Cartels 2019

Last Updated July 11, 2019

Brazil

Law and Practice

Authors



Caminati Bueno Advogados is widely recognised as a leading Brazilian competition law firm. The leading partners have two decades of significant experience working in many of the most challenging and complex antitrust cases before CADE. Caminati Bueno Advogados was founded in 2018, is headquartered in São Paulo with a branch in Brasilia, and has 13 seasoned professionals wholly dedicated to antitrust matters. The firm is solidly structured to assist clients and to co-operate with international law firms in getting approval for global mergers, dealing with antitrust high-profile investigations and assisting in competition compliance affairs. Recent cases include: antitrust approval of the global merger involving Linde/Praxair; assisting Citigroup in Brazil under investigations comprising Forex 1 and Forex 2; execution of several leniency agreements and settlements on behalf of Andrade Gutierrez under the 'Car Wash Operation'; and successful representation in Brazil against the largest international online travel agencies.

Cartel conduct is challenged in Brazil by four different statutes:

  • Law No 12,529/2011 (Brazilian Competition Law) – cartel as a violation against the economic order;
  • Law No 8,137/1990 (Economic Crimes Law) – cartel as a crime (only for individuals);
  • Law No 8,666/1993 (Public Contracting Law) – establishes bid-rigging as a criminal offence;
  • Law No 12,846/2013 (Anticorruption Law) – provides other penalties for bid-rigging.

In Brazil, the Administrative Council for Economic Defence (CADE) is the federal agency in charge of anti-cartel enforcement and has jurisdiction over all Brazilian territory. CADE's lower unit, the General Superintendence (GS), is the investigatory unit responsible for launching and conducting administrative proceedings, whereas CADE's tribunal is the decision-making body.

Articles 37 and 38 of the Brazilian Competition Law set a list of penalties that CADE can apply against companies and/or individuals considered guilty of anti-competitive practices, including cartels.

Companies can receive fines ranging from 0.1% to 20% of the company's gross turnover registered in Brazil in the fiscal year preceding the launching of the Administrative Proceeding, in the field of economic activity in which the violation took place (for that purpose, CADE’s Resolution 3/2012 provides an extensive list of economic activities, although specific adjustments are frequently necessary on a case-by-case basis). In specific cases, CADE may take into consideration the turnover of the whole group or conglomerate.

Statutory directors and managers, directly or indirectly responsible for the violation committed by their company, are subject to a fine in an amount ranging from 1% to 20% of the corporate fine. Other individuals without decision-making power, as well as associations or other entities which do not perform business activities and thus do not register turnover, shall be levied with a fine ranging from BRL50,000 to BRL2 billion.

Non-pecuniary sanctions may also be imposed separately or cumulatively with referred fines, such as:

  • the obligation to publish CADE's tribunal decision in a well-circulated newspaper;
  • debar from contracting with financial institutions and participating in public biddings;
  • a split-up of the company or a divestiture of certain assets;
  • recommendation to public bodies to the effect that
    1. a compulsory licence over intellectual property right held by the offender be granted,
    2. the offender be denied instalment payment of federal taxes owed or that tax incentives or public subsidies be cancelled in full or in part;
  • a prohibition on engaging in commerce; and/or
  • any other act or measure deemed necessary to mitigate the harmful effects to the economic order.

In practical terms, the most common sanctions applied are fines.

Cartel liability under criminal and civil laws must be enforced before courts (either federal or state). Further information on the applicable sanctions can be found below in 4.4 Sanctions and Penalties Available in Criminal Proceedings and 4.5 Sanctions and Penalties Available in Civil Proceedings.

Under the Brazilian Competition Law, parties harmed by anticompetitive acts can pursue their interests in private lawsuits filed before judicial courts aimed at ceasing the practices or seeking redress for losses and damages suffered.

Provided that it has standing to sue, in order to obtain relief, the plaintiff must prove: (i) the illegal act; (ii) the damage; and (iii) the causal link between the illegal act and the damage. For more details, please refer to section 5 Private Civil Litigation Involving Alleged Cartels.

In Brazil, cartel conduct is defined based both on statutory and case law perspectives.

The Brazilian Competition Law sets forth some circumstances that can constitute cartel conduct without specifically labelling it as cartel, including any agreement with competitors directed to price fixing, product and output restrictions and customer and market allocation and bid-rigging.

The cartel conduct definition has been further developed in light of CADE's case law. In this sense, it is worth noting that CADE defines cartel as an intrinsically illegal conduct, meaning there is no need to prove any effects arising from the practice to condemn it. There is a rebuttable presumption of illegality. A cartel can be classified as a hardcore cartel or a soft cartel, depending on the level of collusion and type of information exchanged between the participants. In particular, CADE understands that well-structured co-ordination among competitors aimed at hindering competition (eg, through price fixing, bid-rigging, creation of barriers to entry, etc) is a hardcore cartel, which is regarded the most harmful violation to the economic order.

The mere exchange of commercially sensitive information among competitors would be characterised as a softcore cartel conduct.

There are no industries or sectors exempted from Brazilian Competition Law when it comes to cartel practices. 

Cartel is both an administrative and a criminal offence.

