Brazil: What Rights Do Defendants Have In Antitrust Investigations In Brazil?

1. Introduction

The Administrative Council for Economic Defense (CADE) is an adjudicatory administrative entity with jurisdiction to investigate, prosecute and judge anticompetitive conducts. While CADE's Tribunal is responsible for deciding the cases, CADE's General-Superintendence (GS) concentrates all tasks related to investigation and prosecution of anticompetitive conduct.

As these two tasks are carried out by two bodies within the same agency and as the line between them may sometimes be blurred, the Brazilian Antitrust Law provides for three types of administrative procedures that the GS may use to investigate possible anticompetitive conduct, with different levels of investigative and prosecution powers and different levels of rights granted to the investigated parties

Considering this peculiarity of the Brazilian Antitrust System, the following section provides an overview of the rights of defendants in each of the three types of administrative procedures provided by the Brazilian Antitrust Law: (i) the preparatory proceeding; (ii) the administrative inquiry; and (iii) administrative proceeding.

2. Types of administrative procedures and rights of defendants1

2.1 Preparatory proceeding

The GS may initiate a preparatory proceeding (procedimento preparatório) to verify if a certain conduct falls under the jurisdiction of the Brazilian Antitrust authorities and if it may qualify as a violation to the economic order (i.e., a violation to the Brazilian Antitrust Law). The GS must conclude this phase of the investigation in up to 30 days2.

Preparatory proceedings are confidential, unless the GS orders otherwise3; therefore, during this phase, defendants do not have the right to know that they are being investigated. However, if a defendant finds out about the proceeding, it will have the right to request access to the records to the GS4, even though the defendant may not necessarily have access to the case files.

Depending on its conclusions at the end of the preliminary proceeding, the GS may decide to close the investigation – if it finds that the conduct is not subject to the jurisdiction of the Brazilian Antitrust authorities-, may initiate an administrative inquiry or, if it has sufficient evidence that an antitrust violation took place, may initiate an administrative proceeding.

2.2 Administrative inquiry

The administrative inquiry (inquérito administrativo) is a preliminary investigatory procedure of inquisitorial nature initiated by the GS to investigate possible violations of the economic order when the evidence already gathered by the GS is not enough to initiate an in-depth investigation (which would take place in an administrative proceeding).

According to Article 66, Paragraph 9, of the Brazilian Antitrust Law, the administrative inquiry must be concluded within 180 days, but may be extended for 60 more days when the analyzed conducts are complex or when justified by the circumstances of the case. Although the Law provides for a total duration of 240 days for the administrative inquiry, the GS usually extends the investigation for several 60-day periods, at times making the administrative inquiry last several years, which may be legally questioned.

As a rule, administrative inquiries are non-confidential, but the GS may order otherwise5; for this reason, defendants do not have the right to know that they are being investigated. It is usual, during the administrative inquiry, for the GS to request information to the parties under investigation; in these cases, defendants will be able to submit written statements to the GS, and even request meetings with case handlers. Defendants may also request access to the case files when the investigation is confidential, in which case the GS may decide whether or not to grant access. Should the GS reject the access of defendants to the case files, they may resort to lawsuits before Courts of Law.

The dawn raids carried out by the GS (with the assistance of the Federal Police and the Federal Prosecution Office) to gather evidence usually take place during the administrative inquiry proceedings. Since dawn raids need to be authorized by the courts, CADE will assume that they are legitimate and legal and, thus, a defendant will not be able to challenge the raid directly at CADE; however, defendants may challenge the raids at Courts of Law.

2.3 Administrative proceeding

The administrative proceeding is an in-depth investigation that may be initiated by the GS from the outset, if it concludes that there is sufficient evidence of an antitrust violation, or after the conclusion of an administrative inquiry which indicates sufficient indication of the existence of a violation.

The Brazilian Antitrust Law provides that the administrative proceeding is an adversary proceeding, which aims to guarantee full rights of defense to the defendants6. This is the phase of antitrust investigations where defendants have the opportunity of exercising a broader range of their procedural and substantive defense rights.

To advance with an administrative proceeding, the GS must formally notify all defendants regarding the initiation of the proceeding7. The deadline to submit defenses usually starts when all defendants are properly served of process. Defendants who have been served of process may access the case files, review documents, and make submissions and/or meet with CADE officials to discuss the case.

The notice sent by the GS to serve the defendants of process must contain the entire contents of the decision that determined the initiation of the administrative proceeding8, if it does not, it may be declared null and void9, demanding that the GS issue a new notification to properly serve the defendants of process.

