Enforcement proceedingsEnforcement authorities
Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?
CADE is the agency responsible for investigating, prosecuting and ruling on abuse of dominance conduct. CADE is divided into two departments: the General Superintendence and the Administrative Tribunal (Tribunal).
The General Superintendence is responsible for initiating and conducting investigations related to infringements, adopting preventive measures to cease anticompetitive practices, negotiating and entering into agreements, and otherwise preventing and prosecuting antitrust infringements. During its investigation, the General Superintendence has broad powers, including the power to search companies’ premises and to seize documents or other materials as it may deem necessary. Law No. 12,529 grants the General Superintendence authorities power, including the power to make dawn raids without prior notice, provided that a judicial order is issued. After concluding its investigation, the General Superintendence will issue a non-binding opinion with its findings and a recommendation to the Tribunal, which should be either to dismiss the case, or to impose penalties for infringement of the law.
Seven members, who are in charge of ruling on anticompetitive conduct cases, make up the Tribunal. At the Tribunal, a Reporting Commissioner will be appointed to issue a report and a vote on the case after hearing CADE’s Attorney General, who will issue a non-binding opinion. The case will then be brought to judgment before the Tribunal at a public hearing. The Tribunal may decide to dismiss the case if it finds no clear evidence of abuse of dominance or to impose penalties and order the defendants to cease the antitrust infringement.
Law No. 12,529/2011 also creates a third body, namely the Department of Economic Studies, which acts as an advisory body for both the General Superintendence and the Tribunal in the analysis of mergers and anticompetitive conducts.Sanctions and remedies
What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?
Article 37 of Law No. 12,529/2011 allows CADE to impose fines that vary from 0.1 per cent to 20 per cent of the company or group of companies’ pre-tax turnover earned in the economic sector affected by the conduct in the year prior to the beginning of the investigation. The fine must be no less than the amount of harm resulting from the conduct. Directors and other executives found liable for the conduct may also be fined from 1 per cent to 20 per cent of the fine imposed on the company. So far, the highest fine imposed on a dominance case was the 352 million reais fine imposed on Ambev/Tô Contigo (2009).
CADE may also order the publication of its decision in a major Brazilian newspaper, at the defendants’ expense, order structural or behavioural remedies, such as the corporate spin-off and impose any other sanctions deemed necessary to terminate the conduct’s anticompetitive effects. According to article 84 of Law No. 12,529/2011, either the Tribunal or the General Superintendence can adopt preventive measures (cease-and-desist orders) whenever there are reasons to believe that the defendant caused or may cause irreparable or substantial damage to the market, or when awaiting a final decision may render it ineffective.
Finally, article 85 allows CADE to enter into an agreement with the defendant, at any stage of the proceeding, whereby the defendant undertakes to cease the investigated conduct (the cease-and-desist commitment). The case is put on hold while the commitment is duly complied with. If the conditions set out in the commitment are fully met, the case is dismissed.Enforcement process
Can the competition enforcers impose sanctions directly or must they petition a court or other authority?
The sanctions are imposed directly by CADE. Despite that, if defendants fail to pay the fine or comply with other penalties within the term established in CADE’s decision, according to CADE’s Resolution No. 1/2012, it must petition the court in order to seek enforcement.Enforcement record
What is the recent enforcement record in your jurisdiction?
Abuse of dominance investigations are less common in Brazil in comparison to cartel investigations. In contrast with 2017, when, based on publicly available information, CADE did not found the defendant to be guilty in cases in connection with abuse of dominance, in 2018 CADE convicted Unilever for abuse of dominance in connection with exclusive agreements in the ice cream market. CADE has also entered into important cease and desist agreements with major banks in connection with their abuse of dominance related to the card payment processing market. The trend shows that CADE shall continue to grow its enforcement in connection with abuse of dominance in the coming years.
Abuse of dominance proceedings usually take from one to three years until CADE reaches a final decision, but complex cases may take a little longer as they involve consultations with the market and stakeholders (eg, agencies, trade associations, among others) and further discussions on economic rationale and possible efficiencies of the investigated conduct.Contractual consequences
Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?
CADE has the authority to declare a contract or some of its provisions invalid if they are found to be an antitrust infringement under Law No. 12,529/2011. In this case, the contract’s remaining provisions not related to the antitrust infringement, if any, would remain in force.
In the Unilever case, for example, CADE determined that the agreements entered into with retailers, which contained the clauses considered to be abusive, should be amended.Private enforcement
To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?
According to article 47 of Law No. 12,529/2011, those harmed by an antitrust infringement are allowed to seek indemnification and the cessation of the anticompetitive conduct in courts. Courts have authority to adopt any measure - including invalidating contractual clauses or ordering a firm to grant access to certain technology (eg, with the purpose of obtaining the cessation of the anticompetitive conduct). Despite this framework for private enforcement resulting from antitrust infringement, however, private actions are still relatively rare in Brazil.Damages
Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?
Article 47 of Law No. 12,529/2011 allows those harmed by an antitrust infringement to seek indemnification and the cessation of the anticompetitive conduct in courts. This is parallel to administrative proceedings, which will not be suspended in view of the claim in court. Private compensation claims can be filed by an individual, an entity or by various entities. Consumer organisations, public prosecutors and other public bodies can initiate collective actions. Damages are assessed by the courts on a case-by-case analysis. Plaintiffs usually request the court to appoint an expert in economics to assess the competitive counterfactual price and enable damages calculation. To date, most claims for damages are stand-alone claims related to cartels. The calculation method for damages in antitrust cases in Brazil is deemed highly controversial, and, due to the existence of only a few decisions granting damages, it is still unclear how Brazilian courts would tackle this topic.Appeals
To what court may authority decisions finding an abuse be appealed?
CADE’s decisions finding an abuse can be challenged only before a federal court. It is worth noting that the Brazilian Supreme Court understands that the Brazilian Constitution allows injured parties to choose in which regional federal court they want to appeal against a decision by CADE (or any other federal agency). In theory, CADE’s decisions are subject to a broad review by the courts, but Brazilian courts usually adopt some level of self-restraint by only examining the formal aspects of a decision rather than its material aspects (ie, decision-making regarding correct appreciation of facts and the law).