Under criminal law, the statute of limitation period for cartel is 12 years. Nonetheless, this is a contentious subject in the administrative sphere. This is so because, according to the general rule set forth by the Brazilian Competition Law, antitrust violations are subject to a five-year statute of limitations term, with the exception of those practices which are also considered a crime (for which the limitation period for the administrative enforcement shall follow the statute of limitation set forth by the criminal law).

However, the application of the criminal statute of limitation to the administrative enforcement is quite controversial and there is heated debate on whether the 12-year limitation period should be extended to legal entities (since only individuals are criminally liable for cartel violations), and whether or not a criminal proceeding must have been initiated (or concluded), among other topics.

This matter has been frequently discussed in recent cases and the current stand of the CADE Tribunal, by a majority of votes, is that the limitation period of the cartel violation should be the same as the criminal. Nevertheless, there are recent decisions from Brazilian high courts and Commissioners at CADE acknowledging that the replacement of the administrative statute of limitations (five-year term) for the criminal (12-year term) may only occur in the event a criminal action is filed against the same individuals and facts investigated in the administrative proceeding.

Furthermore, with respect to to bid-rigging cartels specifically, CADE has been taking as a reference the criminal penalty of a prison term of up to four years, plus a fine based on the Public Contracting Law. As a consequence, in practice, CADE has been applying a limitation period of eight years for bid-rigging cartels.

The statute of limitation is counted from the date that the misconduct was perpetrated, or, in the case of a permanent or continuing violation, as for cartel conduct, according to CADE's prevailing understanding, the day such practice has ceased (for instance, in bid-rigging, when the object of the contract is delivered or when the last payment is made). The limitation period is interrupted by any administrative or judicial act with the purpose of investigating the practice.

Civil antitrust claims from cartel victims are subject to a three-year limitation period, but there is great controversy as to the initial term for such deadline. To foster follow-on private damages actions, there is a bill of law in Congress (Senate Bill No 283/2016), currently under analysis at the Brazilian House of Representatives, proposing amendments to the Brazilian Competition Law, basically to (i) suspend the civil limitation period for civil claims when a CADE investigation is ongoing, and (ii) increase the referred limitation period to five years, counted from the publication of the CADE Tribunal's decision in the Federal Official Gazette.

The Brazilian Competition Law covers all practices against the economic order performed in full or in part in the national territory or that produce or may produce effects thereon. For the purpose of assessing its jurisdiction, CADE considers if Brazil was affected by the (direct or indirect) effects of the conduct, even if only potentially and even if Brazil was not the country where the conduct took place. In that respect, in order for CADE to investigate and condemn an international cartel with direct or indirect cartelised exportation, at least one of the following exemplificative factors should be verifiable in the concrete case:

  • the indirect effects in Brazil are sufficiently material, accountable and relevant;
  • Brazil is, in fact, a relevant destination of the final product affected by the cartel;
  • the companies involved in the cartel are relevant sources of Brazilian demand;
  • the companies involved in the cartel act and have substantial presence in Brazil through other markets; or
  • lack of relevant investigations and/or convictions due to cartel practice by competition authorities directly and primarily affected by such practice, among others factors whose gauging is objectively possible.

Brazilian Competition Law does not establish comity principles and grants CADE autonomy and powers to deliberate independently from foreign authorities' decisions. However, CADE has entered into a number of bilateral and multilateral agreements with several foreign antitrust authorities and some of them have provisions regarding both the avoidance of conflicts and the consideration of other agency's interests.

It is worth highlighting that none of these agreements allow CADE to share confidential information nor assist in foreign investigations without prior consent from relevant parties to the case.

An investigation of cartel infringements by CADE can start through three different ways:

  • as a result of a leniency agreement executed by CADE or previous investigations by criminal or administrative authorities.
  • ex-officio by CADE (eg, CADE can become aware of the illicit through:
  • a) an anonymous report,
  • b) news from media,
  • c) 'the Brain Project', a screening and data mining tools to detect cartels); or
  • by complaint from any interested party.

CADE's investigations are divided into three stages: (i) preparatory proceedings; (ii) administrative investigations; and (iii) administrative proceeding.

In summary, preparatory proceedings and administrative investigations are optional stages and may be kept confidential by the GS. These two types of proceedings may be established when there are doubts about whether or not the conduct under review is within CADE's jurisdiction or when the current body of evidence is still not sufficient to start an administrative proceeding. At the end of these stages, if GS concludes that there is no evidence of an infringement, in theory, the case must be dismissed (CADE's tribunal may, however, challenge this decision and request the case files for its review); otherwise an administrative proceeding must be launched.

The offender(s) may only be sanctioned after the conclusion of a formal administrative proceeding (see above, 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards). Due process of law and the right to full defence are principles that must be ensured during the entire proceeding.

The administrative proceeding starts with a technical note issued by the GS. This document summarises the GS' preliminary findings on the occurrence of an anticompetitive infringement and on the involvement of certain companies/individuals (which will be referred to thereafter as defendants) in the misconduct, based on the evidence collected thus far. After being served of the proceeding, the defendants may submit their defences against the GS's accusations and specify the evidence intended to be produced within 70 days counted as from the confirmation that all defendants have been duly summoned.

According to publicly available information, 35 cartel investigations were initiated in 2018 (out of a total of 74 anti-competitive practices cases). The number of cartel investigations being initiated by CADE dropped from 82 during 2017 to 35 during 2018. One of the explanations for this shift may be the increasing interest of GS/CADE in unilateral conducts: while the number of cartel cases being open dropped, the number of unilateral conduct cases almost doubled in 2018, going from 18 cases in 2017 to 30 in 2018.

