Immunity or a 100 per cent reduction in sanctions
1. What benefits are available to the first applicant to qualify?
Brazil
The first applicant to qualify for the Brazilian competition authority’s (CADE) leniency programme is eligible to full immunity from sanctions, or to a reduction of up to 66 per cent in the applicable fines.
The sanctions provided for under Law No. 12,529/2011 include:
- for companies, fines of up to 20 per cent of the revenues (turnover), in the year before the investigation, in the sector of activity affected by the conduct, as well as fines for individuals and other types of legal entities (such as trade associations);
- “name and shame” publications and listings; and
- prohibition to contract with the government on federal, state and local levels (debarment).
Individuals can also be debarred from officer positions for up to five years, and CADE has powers to impose any additional obligations it believes are required to eliminate the anticompetitive effects of the infringement.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
2. Do the protections extend to current and former officers, directors and employees?
Brazil
Yes, as long as the individuals also cooperate with the investigation and sign the legally binding document (ie, the leniency agreement) that grants immunity to the company.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
3. Is immunity available after an investigation begins?
Brazil
Full immunity is only available if the authority does not have prior knowledge of the reported conduct. A fine reduction of up to 66 per cent may be available if the authority finds the collaboration to be valuable for an ongoing investigation.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
4. What are the eligibility requirements before an investigation begins?
Brazil
The list of requirements is relatively straightforward. An applicant must:
- be the first to report the alleged conduct;
- terminate its involvement in the conduct;
- confess its participation in the infringement; and
- cooperate fully with the investigation, through the identification of other participants involved in the alleged infringement, and the submission of information and documents that prove the alleged conduct.
The authority can only grant immunity or a fine reduction if it does not have, at the time of the application, sufficient evidence to secure a finding of liability against the applicant and other companies or individuals involved in the conduct.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
7. Is immunity available to an applicant that admits exchanging commercially sensitive information with a competitor but does not admit entering into an agreement to fix prices or allocate markets?
Brazil
Under Brazilian law, the authority can grant immunity to any type of competition infringement. As a matter of policy, however, CADE has historically awarded immunity only to “hardcore” cartels; only more recently CADE has granted immunity to applicants reporting alleged infringements involving only information exchange practices (see cases No. 08700.003451/2017-70 and No. 08700.000171/2019-71).
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
8. Is immunity available to an applicant that admits entering into a vertical price-fixing agreement if that agreement does not also include horizontal collusion?
Brazil
See response to question 7. In theory, immunity is available for those types of cases, but, so far, no publicly available investigation has started on the basis of immunity granted to an applicant reporting vertical conduct.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
9. Is immunity available to an applicant that admits entering into an agreement not to solicit or hire another company's employees ("no-poach" agreements)?
Brazil
See question 7. In theory, immunity is available for those types of cases. To date, however, CADE has never investigated cases relating to no-poach agreements.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
10. Are ringleaders or initiators of the conduct eligible?
Brazil
Yes, ringleaders or initiators are eligible for immunity; there are currently no restrictions whatsoever. Applicants must be aware, however, that the scrutiny over the contents of a full cooperation is likely to be increased in ringleaders’ applications.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
12. What constitutes termination of the conduct?
Brazil
There are no statutory provisions neither guidance from CADE about the meaning of terminating involvement in the conduct, but it should be interpreted broadly. As a result, applicant should adopt all means necessary to stop from participating in any act that would contribute to the planning or execution of the reported conduct.
In addition, immunity is conditioned upon the signing of a legally binding document between the applicant and CADE (the Leniency Agreement); this document necessarily contains a representation from the applicant assuring it terminated its involvement in the conduct.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
13. Will the applicant be required to make restitution to victims?
Brazil
Restitution to victims is not a requirement for immunity or reduction of fines in Brazil, but considering the applicant has to admit to a violation of law to be eligible for immunity, damage claims are likely a potential side effect of immunity application. There is currently a bill in the Brazilian Congress that seeks to mitigate the exposure of immunity applicants or beneficiaries from potential follow-on damage claims (see Bill no. 11,275/2018).
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
15. Can an applicant qualify if one of its employees reports the conduct to the authority first?
Brazil
No, a company cannot qualify for immunity if an employee, director or officer blows the whistle first (article 197, §3 of CADE’s Internal Regulations). Immunity is only available to first comers, regardless if individuals or legal entities.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
Immunity application and marker process
17. What confidentiality assurances are given to the first applicant to report?
Brazil
CADE’s internal regulations set forth strict rules regarding confidentiality of the proposal, including a firewall – both physical regarding documents and in terms of personnel function – within the authority (excluding the investigations personnel from accessing leniency or immunity applications).