Defendants have the right to submit a written defense to CADE within thirty days after CADE concludes notifying all defendants10. In investigations involving more than one defendant and in which the defendants have different attorneys, this deadline is counted in double11. Additionally, all defendants may request an extension of ten days to the deadline12, which the GS must grant, allowing up to forty days (or seventy days, in case of multiple defendants with different attorneys) to submit their defenses to CADE, counted from the date in which the GS confirms that the last defendant has been served of process.

In the written defense, defendants may raise all legal (procedural and substantive), factual and economic arguments they see fit. They may also submit legal or economic opinions, documents that help clarify the facts and appoint up to three witnesses. If the GS accepts the request for the hearing of witnesses, the GS must previously designate a date and time for the hearings, and all defendants will have the right to attend them and address questions to the witnesses.

If a defendant fails to submit its defense within the deadline, the defendant will be considered at default13. If the defendant remains at default throughout the investigation and does not submit any defense to CADE, all facts imputed against the defendant will be considered true. However, the defendant may submit written motions to CADE at any point during the investigation14, which CADE will take into consideration in respect to the principle of the real truth (princípio da verdade real) and to the principle of full right of defense (princípio da ampla defesa).

Once the SG concludes its analysis in the administrative proceeding, it will issue its opinion on the merits and on the procedural matters of the case, and send its recommendation to CADE's Tribunal, where the investigation will be randomly distributed to a reporting Commissioner. At the Tribunal phase of the investigation, defendants will have the right to submit written statements at any time and will be granted a specific moment – before the judgement of the case – to submit their closing arguments. Defendants also have the right to meet with all Commissioners to discuss the case, and defendants may request to present oral closing arguments to the Tribunal during the judgement session, before the judgement of the case.

Defendants may not appeal against the Tribunal's decision at the Federal Administration level15; but they may submit motions for clarification related to any obscurity, omissions or contradictions in the decision16. In these situations, defendants will have five days to submit their motions after the decision is published, and the deadline will be counted in double if they have different attorneys in the case.

Although the Brazilian Antitrust Law does not provide for any appeals, CADE's Internal Regulation states that defendants may request the reappreciation of the case in up to fifteen days following the publication of the decision if there are new facts or documents that are capable of altering the decision.17 These requests, however, are rarely granted.

As set out by the Brazilian Constitution, defendants in antitrust investigations – and in investigations of any nature – may always resort to lawsuits in Courts of Law if they believe any of their rights have been violated and may also challenge CADE's decisions before Courts of Law.18 This possibility is available to defendants during all phases of antitrust investigations.

3. Conclusion

The Brazilian legal system generally awards defendants wide defense rights related to administrative or criminal investigations, and this is also the case in antitrust investigations. In fact, the Brazilian Constitution states that defendants are entitled to wide defense, due process and adversary rights and must have access to all means necessary to exercise them.19

Based on this provision, the Brazilian Antitrust Law and CADE's Internal Regulation provide for wide access to case files, accusation documents, case handlers, and CADE's practice has established the formidable tradition of accepting all written statements from defendants before a final decision is rendered, regardless of the phase of the investigation in which they are presented.

In any case, if defendants understand that their rights have been violated during an antitrust investigation, they have the right to challenge the harmful act in a Court of Law, whose decision will prevail over any act issued by CADE.

Footnotes

 1 As discussed in several articles in this book, defendants have the right to submit settlement agreement proposals to CADE even at late stages of the investigations. Given that this topic is the object of other chapters in the book, we will not describe these procedures in this chapter.

2 Article 66, paragraph 3, of the Brazilian Antitrust Law.   3 Article 179, Paragraph 1 of CADE's Internal Regulation.

4 Article 5, XXXIV (b) and LV of the Brazilian Federal Constitution.

5 Article 181, Paragraph 1 of CADE's Internal Regulation.

6 Idem.

7 Article 70 of the Brazilian Antitrust Law.

8 Article 70, paragraph 1, of the Brazilian Antitrust Law.

9 Article 26, paragraph 5, of Law N. 9,784/1999.

10 Article 70 of the Brazilian Antitrust Law.

11 Article 102, item IV, of CADE's Internal Regulation.

12 Article 70, paragraph 5, of the Brazilian Antitrust Law.

13 Article 71 of the Brazilian Antitrust Law.

14 Article 71, sole paragraph, of the Brazilian Antitrust Law.

15 Article 9, paragraph 2, of the Brazilian Antitrust Law.

16 Article 259 of CADE's Internal Regulation.

17 Article 263 of CADE's Internal Regulation.

18 Article 5, item XXXV, of the Brazilian Constitution.

19 See, in this regard, article 5, item LV, of the Brazilian Constitution, and article 115 of the Brazilian Antitrust Law.

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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