Also, during 2018, the GS concluded its opinion on 49 cartel cases (out of a total of 94 anti-competitive practices cases), which were sent for the tribunal's review and final ruling.

In order to supplement the fact-finding effort of an ongoing investigation/proceeding, CADE can conduct dawn raids to seize papers of any kind, as well as business books, computers and magnetic files of a company or an individual suspected of involvement in an anticompetitive conduct, without prior notice.

Dawn raids must be authorised by a judge, provided a well-reasoned request be made by CADE's Attorney General Office, upon the GS' instructions, which must specify the facilities that will be searched and relevant material to be collected at the target's premises.

Outside counsel can participate in dawn raid procedures to ensure the protection of the targeted parties' individual rights. An outside counsel also performs an important role after the dawn raid, checking the data collected by CADE and validating the return of the original material to the targeted party.

According to CADE's Dawn Raids Guidelines (2017), this is an exceptional investigative measure – which, however, is not unusual. Since 2012, CADE has conducted 23 dawn raids, six of which are from 2018 onwards (five related to bid-rigging schemes involving different markets).

The Brazilian Competition Law also gives CADE powers to make surprise visits, known as 'inspections'.

A dawn raid must be strictly conducted within the limits set forth by the judicial warrant that granted it. Premises that will be visited and format of data to be collected are previously defined in the warrant and must be strictly observed by the dawn raid's task force (led by a judicial officer, the police and CADE's staff allocated to the task), as well as confidentiality rules. The procedure must be monitored by witnesses, preferably employees of the company.

As already mentioned, dawn raids have confidentiality procedures that must be strictly followed by the task force. On completion of the dawn raid, the judicial officer issues a writ of confiscation, listing all objects and documents collected during the proceeding, assigning to a CADE officer the responsibility to keep the material sealed.

The sorting of the materials seized is made by CADE's officials and aims to identify the material relevant to the investigation, in order to allow its reproduction. Paper documents deemed relevant to the investigation are copied to the case records. The electronic materials seized are duplicated, while the originals, as a rule, are stored with CADE until the end of the administrative proceeding.

Questions regarding their alleged involvement in the conduct or other topics not related to the dawn raid itself cannot be made to employees of the targeted company during the dawn raid.

The role of counsel is important to make sure that the scope of the warrant is observed and not exceeded during a dawn raid, as well as to take note and provide advice to the employees of the targeted companies.

Individuals are not required to obtain separate counsels. However, depending on the strategy to be adopted by the legal entity in view of the case, it can be useful to separate the counsels for individuals.

An initial priority of the defence counsel must be obtaining full access to the investigation records file to identify all the accusations and pieces of evidence collected by CADE against the client. In principle, only after that would the defence counsel be properly able to evaluate the client's exposure to antitrust fines and sanctions, based on the evidence CADE has had access to and other available internal resources (documents and information provided by the client).

Based on this initial risk assessment, the defence counsel will analyse the pros and cons, as well as assess the potential outcomes of all strategic alternatives (defence or settlement), so that, in theory, it will be in a better position to assist the decision-making of the ideal course of action considering the client's best interests.

This initial risk assessment is time-sensitive – there are decreasing discounts according to the time the defendant requests a marker to initiate a settlement negotiation with CADE; first-comers can get greater discounts.

CADE's internal rules set forth that the authority can request documents, objects, information, either written or oral, from any individuals or legal entities, either public or private, preserving their confidentiality. This request is usually made through an official letter, nowadays sent by email, with instructions on the object of the request, the deadline for response and the warning that the non-compliance with the request may subject the party to a daily fine (not applicable to public bodies).

In addition, evidence can also be collected from the execution of Leniency Agreements and Settlement Agreements (TCCs in the Portuguese acronym), as the signatories are required to provide additional evidence to support their co-operative statements (see below, 2.17 Leniency, Immunity and/or Amnesty Regime and 4.2 Procedure for Plea Bargaining or Settlement), and from dawn raids (see above, 2.2 Dawn Raids).

However, there is no discovery procedure in Brazil and therefore the defendant may refuse to produce evidence that it deems will be negative for its defence before CADE.

Please see above, 2.9 Enforcement Agency's Procedure for Obtaining Evidence/Testimony.

In theory, CADE has the power to request documents produced or located abroad if it cannot be directly provided by the target, but the applicable procedures may be subject to international agreements and treaties concluded between Brazil and other countries. Usually the requests are conducted through letters rogatory issued by CADE and shall be submitted to the Department of Asset Recovery and International Legal Cooperation (DRCI in its Portuguese acronym), which invokes aid to the equivalent authority in the envisaged country.

However, there are difficulties in compelling companies to provide digital data stored abroad, especially when the targeted company is a Brazilian subsidiary of a foreign company and does not control access to the requested information. The 2014 Marco Civil da Internet (Brazilian legal framework for the internet) is an attempt to constrain foreign companies to comply with Brazilian law and facilitate evidence production regarding electronic data, but case law on the matter is still incipient.

