Desarrollos recientes de la Prática de Competência en Brasil · Brazilian Competition Law...

Segundo Congreso sobre Derecho de la

Competencia en Colombia

Desarrollos recientes de la

prática de competência en

Brasil

José Carlos da Matta Berardo

21.11.2014

Competition Law in Brazil: Recent DevelopmentsAgenda

1. Brazilian Competition Law: background

2. Cartel enforcement

a. Recent decisions: cement; medical associations

b. Recent enforcement actions: the subway investigation

c. Leniency program and developments

d. The 2013 revision of settlement rules and effects

e. The “Clean Companies” Law and impacts on cartel prosecution

3. Merger Control

a. The Brazilian experience in the “suspensive regime”: issues and

developments

b. Recent developments:

a. “Associative Agreements” (Bayer/Monsanto)

b. Merger remedies: American Chemicals/Oxiteno; Innova/Videolar;

Kroton/Anhanguera; Braskem/Solvay; Holcim/Lafarge.

4. Looking into 2015: what to expect?

a. Nominations of new commissioners

b. Increase in cartel enforcement?2









3. Merger Control


developments








Brazilian Competition LawBackground (1)

• Relatively recent in its modern form (1994). Law 12,529 entered into force in

May, 2012: (1) Major overhaul of the institutional structure of the competition

authorities; (2) Adoption of a pre-merger system (suspensive regime).

• Enforcement is generally public through a single centralized federal government authority (the “CADE”); private enforcement cases are trending,

but still incipient.

• The CADE is well-regarded nationally and internationally; it has a reputation

for transparency, independence from the Government, and (generally) technically sound decisions.

• There is no industry or sector exempted from competition rules, which are

also applicable to industry-specific regulations. Banking and financial

services are a separate discussion.

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• On the merits, decisions generally follow the approach adopted by more

experienced jurisdictions:

• Conduct among competitors is assessed either on the basis of its anticompetitive

object (e.g., hard core cartels) or its potential competitive effects/efficiencies

(e.g., cooperation agreements, information exchange process etc.);

• Unilateral conduct (“abuse of dominance”) is generally assessed on the basis its

potential competitive effects/efficiencies, and there is a rebuttable presumption of

a “dominant position” when a party’s market share is higher than 20%.

• Sanctions apply to both companies and individuals, including directors,

officers and employees.

• Fines are based on infringer’s revenues, other penalties might be applied as

well; compliance programs are well regarded by the authority, but do not

mitigate sanctions.

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• The CADE may adopt police-like enforcement: searches, wiretapping,

inspections, “depositions” etc.

• Courts may review the CADE’s decisions; Court review, however, is a very

lengthy process lack of precedents regarding important points of law.

• Criminal enforcement limited to cartel and bid-rigging practices, but still

incipient. Huge recent cases and the “clean companies law” have brought

CADE to the spotlight.

• Increasingly common to see cooperation between CADE and its foreign

counterparts.

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The Brazilian competition authority

Structure of the Conselho Administrativo de

Defesa Econômica (CADE)

Board (Tribunal)

7 Commissioners

(currently 3 vacant seats)

Legal Services

Division

Economic Studies

Division

General Superintendence

Superintendent General

Investigations

Leniency & Settlements

Merger reviews

(clearance or objection)

Penalties & Settlements

Decision on complex

merger cases (remedies,

prohibitions)

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3. Merger Control


developments








Cartel EnforcementRecent Decisions & Enforcement Actions

• The cement case (08012.011142/2006-79)– Complaint from a sales representative started the investigation;

searches revealed lots of apparently “hot documents”

– Infringement was found on the basis of price fixing, market and

client allocation, exclusion of new competitors

– Very high fines (BRL3.1 billion total – almost always on the top

range of the agency’s fining powers); Lafarge had settled back in

2007 and paid BRL40 million without confession

– The CADE ordered the divestiture of certain concrete and

cement business; divestiture of cross shareholdings in cement

and concrete companies

– Final unappealable decision still pending

9

Cartel EnforcementRecent Decisions & Enforcement Actions

• Medical Associations (08012.005374/2002-64, among several

others)– Collective negotiation by doctors and professional associations with health providers was

found an infringement

– Need for “countervailing bargaining power” was again found an insufficient argument in “object” infringements