In addition, the law provides that a rejected application cannot be used in any case or interpreted negatively against the applicant.
See question 31 for information about access to documents from third-parties (eg, damage plaintiffs).
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
18. Does the authority publish guidance regarding the application of the programme?
Brazil
Yes, CADE publishes and updates a very thorough and detailed document (available at www.cade.gov.br/acesso-a-informacao/publicacoes-institucionais/guias_do_Cade/GuidelinesCADEsAntitrustLeniencyProgram.pdf).
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
20. What is the initial process for making an application?
Brazil
The applicant must contact CADE’s General Superintendency Chief of Staff to obtain a marker. The marker assures the applicant is the first in and is a candidate for immunity. If the marker is available, the Chief of Staff will issue a confirmation letter, and the applicant will be able to start the “proffer” phase of the application.
Once a marker is granted, the authority will set a deadline for the “proffer” phase and the leniency agreement proposal (generally 30 to 45 days), which can be extended on a case-by-case basis.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
21. What information is required to secure a marker?
Brazil
The contents may vary on a case by case basis, but the minimum requirements for a marker involve:
- identification of the applicant, and a minimum identification of other infringers known at time of the proposal;
- the products and geographic areas involved in the alleged conduct; and
- a brief description of the alleged conduct.
Anonymous markers (ie, without the identification of the applicant) are usually not accepted.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
25. Can the scope of the marker be expanded if additional information is discovered by the applicant?
Brazil
Yes, the scope of the marker can be expanded as long as the eligibility requirements for immunity are met, and the applicant is acting in good-faith. If the new/additional information provided by the applicant indicates a different conduct, discussions on the availability of a new marker should start.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
Immunity cooperation obligations
26. Can an applicant lose its marker if a second applicant comes forward with better information?
Brazil
No. The authority will only start discussions (the "proffer” phase) with the second comer in case the applicant loses the marker, either by withdrawing or by not being able to meet the cooperation requirements (the identification of other participants, and the offer of information and documents that prove the alleged conduct).
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
27. What if the applicant’s investigation reveals that no violation exists?
Brazil
The applicant can withdraw the marker and any documents submitted to the authority. The law provides that a rejected application cannot be used in any case nor interpreted negatively against the applicant.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
28. What if the authority decides not to investigate?
Brazil
There is debate as to the extension of prosecutorial discretion and enforcement priorities under Brazilian law, so it is extremely rare for the authority to simply decline to investigate a conduct once the evidence is properly presented by the applicant. If, however, the authority is not convinced about the quality of the evidence produced by the applicant, it should reject the application, on the grounds that the applicant failed to meet the cooperation requirement (the identification of other participants, and the offer of information and documents that prove the alleged conduct).
The law provides that a rejected application cannot be used in any case nor interpreted negatively against the applicant.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
29. What is the applicant required to produce?
Brazil
The applicant should provide the identification of other participants, details on the reported violation (purpose, duration, products or services involved, etc) and the offer of information and documents that prove the alleged conduct.
The documents usually accepted by the General Superintendency are:
- emails or other written communications (for instance, in a cartel infringement, CADE accepts either emails exchanged between competitors or between individuals of the same company, describing the illegal arrangements);
- exchange of electronic messages by text and/or voice (SMS, WhatsApp, Skype, etc);
- handwritten notes;
- recordings;
- spreadsheets;
- proof of meetings (minutes, Outlook appointments, reservation of meeting rooms, hotel reservations, credit card bills, travel expenses statements, itinerary electronic record, etc); and
- telephone bills, among others.
The authority may also request interviews with officers and employees of the applicant to obtain additional information and details concerning the reported infringement and documents submitted to CADE.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
31. Can third parties obtain access to the materials provided by the applicant?
Brazil
Yes, but under very limited circumstances. These include: (i) a judicial decision; (ii) an authorisation granted by the applicant and by CADE, if access is proven not to jeopardise the investigation; and (iii) a statutory requirement. As a rule, a complete version of the applicant’s report on the anticompetitive conduct and most evidence will be kept confidential to preserve and encourage future whistle-blowers.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
Granting immunity
32. Will the applicant lose its protection if one or more of its employees refuses to cooperate?
Brazil
No. As long as the applicant is acting in good faith and it is able to provide cooperation that allows for the identification of other infringers and the submission of documents and information capable of proving the alleged conduct took place, collaboration – or refusal to collaborate – from one or more of its employees is not relevant for protection.