Attorney-client privilege (in essence, confidentiality and inviolability) is secured by Law No 8,906/1994 (Brazilian Bar Association Law) and is only for lawyers enrolled before the Brazilian Bar Association. The application of the privilege principle for communication to or from in-house counsel may be subject to discussions and limitations.

In Brazil, based on the Federal Constitution and the Competition Law, cartel defendants have the right to: (i) remain silent, encompassing the privilege against self-incrimination; (ii) a due process of law; (iii) a full and effective defence, with the assistance of counsel; (iv) privacy/intimacy.

CADE's requests are usually complied with by their targets. According to the Brazilian Competition Law, the refusal, failure or unwarranted delay to provide information or documents requested by CADE subjects the non-compliant party to daily fines of BRL5,000, which can be increased by up to 20 times, if necessary, to ensure its effectiveness, based on the economic condition of the party.

Furthermore, the law also provides that the unjustified absence of the defendant or third parties, when subpoenaed, to provide clarification in the course of the investigation shall subject the non-compliant party to a fine ranging from BRL500 to BRL15,000 for each absence, also based on its economic condition.

The application of fines due to non-co-operation should always respect the defendants' rights, as noted immediately above (see 2.13 Other Relevant Privileges). Further to that, there is no discovery procedure in Brazil and therefore the defendants may refuse to produce evidence that it deems will be negative for its defence before CADE.

CADE has specific procedures to protect documents and information classified as confidential. Defendants and third parties can request confidentiality of documents and information based on the classification of CADE's Internal Rules. If CADE acknowledges such confidentiality, the document containing this information is allocated to a restricted case file, available only for the defendant/third party, CADE and, if it is the case, for the other defendants – it is possible to provide information restricted only to CADE and the defendant/third party. However, if the case has public files, it can be necessary to present a public version of the document, omitting the confidential information.

In theory, CADE's internal rules define that the following information is subject to confidential treatment:

  • commercial bookkeeping;
  • economic and financial situation of a company;
  • tax or bank secrecy;
  • corporate secrets;
  • productive process and industrial secrets, in particular industrial processes and formulae regarding the manufacturing of products;
  • billing of the interested party;
  • transaction data and value and form of payment;
  • documents formalising the notified merger;
  • last yearly report prepared for the shareholders or quota holders, except when the document is public;
  • value and quantity of sales and financial statements;
  • clients and suppliers;
  • installed capacity;
  • production costs and expenses with research and development of new products or services; or
  • other events, at the discretion of the granting authority.

Defence counsels can raise legal and factual arguments to persuade CADE to modify or drop the accusations against their client at any time. Usually they will provoke this discussion at the defence stage, at any other written submission and at in-person meetings with the enforcers handling the investigation. Oral statements during the plenary session and before the ruling of the case are also permitted.

CADE has a historical (more than 15 years) and recognised leniency programme that aids the investigation of cartel practices. The leniency agreement allows companies and/or individuals currently involved, or that were involved in a cartel practice or in another collective antitrust conspiracy, to obtain administrative and criminal immunity.

The party interested in signing a leniency agreement with CADE (leniency applicant) must: be the 'first-in' to report a violation previously unknown to CADE; cease and confess its participation; and fully co-operate with CADE's investigation by providing documents, information and any clarification needed until the tribunal rules on the case (when the agreement is declared fulfilled and the benefits are granted), noting that a 'ringleader' is allowed to apply for a leniency in Brazil. If the cartel targeted state-owned companies, the applicant would also be obliged to negotiate a leniency agreement with the CGU (General Comptroller's Office) and AGU (Federal Attorney General's Office), pursuant the Anticorruption Law. This is, however, subject to discussion and controversy.

Leniency applicants may receive full administrative immunity (total leniency) or the reduction by one-third to two-thirds of the applicable fine, whether CADE had already previous knowledge of the conduct, but lacked evidence to support the condemnation of the offenders (so-called 'partial leniency'). Criminally, the leniency agreement lifts the limitation period and prevents the criminal prosecution of the leniency applicant.

As CADE adopts a leniency marker system, only the first to blow the whistle can qualify for a leniency agreement. Latecomers may secure their place in line and can be entitled to negotiate a leniency agreement if CADE's negotiations with the 'first-in' fail or may be invited to enter into TCC negotiations (see below, 4.2 Procedure for Plea Bargaining or Settlement) if the leniency agreement is no longer available.

Also, Brazil adopts a 'leniency-plus' programme, which provides incentives for a defendant under investigation regarding an anticompetitive conduct in a certain market ('original case'), to report its involvement in a violation in another market ('disclosed case'), thereby securing full immunity in the disclosed case and also a considerable fine discount on the original case (fines can even be further reduced if the defendant settles the original case – ie, the TCC discount will be subsequently applied to the 'plus reward' – see below 4.2 Procedure for Plea Bargaining or Settlement). Different from other jurisdictions, the leniency-plus is not a compulsory element of the Brazilian leniency programme, meaning that CADE will not consider the failure to report other violations as an 'aggravating sentencing factor' when judging the original case and must not induce the applicant to do so (ie, omnibus question) while negotiating. Despite having been created alongside the leniency programme, CADE’s experience with leniency-plus is quite recent, with the first applications dated as of 2015.

CADE's first leniency agreement was signed in 2003 (security service companies' cartel). Since then, CADE has entered into more than 91 leniency agreements with companies and individuals that had engaged in cartel practices.