– Courts will review the matter

• The São Paulo subway bid-rigging (BRL9 billion in contracts)

investigation (08700.004617/2013-41): leniency application,

searches, liaison with criminal authorities and the spill-over effects

• 11 different searches conducted by the CADE in the past 2 years

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• “First in” only

• Full immunity from penalties and criminal prosecution

(for individuals)

• Confession is a legal requirement

• Cooperation must be effective: CADE has increased the

bar for accepting leniency applications over time

• Prosecutors have been more open towards participating

in the leniency negotiation

• CADE has been very committed towards the secrecy of

leniency documents – impacts for civil claims is

controversial

Cartel EnforcementLeniency Program

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Cartel EnforcementLeniency Program

http://www.ibrac.org.br/Uploads/Eventos/20SeminarioConcorrencia/PALESTRAS/%C3%9Altimo%20Pa

inel.pdf

SOURCE: CADE

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Cartel EnforcementRevision of Settlement Rules

• Effective as of March 2013

– Confession is a requirement for cartel cases

– Decreasing benefits (discounts in the fines) for late comers

– Emphasis on obtaining effective cooperation for the investigation: the more a party cooperates, the higher the discounts it will be

– Supplements the leniency program, not just an option for defendants

– Impacts for individuals (settlement does not protect from criminal prosecution)

13

Cartel Enforcement

“Clean Companies” Law and Cartel Prosecution

• “Clean companies” Law (Law 12,846, adopted in Aug, 2013) sets

forth penalties (fines and similar sanctions) for companies involved

in bribery to government officials in Brazil or abroad

– Very broad liability regime: joint and several liability

– Fines to companies and individuals

– Compensation of public coffers

– Prohibition of participating in public bids

– Rewards effective compliance program (regulations about this are to be

issued)

– Leniency (and self-reporting) program may lessen fines

• Yet another law (the third) which overlaps with CADE’s jurisdiction

over bid-rigging schemes

– Need to coordinate leniency applications within the Federal Government

– Cooperation among agencies, criminal authorities and the governmental

body involved becomes even more essential

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3. Merger Control


developments








Merger Control“Suspensive Regime”

• Big change for M&As: depending on the transaction, competition is the most

relevant issue

• New issue: “gun jumping”; everyone still learning where to draw the line

• Very good results in the first two years: decisions have been timely

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SOURCE: CADE

Merger ControlMerger Remedies

• Pre-merger system empowers the authority: chances are

hard cases will be blocked or substantially modified, in

comparison to the “old” regime

• Recent decisions show CADE is very concerned about

market concentration:

– American Chemicals/Oxiteno*: vertical integration case,

behavioral commitments (non-discrimination, increased

transparency in pricing of the upstream input)

– Innova/Videolar: concentration case, behavioral commitments

accepted because of particular market conditions

– Kroton/Anhanguera: concentration case, both behavioral and

structural commitments required

– Braskem/Solvay: practically a merger to monopoly in Latin

America, case was blocked

– Holcim/Lafarge: behavioral commitments to be discussed in the

near future 17

Merger Control“Associative Agreements” new regulation

• Regulation no. 10/2014 sets out the following types of

transaction must be submitted as “concentrations” under

merger control rules, if other thresholds are met:

– Any horizontal “agreements”, with a 2+ years duration, in which

the resulting market share is higher than 20%

– Any vertical “agreements” with exclusivity or risk-sharing

provision, with a 2+ years duration, in which up or downstream

market share is higher than 30%.

• Blurs the line among merger control and conduct cases:

lots of uncertainty about what has to go in

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c. The 2013 revision of settlement rules and effects

d. Leniency program and developments


3. Merger Control


developments








Muchas gracias!

BM&A Advogados

José C. M. Berardo | [email protected]

T 55 11 2179-4559 | F 55 11 2179-5322

Brasília | Rio de Janeiro | São Paulo

Desarrollos recientes de la Prática de Competência en Brasil · Brazilian Competition Law...

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