Brazil: The Dominance And Monopolies Review - Brazil

Last Updated: 6 August 2018
Article by Ana Paula Martinez

I INTRODUCTION

At the administrative level,1 antitrust law and practice in Brazil is governed by Law No. 12,529/11 (Competition Law), which entered into force on 29 May 2012 and replaced Law No. 8,884/94. The Competition Law has consolidated the investigative, prosecutorial and adjudicative functions into one independent agency: the Administrative Council for Economic Defence (CADE). CADE's structure includes an Administrative Tribunal for Economic Defence (Tribunal) composed of six commissioners and a president, a Directorate-General for Competition (DG) and a Department of Economic Studies. The DG is the chief investigative body in matters related to anticompetitive practices. The Tribunal is responsible for adjudicating cases investigated by the DG: all decisions are subject to judicial review.2There are also two independent offices within CADE: CADE's Attorney General's Office, which represents CADE in court and may render opinions in all cases pending before CADE; and the Federal Public Prosecutor's Office, which may also render legal opinions in connection with all cases pending before CADE.

The first Brazilian competition law dates back to 1962, but it was only in the mid-1990s that the modern era of antitrust began in Brazil. Among other reforms, in 1994 Congress enacted Law No. 8,884, which governed Brazil's administrative antitrust law and policy until 2011. From 1994 to 2003, the Brazilian antitrust authorities focused primarily on merger review, and substantial resources were devoted to the review of competitively innocuous mergers. In 2003, the Brazilian antitrust authorities promoted a hierarchy of antitrust enforcement and ranked hard-core cartel prosecution as the top priority, making use of investigation tools such as dawn raids and leniency applications. A more recent development in Brazil's competition law enforcement is related to the increasing number of abuse of dominance cases, which is first and foremost a symptom of a system that is no longer in its infancy.

The basic framework for abuse of dominance in Brazil is set out in Article 36 of the Competition Law. CADE has not yet issued a regulation under the new Competition Law covering unilateral conduct, and has been resorting to legislation issued under the previous regime and precedents. The Anglo-American concept of binding judicial precedent (i.e., stare decisis) is virtually non-existent in Brazil, which means that CADE's commissioners are under no obligation to follow past decisions in future cases. Under CADE's Internal Regulations, legal certainty is only achieved if CADE rules in the same way at least 10 times, after which a given statement is codified via the issuance of a binding statement. To date, CADE has issued nine binding statements, all related to merger review except one (Binding Statement No. 7), which provides that it is an antitrust infringement for a physicians' cooperative holding a dominant position to prevent its affiliated physicians from being affiliated with other physicians' cooperatives and health plans.

Although abuse of dominance could also be considered a criminal violation under Article 4 of Law No. 8,137/90, punishable in the case of individuals but not corporations by a criminal fine and two to five years' imprisonment, no criminal sanction has to date been imposed on individuals for abuse of dominance practices.

II YEAR IN REVIEW

In 2017, CADE adjudicated 13 administrative proceedings. Out of these four were dismissed, while in nine cases CADE found an infringement in relation to at least one defendant. This represents a significant drop if compared to 2016, when 31 cases were adjudicated in total, out of which 19 resulted in a conviction (and an even more significant drop if we take 2015 figures into account, when 52 cases were adjudicated, resulting in 39 convictions). On the other hand, there has been an increasing number of settlements reached between defendants and CADE, totalling 70 settlements executed in 2017 (out of 75 settlement proposals). As a result, imposed fines have decreased from 196 million reais in 2016 to 95 million reais in 2017, while settlement sums agreed to be paid with CADE achieved a record 845 million reais in 2017, against 798 million reais in 2016. The increasing number of settlements and amounts collected may be explained by the fact that the authority has established a more predictable procedure for settling cases, and is devoting more resources to the prosecution of anticompetitive practices.

In 2017, cartels remained a priority for CADE, accounting for most of the investigations and infringements found. All cases in which CADE found an infringement referred to cartel investigations. There was only one investigation involving concerted practices in connection with the pricing of advertising agencies and marketing services, but CADE dismissed such case due to lack of evidence of harmful effects on competition. Other CADE decisions – whether to open, settle or dismiss a case, or recommend the conviction of defendants – included exclusionary practices, namely refusal to deal, price discrimination and the creation of difficulties for market players. Listed below is a comprehensive list of 2017's abuse of dominance cases.

i Regulated industries

In 2017, CADE continued to be active in the review of alleged abuse of dominance practices in regulated industries, with a special focus on financial services, port services and natural gas.

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* Ana Paula Martinez is a partner at Levy & Salomão Advogados. The author would like to thank Lucas Griebeler da Motta for conducting the research needed to update this chapter.

Footnotes

1 Brazil's antitrust system features both administrative and criminal enforcement. The administrative and criminal authorities have independent roles and powers, and may cooperate on a case-by-case basis. Private enforcement actions may also be initiated through the judicial courts by aggrieved competitors or damaged parties. At the criminal level, antitrust law and practice is governed mainly by Law No. 8,137/1990 (Economic Crimes Law), as amended by Law No. 12,529/11, and Law No. 8,666/1993 (Public Procurement Law).

2 On average, judicial courts confirm over 70 per cent of CADE's decisions.

Originally published in The Law Reviews

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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