From 2015 onwards, CADE's leniency programme numbers were driven up by the conclusion of agreements related to the 'Car Wash Operation' – the largest and most wide-ranging corruption and bid-rigging investigation in Brazilian history and one of the biggest antitrust investigation around the world. Since 2015, CADE has already entered into 27 leniency agreements related to the 'Car Wash Operation' (nine of them between January 2018 and May 2019).

As per public information, CADE executed nine leniency agreements and analysed three leniency-plus agreement requests between January 2018 and May 2019. This represents a drop in light of the 21 leniency and 12 leniency-plus agreements in 2017, which, in turn, were pushed by the 'Car Wash' probe, but, in any case, maintained the general average of 2015 (with ten agreements signed) and 2016 (11 agreements).

CADE can request information and documents from any person or legal entity, usually through official letters, provided that it preserves the confidentiality of the information (see 2.15 Protection of Confidential/Proprietary Information). CADE may directly approach the individuals involved in the conduct and may schedule a hearing for their testimonials, but it is unusual for CADE to seek information directly from company employees which are not part of the cartel investigation. Individuals involved in the investigation must be formally summoned.

CADE may also seek with the judiciary branch a search warrant to execute a dawn raid at an individual’s home or the company's headquarters (see 2.2 Dawn Raids).

Please see 3.1 Obtaining Information Directly from Employees, above.

Please see above, 3.1Obtaining Information Directly from Employees. In addition, it is worth noting that – in order for entities located outside CADE's jurisdiction to be summoned and be a part of the investigation – specific civil procedural rules must be followed (through a letter rogatory). Due to bureaucratic delays in the summoning procedure, CADE has, in some cases, followed the strategy to split the administrative proceeding, separating local companies from entities located outside its jurisdiction, so as to be able to move forward and carry out the investigation at least for local companies.

CADE has signed several co-operation agreements with public authorities in Brazil, such as the Public Prosecutor's Office (federal and state level), regulatory agencies (in telecommunication, energy, transport, oil and gas sectors, for instance) and the Brazilian Central Bank, with the main purpose of regulating exchange of information and data and further co-operation.

The issuance of the Public Prosecutor's Office's (non-binding) opinion is mandatory in cartel proceedings at CADE, as well as the opinion of public authorities related to the activities/market affected by the conduct. Confidentiality procedures, mentioned in 2.15 Protection of Confidential/Proprietary Information, must be observed.

CADE has executed different bilateral and multilateral agreements with foreign antitrust authorities and international organisations in order to enhance the antitrust policy in Brazil. Those agreements generally encompass exchange of information (this is allowed through the granting of waivers), experience and best practices on competition law and policy. During an investigation of an international cartel, the antitrust authorities can exchange information and data regarding the practice, with limitations mentioned in 1.7 Principle of Comity.

In March 2019, the OECD Competition Committee approved the admission of Brazil as an associated member.

Criminal cases comprise four phases: (i) investigation; (ii) prosecution; (iii) adjudication/trial; and (iv) execution. Rules of criminal proceedings are the same for both federal and state cases, noting that cartel crimes may be prosecuted and adjudicated at either level.

In the investigation phase, the police, the Public Prosecution or another legally authorised body will gather evidence to demonstrate whether a crime took place and who was the author. There is no adversarial system and the suspects have limited access to non-sealed information at this stage. The prosecution phase starts when the federal/state public prosecutors decide to offer an indictment against the possible author whenever there is evidence of a crime, which could be accepted or not by a federal/state court. The trial phase is an adversary system, where the due process rights are granted, and the judge will control all the proceedings until he/she decides to convict or acquit the defendant (only crimes against life are trialled by a jury). The criminal condemnation is implemented in the last phase.

Defendants may present any evidence deemed relevant for their defences and can request access to information gathered by the enforcement agency or subpoena relevant evidence in possession of third parties. Restrictions related to privileged/confidential information are also applied (see also 2.15 Protection of Confidential/Proprietary Information, 3.11 Use of Evidence Obtained from One Proceeding in Other Proceedings and 5.4 Admissibility of Evidence Obtained from Governmental Investigations/Proceedings).

The standard civil case starts before a state or federal court, through a complaint filed by any person that has sufficient grounds to demonstrate it has suffered damages from an illegal act perpetrated by the defendant. The defendant may then file an answer to the complaint and the judge can schedule a conciliatory hearing. If no conciliation is reached, the judge will then decide whether additional evidence is necessary. After the evidentiary stage is concluded, the judge will render his/her decision on the matter. Every step of the process is subject to an adversarial system and all due process rules must be observed.

Defendants may present any evidence deemed relevant for their defences, except those obtained through illicit means and can request access to information gathered by the enforcement agency or subpoena relevant evidence in possession of third parties. Restrictions related to privileged/confidential information are also applied (please see also 2.15 Protection of Confidential/Proprietary Information, 3.11 Use of Evidence Obtained from One Proceeding in Other Proceedings and 5.4 Admissibility of Evidence Obtained from Governmental Investigations/Proceedings).

Usually, CADE's cartel proceedings are brought against multiple parties – all companies and/or individuals which were identified as possible participants of the investigated conduct.

However, according to CADE's internal rules, the GS may split up a proceeding, separating the defendants, if, for instance, the infringements were practiced in different time or circumstances, this in order to avoid impairing the reasonable duration of the proceeding, among other reasons.