The individuals, however, might lose the protection offered against fines and criminal sanctions.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
33. Will the applicant lose its protection if one of its employees engages in obstructive conduct before or after the application?
Brazil
Not necessarily, but this is a very likely scenario in case the employee engages in obstructive conduct after the application is made and without a timely response by the applicant. If the employee acts obstructively before the application, the applicant could dismiss this employee and apply for the leniency agreement as long as it still meets the requirements provided in question 4.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
34. Will the applicant be required to provide materials protected by attorney-client privilege or work-product doctrine?
Brazil
The applicant is required to offer any documents and information that may be used to prove the reported conduct. If the applicant has only classified documents, it may waive the privilege and submit them to CADE.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
Individual immunity or leniency
35. Does the existence of an effective compliance programme affect whether an applicant meets the eligibility requirements?
Brazil
No. However, the existence of an effective compliance programme increases the chances of a timely identification and remediation of infringements (including the application for immunity).
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
36. Does the authority consider the existence of an effective compliance programme at the time it becomes aware of an infringement when determining the leniency benefits granted?
Brazil
No, there is no such provision on the law or CADE’s regulations. See question 52.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
37. Will the applicant be required to implement or enhance a compliance programme to obtain leniency benefits?
Brazil
This is not a statutory requirement nor a practice from CADE. However, considering that the applicant must cease the infringement to apply for the leniency agreement (and it may lose its benefits if the infringement continues), the implementation or enhancement of the compliance programme is a common outcome of an immunity application.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
40. Who is given access to the document?
Brazil
The applicant and the authority, initially. If formal charges are brought against third parties on the basis of the collaboration obtained through the leniency programme, then the defendants have access to that document.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
Revocation of immunity
46. When can it be revoked?
Brazil
CADE can revoke the immunity benefits at any time prior to the end of the investigation (see question 38), if the Board (Tribunal) of CADE confirms failure of the applicant or beneficiary to cooperate with the investigation. So far, however, there have been no known cases of revoked immunity benefits.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
47. What notice is required to revoke?
Brazil
During the investigation, the authority must inform the applicant or beneficiary of the potential default and require specific performance; if the applicant fails to perform or to justify its position, then the authority is able to revoke the benefits. After the conclusion of the investigation, the authority could revoke the benefits by challenging the applicant in a Federal Court in case it identifies fraud or bad-faith behaviour.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
48. Can the applicant file a judicial challenge to a decision to revoke?
Brazil
Any decision issued by CADE can be challenged before the Federal Courts. In this case, the Federal Courts should review if the applicant complied with its obligations to cooperate with the investigation and to provide necessary information and evidence. However, there is debate as to the limits of the legal intervention by the courts on administrative decisions. In theory, the courts should intervene only in cases where the authority exceeds the limits of its discretion.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
Reduction in sanctions
49. Does the leniency programme allow for reductions in sanctions?
Brazil
Yes, see questions 1 and 3. The antitrust leniency program sets forth full immunity for the applicant for cases where the authority had no knowledge of the anticompetitive practice. For those where the authority had previous knowledge, but not detailed information or evidence, the applicant can be granted a reduction of one to two thirds in applicable sanctions.
CADE’s regulations provide also for direct settlement (named as Cease and Desist Agreements, or TCC in its Portuguese acronym) if the applicant is not the first to report the alleged conduct, but meets the other eligibility requirements, which are:
- to terminate its involvement in the conduct;
- to confess its participation in the infringement;
- to cooperate fully with the investigation, through (i) the identification of other participants involved in the alleged infringement, and (ii) the submission of information and documents that prove the alleged conduct; and
- to pay a pecuniary contribution that cannot be lower than the minimum applicable fine.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
51. Is there a marker process similar to immunity applications?
Brazil
The process for obtaining a marker either for a reduction in sanctions is largely the same (see questions 20 and 21); in cases of direct settlements (TCC), however, contact is usually made with the officials leading the investigation directly.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
52. Are the reductions in sanctions fixed or discretionary?
Brazil
Reductions in sanctions are calculated based on a two-step approach, the first being the calculation of the expected fine (in the absence of a negotiated settlement); and the second being the application of fixed standards provided by CADE’s regulations and guidelines as to potential reductions.
First, the criteria for calculating the fine are provided by Law and consider (i) the seriousness of the infringement; (ii) the good faith of the offender; (iii) the advantage intended or obtained by the offender; (iv) the consummation of the infringement; (v) the degree of injury to free competition, the national economy, consumers or third parties; (vi) the effects to the market; (vii) the economic situation of the offender; and (viii) recidivism.
