Brazil: Administrative Council for Economic Defence
Since the legal and institutional reform of 2012, the new CADE has matured into a robust competition enforcement institution working towards the consolidation of a more efficient competition defence policy. The developments and achievements of the past three years have not only brought added efficiency and effectiveness to CADE’s competition enforcement, but have allowed both the General Superintendency and Tribunal to explore other areas of competition policy and enforcement.
The year 2014 was important for CADE in the consolidation of its competition policy and enforcement, with landmark competition decisions, reinforced organisational efficiency, and a strengthening of legal certainty, transparency and dialogue with stakeholders.
Firstly, 2014 saw the consolidation of achievements in implementing an efficient and robust pre-merger review system. Since its implementation, fast-track cases, which account for 80 per cent–90 per cent of all merger cases reviewed by CADE, are decided in up to 30 days, whereas ordinary cases are reviewed in an average of 65 days, and challenged and complex mergers are analysed in just over 200 days, on average.
This achievement led, in 2014, to renewed efforts in the field of anti-competitive practices, namely cartels. In May, CADE applied, for the first time, structural remedies in a cartel case, along with historic fines, in the cement cartel case. The final decision of this case is pending following a motion for clarification. CADE also decided various high-profile, complex cartel cases in bid rigging, opening an administrative proceeding against several multinational companies in alleged cartel behaviour in train and subway procurements.
The 2013 Settlements Programme proved its success in 2014, with a total of 38 signed settlement agreements, 22 of which were in cartel cases, demonstrating the importance of this case resolution mechanism for both CADE and companies. These results also reflect mutual openness to dialogue and negotiation, particularly with the provision allowing negotiations to occur with the Superintendency as well as the Tribunal. The Settlements Programme contributes to more efficient and quicker enforcement of anti-competitive practices.
The success of the Settlements Programme is also due to its complementarily with CADE’s Leniency Programme, which provides immunity only for first-in applicants. In this sphere, CADE continued to collaborate closely with the Federal Public Prosecutor’s Office, which handles criminal cartel enforcement in Brazil, to simultaneously negotiate leniency agreements with parties, so as to ensure that applying for leniency in the administrative sphere would not lead to exposure in the criminal sphere. The Leniency Programme has greatly contributed to CADE’s efforts in detecting cartels, which also continue to focus on ex officio cartel detection in public procurement with the use of screens.
In addition to this consolidation of competition enforcement, CADE made important strides in reinforcing dialogue with its stakeholders, through public consultations of resolutions, promoting legal certainty and transparency in CADE’s procedures, as well as through a dialogue launched on competition compliance in Brazil.
CADE launched its first ever initiative to actively promote compliance in the business community in 2014. The Competition and Compliance seminar organised in August of 2014 in cooperation with CEDES, a Brazilian economic law think-tank, sought to stimulate a dialogue regarding what constitutes a competition compliance programme and what CADE’s role should be in promoting its adoption by businesses. Speakers at the seminar included Brazilian and international competition lawyers, competition academics and representatives of international competition authorities and international organisations.
The efficiencies gained within CADE in its international procedures have allowed the agency to focus more on relevant precedent, predictability and legal certainty in its competition policy and enforcement. This is a particularly relevant development as in the past, three different bodies were responsible for competition policy and enforcement in Brazil, sometimes leaving room for grey areas and contradicting interpretations. CADE now has the tools and framework to reflect carefully on competition cases to provide coherent, consistent and robust legal precedent in Brazil – a unified approach to competition policy.
Looking beyond competition enforcement, and taking advantage of the resources gained from the reallocation of resources with the agency, CADE has also sought to strengthen the robustness of Brazilian competition policy by way of a normative agenda, through publishing Resolutions and guidance for stakeholders.
In 2014, CADE published Resolution No. 10/2014, regarding the notification of associative contracts clarifying the criteria that must be fulfilled in order for a contract of this kind to be notifiable to CADE. Furthermore, Resolution No. 12/2015, published in March 2015, regulated CADE’s consultation procedure, a procedure instituted by Law 12.529/2011 whereby parties can consult CADE’s Tribunal on particular interpretation of points of law, but that has yet to be clarified.
In addition to these Resolutions, CADE has been able to allocate greater resources to providing guidance to the business community, with a view to reinforcing transparency and legal certainty regarding CADE’s interpretation and understanding in competition enforcement, to engaging the business and legal communities in the development of competition policy in Brazil, and to further stimulate a culture of competition in Brazil.
In May 2015 CADE published a guide on gun jumping. It seeks to guide private agents, to promote legal certainty, to reduce merger transaction costs and to facilitate the legal integration of activities of economic agents. The guide aims to establish parameters in which merging parties can base themselves when designing a merger transaction and it was developed based on CADE’s experience since the enactment of the new Competition Law and on international benchmarking.
There are currently two other guides under development. The first builds an integral part of CADE’s agenda on competition compliance, launched in August of 2014 – a guide on competition compliance. It aims to provide a framework whereby companies can regulate themselves, internally implementing competition compliance programmes and incorporating compliance with competition law into the corporate identity of the company. As a consequence, companies would be able to assess their own actions and monitor their behaviour to prevent potentially infringing competition rules and being investigated for an anti-competitive conduct. It is also a way to promote the importance of compliance with competition law as a key factor in the maintenance of a healthy competitive environment in Brazil.
The second guide, to be published in 2016, is on the implementation of antitrust remedies. The project to develop the guide is being carried out with the support of the United Nations Development Program, which finances specialised consulting.
In terms of agency effectiveness, CADE implemented a widespread organisational shift to paperless internal procedures across CADE with the Electronic Information System (SEI). This system aims to significantly reduce the duration of competition cases. SEI also allows for statistics and data regarding institutional activity and performance, promoting better, more informed management and more information on CADE’s competition enforcement activities. Finally, this interactive SEI platform allows companies involved in CADE investigations online access to file – a reflection of CADE’s commitment to transparency and due process.
CADE has also seen a great deal of activity in terms of the interaction of competition with other areas of law enforcement. Since Law 12846/2013, also known as the Brazilian Clean Companies Act, came into force and the investigations under way by the Brazilian Federal Police disclosed several corruption schemes, anti-corruption has been very much in the public eye. The Law includes provisions on bid rigging, leniency and compliance programmes, and CADE has been called on to provide its view on the new legislation and on how it will affect antitrust enforcement.
CADE’s experience in working together with other agencies and institutions, namely with the State Public Prosecutor, has been very successful. The efforts are reflected in the increased number of leniency agreements and consent settlements signed over the past years. The same path has been followed regarding cooperation with the Office of the Comptroller General (CGU), which signed a Cooperation Agreement with CADE in late 2014, whereby a framework for information exchange in connected investigations is set out. That is, the need for integration between anti-corruption and antitrust on many aspects does exist, although the areas are distinct, and the authorities are very much invested in establishing mechanisms to ensure effectiveness in investigations.
The challenges CADE faces today are those of a newly mature authority, which is striving to maintain the level of its achievements, while aiming to constantly improve in all areas of its activities, and relationship with its stakeholders, with a view to promoting a strong, consolidated, competition culture in Brazil through transparency, dialogue, efficiency and effective enforcement.