Under the administrative and criminal due process of law, the enforcer in charge of the accusation (a public authority) bears the burden to prove 'beyond any reasonable doubt' that anticompetitive practices took place and that the defendants were involved, whereas the defendants have the burden of proving their defence arguments. Based upon CADE's case law, the standard of proof from criminal proceedings in cartel cases is higher than in the administrative proceedings. In any event, it is worth noting that in administrative proceedings CADE's case law considers cartel an intrinsically illegal conduct, meaning that discussions involving market power, effects and economic rationality are typically disregarded as means of evidence and defence arguments.

For civil cases, the plaintiff will bear the burden of proof to demonstrate the illicit act, the damage suffered and the causality link.

In administrative cartel proceedings, CADE acts as the finder of fact; as mentioned in 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards, CADE is comprised of the GS and the administrative tribunal; the former is the investigatory unit responsible for launching and instructing administrative proceedings whereas the latter is the decision-making body. As for both civil and criminal cartel cases, a non-antitrust specialised judge is the finder of fact, applying the Brazilian law to the facts presented in the suit, supported by inputs rendered by the defendant – by the plaintiff in civil proceedings, and by the Public Prosecutor's Office in criminal cases.

Brazilian courts have consistently allowed CADE to borrow evidence gathered in other proceedings, especially criminal, provided that the diligence was authorised by a judge and the adversary right is observed in the proceeding in which the evidence will be used, even if the original proceeding has different defendants.

As for the use of evidence from administrative proceedings in civil cases, CADE has indicated that its final decision (including the Commissioner's votes) should be sufficient to initiate a claim – however, CADE's decisions do not bind judges' rulings.

In September 2018, CADE issued Resolution No 21/2018 to rule on sharing of information and evidence from investigations with third parties. According to this resolution, the access to the History of Conduct (a corporate statement made by the GS in the context of a leniency or a settlement agreement (TCC), based on self-accusatory documents and information) shall not be granted to third-parties, even after the tribunal's final decision, except in case of legal determination or judicial decision. The access can also be authorised by the leniency/settlement signatories or granted through international co-operation (provided a waiver is granted by the signatories), both with CADE’s consent.

Under the Brazilian legal procedure law, any and all means of proof is admitted (eg, documents, witnesses, experts' opinions, etc), except for evidence illegally produced. Evidence is freely assessed at the judge's discretion.

Although not often observed if compared with merger control cases, experts, mainly economists, may be engaged to interpret facts and produce evidence, especially in cases lacking direct evidence of the alleged anticompetitive practice (eg, by preparing studies and econometric exercises to demonstrate that a given suspicious practice may or may not have economic rationality). Other experts may also be hired, although in a lesser degree – for instance, IT specialists may be hired to certify whether or not digital evidence was collected following appropriate forensics technics and procedures.

Privileges are not subject to any specific antitrust guidance in Brazil. Nevertheless, as mentioned above (2.12 Attorney-client Privilege), attorney-client privilege is a constitutional right and may be applied to all communications and documents related to the attorney's professional activity with a client. The extent of attorney-client privilege of in-house counsel, however, may be subject to discussions and limitations.

A single cartel activity can be prosecuted at criminal, administrative and civil levels and may have different results in all these areas.

A cartel violation is both an administrative and a criminal offence, with CADE dealing with the administrative investigation, whereas criminal authorities (the Public Prosecutor's Office and the Police) will run the criminal case. In addition, cartel offenders may also face civil liability from private damage actions filed by the cartel victims before a court.

In the administrative enforcement, a proceeding may result in fines and, eventually, right restrictions (such as a ban on participating in public bids). A criminal case against individuals (solely) could result in imprisonment and fines; the civil proceeding may result in the obligation to financially compensate the cartel victim.

In addition to CADE, the Public Prosecutor's Office and the Police, one should bear in mind that in Brazil different institutions are invested with powers and have jurisdiction to investigate certain sorts of collusion that are specifically linked to bid-rigging, corruption, bribery and other schemes – for instance, the AGU (Federal Attorney General's Office), the CGU (General Comptroller's Office) and the TCU (Brazilian Court of Audit).

Although part of the same agency, CADE's investigative body (ie, the GS) shall submit the case to CADE’s tribunal after concluding its investigation. The tribunal may also determine additional diligences and, ultimately, has the authority to impose administrative sanctions. Although CADE's rulings are final at the administrative level, they may be subject to appeal before the Brazilian courts (the judicial system).

According to information made available by CADE (an initiative called 'CADE In Numbers'), from January 2018 until May 2019, CADE's tribunal ruled on 31 Administrative Proceedings related to cartel practices: 14 cases were shelved and 17 cases resulted in (total or partial) conviction. Fines imposed totalled around BRL884 million.

If a company or individual facing an investigation wants to settle with CADE, they can execute a settlement agreement (TCC) with the authority. Under a TCC, the antitrust authority agrees to close investigations against the interested party upon the fulfilment of certain terms and commitments.

Among these commitments, and under a cartel investigation, it is mandatory for the interested party to plead guilty, collect a settlement fine ('pecuniary contribution'), cease conduct, fully co-operate with CADE throughout the investigation by providing additional evidence of the conduct, as well as complying with eventual ancillary obligations that may be negotiated with CADE.