Based on these criteria, CADE may discretionarily increase or reduce the amount of the fine within the minimum and maximum limits 0.1 and 20 per cent, respectively, of the revenue (turnover) in the year before the investigation, in the sector of activity affected by the conduct. There is debate as to the possibility of fines exceeding the 20 per cent limit if the benefit arising out of the infringement surpasses this amount; hardcore cartel cases have been historically fined at the top end of this range (1–20 per cent).
Once the amount of the expected fine is established, CADE applies the standards provided in its regulations and leniency guidelines. The reduction of fine will depend on the scope and level of cooperation of the applicant (considering a very strict level of discounts and considering how valuable is the information provided as collaboration), but most importantly at the timing of the settlement application.
If the settlement (TCC) application is filed after the start of the administrative proceeding, but before the case records are forwarded to CADE’s Board (Tribunal), the reduction of sanctions will be calculated based on the following criteria:
- a reduction of 30 to 50 per cent for the first in;
- a reduction of 25 to 40 per cent for the second in; and
- a reduction of up to 25 per cent for the remaining proponents of a TCC.
After the case is sent to Cade’s Tribunal, the applicant may be subject to a reduction of up to 15 per cent (these parameters may be changed if Leniency Plus has also been granted; see question 57).
The authority has the discretion to consider an effective compliance programme as an additional reduction factor in certain cases, but so far no proper guidance or regulations have been issued in connection to this point.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
Cooperation obligations for sentencing reductions
55. If an applicant's cooperation reveals self-incriminating information that expands the scope of the conduct known to the authority, will that conduct be factored into the fine calculation?
Brazil
If the scope of the violation is expanded in a manner that discloses a completely new violation previously unknown to the authority, the applicant may file for leniency plus (please refer to question 57. However, in case the new self-incriminating information relates somehow to the ongoing negotiation, it will be factored into the applicable fine calculation.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
57. Other than fine reductions, are there additional incentives offered to an applicant that is the first non-immunity applicant?
Brazil
Yes, the settlement (TCC) applicants are exempted from the application of other sanctions provided by the law, such as “name and shame” publications and listings, debarment etc.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
59. Does the authority provide for "Leniency Plus" benefits?
Brazil
Yes, it does: reduction of one to two-thirds of the applicable fines for a company and/or individual that does not qualify for a leniency agreement in connection with an infringement in which it has participated but provides information on a second violation of which the authority had no prior knowledge.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
61. Are the cooperation obligations similar to those for immunity applicants?
Brazil
Yes, the company and/or individual must fully and permanently cooperate with the investigation and the administrative proceeding, and attend, at their own expenses, whenever requested, at all investigation acts, until a final decision is rendered by the authority on the reported violation. Furthermore, the cooperation must result in the identification of the others involved in the violation and the collection of evidence of the offense reported or under investigation.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
62. Will the applicant be required to make a written confession?
Brazil
Yes, it is a statutory requirement that the applicant “confesses its participation in the reported unlawful conduct”. CADE will never offer the second comer a better deal than the immunity applicant (first comers will always have the better “deals”).
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
63. Can third parties obtain access to the materials provided by the applicant?
Brazil
As a rule, a complete version of the applicant’s report on the anticompetitive conduct and evidence will be kept confidential to the authority, the applicant and others involved in the violation. However, a redacted version of the applicant’s report (ie, without sensitive information) must be made available to the general public.
Third parties could have access to the confidential version of the materials only in the case of: (i) a judicial decision; (ii) an authorisation granted by the applicant and by CADE, if it does not jeopardise the investigation; and (iii) a legal ordinance.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
65. Will the applicant lose its protections if one of its employees engages in obstructive conduct before or after the application?
Brazil
Not necessarily, but this is a very likely scenario in case the employee engages in obstructive conduct after the application. If the employee acts obstructively before the application, the applicant could dismiss this employee and apply for the leniency agreement as long as it still meets the eligibility requirements.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
66. Will the applicant be required to provide materials protected by attorney-client privilege or work-product doctrine?
Brazil
The applicant is required to share any documents and information that demonstrate the reported violation. If the applicant has only classified documents as evidence, it may waive the privilege and submit them to CADE.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
67. Can an applicant challenge the amount of the reduction of sanctions?
Brazil
The applicable fines are set out at the authority’s discretion pursuant to the criteria foreseen in the Brazilian law and guidelines. However, all decisions issued by the authority may be challenged before the Brazilian courts, which may interfere if the authority exceeds the limits of its discretion.
Answer contributed by
José Carlos da Matta Berardo,
Juliana Maia Daniel Pinheiro and
Marcela Pirola