To start the settlement negotiations, the interested party must request for a marker, which grants a position in line to negotiate a TCC. This is relevant since the first TCC applicant in the case is granted a discount of 30% to 50% on the fine expected to be imposed by CADE’s tribunal; the second applicant is granted a discount of 25% to 40% and the third and onwards a discount of no more than 25%; however, after the case is sent to tribunal, the expected fine discount must not surpass 15%.

If the TCC applicant is also applying for a Leniency Plus Agreement (see above 2.17 Leniency, Immunity and/or Amnesty Regime) in another case, the following parameters will be applied to the TCC discount:

  • first TCC applicant (+ leniency-plus) – from 53.33% to 66.67% of the expected fine;
  • second TCC applicant (+ leniency-plus) – from 50% to 60% of the expected fine; and
  • all other TCC applicants (+ leniency-plus) – up to 50% of the expected fine.

A TCC can be proposed at any moment up until the case is included in the dockets for ruling by the tribunal, pursuant to CADE's Internal Regulations and Guidelines on TCC for cartel cases.

The TCC fine is calculated based on the expected fine to be imposed by CADE's tribunal, in which the mentioned discount is applied as a result of the negotiation.

Different from the leniency agreement, the TCC does not provide criminal immunity to the individuals who admit participation in the conduct. However, CADE may help the settling party to also reach an agreement with the Public Prosecutor's Office to settle the criminal liability.

Since the enactment of the current Brazilian Competition Law in 2012, the average number of TCCs ruled by the tribunal is 34 per year.

According to information made available by CADE ('CADE In Numbers'), from January 2018 until May/2019, CADE has executed 52 TCCs related to cartel practices, which represented settlement pecuniary contributions of around BRL1,285 billion; of these, 16 TCCs were connected to the 'Car Wash Operation' and the settlement fines collected from those agreements totalled an amount of around BRL898 million. For more information on leniency proceedings, see 2.17Leniency, Immunity and/or Amnesty Regime.

The admission of guilt or a decision condemning a defendant could be used as a strong evidence to support civil damage claims from cartel victims. Public bodies can also debar cartel offenders from participating in their public biddings regardless of the debarment sanction that can be imposed by CADE (see 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards).

Neither leniency nor settlement agreements (TCCs) can avoid or mitigate these side-effects.

In Brazil, criminal sanctions are only applied to individuals found guilty of cartel offences, as companies are not criminally liable for this felony. The Economic Crimes Law considers cartel a crime punishable by fine and imprisonment (from two to five years) and the penalty may be increased by one-third to one-half if: (i) the crime causes serious damage to consumers, (ii) is committed by a public servant; (iii) or relates to a market essential to life or health. Criminal sanctions are applied by the judge, who will assess the circumstances of a case and verify whether legal causes of increase and reduction of the sanction, or mitigating and aggravating circumstances, must be applied.

Civil proceedings do not entail sanctions for a cartel practice, but rather compensation for cartel victims who are seeking damage claims.

Effective compliance programmes are welcomed by the antitrust authority. As set forth in Article 45 of Brazilian Competition Law, in spite of the moment when the compliance programme is adopted, CADE might consider the 'good faith factor' as a mitigating effect when sanctions/fines are established.

With respect to settlement negotiations, a robust compliance programme may be considered, among other factors, as an element to justify an increase on the discount available to the company. In a few recent cases, CADE granted additional discount to companies negotiating TCCs that committed to adopting a compliance programme (ie, showed a forward-looking approach) and pointed out that the implementation of such a programme could generate a discount of up to 4% of the expected fine, in line with the Brazilian anticorruption law.

CADE's compliance guidelines also set forth the features that companies have to prove to qualify their compliance programmes as 'robust' (eg, commitment from top executives, appropriate resources for the programme, an autonomous team to lead the compliance activities, etc) in order to be entitled to fine reductions. Robust programmes must be custom-made for the company's size and activities and must also be frequently reviewed/improved. While CADE is aware of the risks posed by sham programmes, it does not expressly state whether such programmes could aggravate the expected fine.

CADE cannot order mandatory consumer redress, as this is not provided in the list of sanctions set forth by the Brazilian Competition Law. Compensation for damages can only be obtained as a result of a civil lawsuit filed before a court.

CADE's decisions are final and non-appealable at the administrative level. The defendants can only file a motion for clarification before CADE's tribunal to clarify omissions, obscurities and contradictions. Nevertheless, defendants may challenge CADE's decisions in a federal court either during an investigation (to discuss the illegality of an investigatory measure, such as a dawn raid), or after the trial (in an attempt to annul or revert CADE's tribunal decision). In order to suspend CADE's ruling effects, defendants should provide appropriate guarantees to the court, when applicable (ie, depositing the amount of the fine imposed by CADE or offering a Letter of Guarantee).

According to information released in CADE's Annual Report, the number of CADE's decisions being challenged in court has dropped considerably: from 79 appeals in 2017 to 61 in 2018. Also, during 2018, CADE's decisions were confirmed by the courts in 73.5% of the cases appealed. These are overall figures comprising all of CADE's rulings.

Private entities and individuals seeking damages compensation for illegal acts have the right to file a civil lawsuit before courts. Provided that it has standing to sue, the plaintiff must prove (i) the illegal act; (ii) the damage; and (iii) the causal link between the illegal act and the damage in order to obtain relief.

Both direct and indirect purchasers (not distinguished by the Brazilian Competition Law) harmed by the cartel have the right to seek damages from any of the cartel members (including the leniency/settlement applicants), which are jointly and severally liable for all cartel-related damages. Plaintiff's award is calculated by the damage extent ('single damages', without multipliers). However, Senate Bill of Law No 283/2016, currently under analysis at the Brazilian House of Representatives, calls for doubling the damages that plaintiffs can award from the defendants – excepting the leniency/settlement applicants.

Damages and injunctive reliefs (eg, seeking an order to cease the conduct) are the actions most commonly sought by antitrust plaintiffs in Brazil.

Up to June 2017, 127 civil lawsuit cases were filed before courts, out of which 86 were related to cartel practices. The majority of those lawsuits were filed before the São Paulo Court of Justice. Out of 127 civil lawsuits filed, 91 were ruled (final decision, including cartel and non-cartel practices).

Civil collective actions for cartel damages compensation (class actions) are allowed in Brazil. Associations and public interest groups, specifically those destined to defend interests and rights protected by the Consumer Protection Code, are listed among the entities that have standing to file collective actions. Also, based on Law No 8,625/1993 (National Law of Public Prosecutor's Office), the Public Prosecutor's Office can propose collective actions in the face of violations against collective rights.

Private antitrust enforcement is still incipient in Brazil and there is as yet no consolidated case law regarding indirect purchases or passing on defences. Any purchaser (either direct or indirect) can claim damages resulting from cartel overprice at the courts, following the ordinary judicial proceeding rules.

Evidence produced in CADE's investigations is admitted by Brazilian courts. In fact, courts usually accept CADE's decision as 'strong evidence' of an antitrust infringement and there is a Senate Bill of Law (No 283/2016), currently under analysis at the Brazilian House of Representatives, that raises CADE's decision to the 'prima facie evidence' status.

However, the access to leniency and settlement confidential documents is highly debated in private litigations; the matter was recently ruled by CADE's Resolution No 21/2018 (see 3.11Use of Evidence Obtained from One Proceeding in Other Proceedings), which provides that third-parties may only have access to sensitive material (ie, confidential documents derived from the leniency/settlement agreements) on an exceptional basis (legal authorisation, court order and signatories' consent among them).

Generally, litigation in Brazil is quite a lengthy process and it may take several years to resolve a claim. Private antitrust enforcement is still incipient in Brazil. It is worth pointing out that the lengthy process, in addition to a general lack of familiarity of some judges with competition matters in Brazil – which indeed require complex and technical legal and economic analysis – may contribute to discouraging private antitrust enforcement in Brazil, justifying in part its incipience. Private actions can also be costly for the parties, which could add another layer of discouragement for the proliferation of such actions

According to articles 84 and 85 of the Brazilian Civil Proceedings Code, the losing party is obliged to pay an amount set by the judge – which will range from 10% to 20% of the claim value or the condemnation value – to the attorneys engaged by the winning party.

In addition to the compensation for the successful party's attorney, the losing party must also bear the reimbursement of the court fees. In respect of collective actions, the losing party has none of these obligations, pursuant both the Brazilian Consumer Protection Code (Law No 8,078/90) and Public Civil Suit Act (Law No 7,347/85).

All first instance decisions are subject to be reviewed by a court of appeals. It is very common that the losing party in a private litigation appeals a first-instance decision, but the court can only review specific matters raised by the party within the scope of the former decision.

The following guidelines relating to cartel conduct can be found at CADE's website – http://en.cade.gov.br/topics/publications/guidelines:

  • CADE's antitrust leniency programme;
  • settlement agreement for cartel cases; and
  • competition compliance programmes.

There is a recent bill presented by the Minister of Justice – dubbed the 'anti-crime package' which sets out “measures against corruption, organised crimes and crimes committed with serious violence”. The bill introduces, among other matters, the practice of negotiated solutions and whistleblower incentives. In the competition sphere, for instance, those measures could increase big-rigging cartel investigations. In particular, with regard to the whistleblowing institute, some bills of law have already been discussed at the National Congress, but no substantive progress has been achieved thus far.

Caminati Bueno Advogados

Av. Pres. Juscelino Kubitschek, 1600 - 10º andar
04543 000
São Paulo, Brasil

+55 (11) 2050 5440

www.caminatibueno.com.br
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Law and Practice

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Caminati Bueno Advogados is widely recognised as a leading Brazilian competition law firm. The leading partners have two decades of significant experience working in many of the most challenging and complex antitrust cases before CADE. Caminati Bueno Advogados was founded in 2018, is headquartered in São Paulo with a branch in Brasilia, and has 13 seasoned professionals wholly dedicated to antitrust matters. The firm is solidly structured to assist clients and to co-operate with international law firms in getting approval for global mergers, dealing with antitrust high-profile investigations and assisting in competition compliance affairs. Recent cases include: antitrust approval of the global merger involving Linde/Praxair; assisting Citigroup in Brazil under investigations comprising Forex 1 and Forex 2; execution of several leniency agreements and settlements on behalf of Andrade Gutierrez under the 'Car Wash Operation'; and successful representation in Brazil against the largest international online travel agencies.

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