CORRUPTION: LENIENCY AGREEMENT NO LONGER EXECUTED BY THE PUBLIC PROSECUTOR’S OFFICE?

The Third Panel of the Federal Regional Court of the Fourth Region (“TRF4”), based in Porto Alegre, decided on August 22, 2017 that the Public Prosecutor’s Office does not have the proper authority to execute leniency agreements that involve acts of administrative improbity without the participation of other bodies.

The Court understood that, if the leniency agreements lead to some kind of availability of public assets, the Office of the Comptroller General (CGU, in Portuguese) is the only one with power to execute such agreements. Obviously, it does not exclude the participation of the Public Prosecutor’s Office, which is able to execute the leniency agreements, provided that they are submitted, as a necessary condition, to the CGU.

It is obvious that the decision may, in principle, be modified by the Court itself or by the Superior Court of Justice, but it indicates that caution is needed in case someone aims at executing a leniency agreement involving an act of administrative improbity.

2017/08/29 by GCA Conteúdo

New Cade’s Attorney General has just been appointed

 

The President of the Republic has just appointed the lawyer Walter Agra Júnior, from Paraíba, to act as Attorney General of the Administrative Council for Economic Defense (CADE). This is an external choice of a professional who holds in his resumé a Master Degree in Procedural Law by the prestigious Federal University of Pernambuco, which indicates it could give a great contribution to the autarchy in procedural matters.

His duties include not only the legal guidance to Cade, in cases to be judged by the Court (and in which it will deliver opinions), as well as to represent the autarchy in the cases it figures as plaintiff or defendant.

The appointment still depends on the Senate’s approval.

2017/08/29 by GCA Conteúdo

ITAU/CITIBANK: THE FINANCIAL MARKET AT CADE

Brazil’s Administrative Council for Economic Defense (“CADE”) approved, in the last trial session, held on August 18th 2017, the partial acquisition of the Brazilian operation of Citibank Bank by Itau Bank. The acquisition was partial because it only involved the credit market, which consists of 71 agencies in 26 cities.

It was feared that the great severity shown in the two recent cases (Kroton/Estácio and Ipiranga/Alesat) would remain in this case, but it did not occur; it was pointed out, for example, that this procedure is much smaller than the acquisition of HSBC by Bradesco, approved in 2016.

However, behavior remedies (restrictions on competitive language) were applied. To clarify, remedies can be structural (where there is an obligation, for example, of selling assets) or behavioral (where there are obligations to do or not do something). In this case, the main remedy is the obligation to not acquire any other financial institution for 30 months (which does not include Itau / XP, already under review by Cade).

2017/08/28 by GCA Conteúdo

Banking System, CADE and Bacen: Finally in peace?

The Administrative Council for Economic Defense (CADE) and the Central Bank of Brazil (BACEN) have created a Work Group (WG) to study the defense of competition in the banking system and possibly seal the peace between the agencies.

Not that there has been a serious conflict, but, historically, the two agencies defend their own jurisdiction for the competition analysis. We have, curiously, bank mergers (a very recent case is Itaú/Citibank) that have continued to be conducted by CADE even after a court decision recognizing BACEN’s jurisdiction (Bracesco/BCN). In conduct matters, CADE has recently opened two processes concerning the exchange market.

What the WG will do (exchange of information between the two agencies, workshop, etc.) could certainly lead to a greater understanding, something that will certainly bring more legal certainty to the sector.

2017/08/28 by GCA Conteúdo

REGULATION AND COMPETITION: LIMIT TO CADE’S ACTION

The Brazilian Association of Radio and Television Stations (Abert), by means of a consultation related to the Merger Review n. 08700.001390/2017-14, has questioned whether the Administrative Council for Economic Defense (CADE) should consider a regulatory restriction related to a legislation or specific regulation concerning certain economic activity. The case was about an alleged prohibition of a share superior to 30% in the capital of telecommunication companies with headquarters in Brazil.

CADE’s Attorney General submitted the Report n. 27/2017 on July 12, 2017, concluding that CADE had no jurisdiction to apply regulatory dispositions, especially when there are regulatory agencies with such jurisdiction.

2017/07/26 by GCA Conteúdo

CADE recommends the filing of the case on exclusivity agreements in the ice cream market

On July 14, The General Superintendence of the Administrative Council for Economic Defense – CADE concluded the analysis of the administrative proceeding concerning the establishment of exclusivity agreements by the companies Unilever and Nestlé in the impulse ice cream market (immediate consumption). In the Technical Note, CADE’s General Superintendence (GS/CADE) recommended the filing of the investigation considering the lack of evidence to support the allegation that the companies were performing anticompetitive practices.

In the decision, GS/CADE analyzed two specific conducts: (i) the exclusivity of the use of freezers, by Nestlé and Unilever, with the requirement of exclusive packaging of the ice cream of each of the companies, ; (ii) the exclusivity of merchandising/sales (merchandising regarding Unilever and sales regarding Nestlé), including, in addition to the freezer exclusivity, minimum volume clauses, minimum capital, concession of bonus and preferences in the renewal.

Regarding the freezers exclusivity agreements, the companies have demonstrated the economic rationality of this exclusivity requirement, once they bear the costs of installation and maintenance. Therefore, CADE understood that the exclusivity of the use of freezers is reasonable – which, in addition to be an usual market practice, would not create barriers to entry for new competitors.

Concerning the exclusivity of sales and merchandise agreements, SG/CADE verified that the companies enter into this kind of agreement with a small amount of sale points. Consequently, the exclusivity in the limits practiced by the companies would not lead to market foreclosure.

The Superintendence concluded that the ice cream market, in general, is very dynamic in the country, with a great evolution since the commencement of the administrative proceeding at issue. Even if Unilever and Nestlé remain as leaders of the market, new competitors are entering it and they have potential to compete with them, especially on a regional basis.

The case was forwarded to CADE’s Administrative Tribunal, which will carry out the trial.

2017/07/26 by GCA Conteúdo

Approval of the transaction which submission has been requested by CADE

On June 6, the Administrative Council for Economic Defense (CADE) approved without restrictions the acquisition of the contrast media and delivery systems (CMDS) of Mallinckrodt by Guerbet.  Since the companies did not have enough revenue for a mandatory notification, the transaction was concluded on November 27 of 2015, without submission to the authority. CADE, however, has received a report from GE Healthcare of Brazil, claiming that there was a high market concentration arising from said transaction.

After considering that the involved companies’ market shares were very high, amounting to 2/3 in some cases, Cade has requested the filing of the transaction. Nevertheless, after a comprehensive analysis of the case, CADE’s General Superintendence (SG/CADE) has recognized there were no evidences that the companies exercised market power after the merger – it, in fact, has not been seen in a negative way by the clients. Finally, SG/CADE has also recognized that there was rivalry in the analyzed markets in a way that competitors could contest an eventual abuse of dominant position by Guebert.

Thus, SG/CADE has recommended the approval of the transaction without restrictions. CADE’s Court has accepted the recommendation, approving the completed transaction.

2017/06/16 by GCA Conteúdo

CADE fines individual for confidential information disclosed

At the trial session held on June 7th, 2017, CADE’s Tribunal fined an individual for the disclosure of information considered confidential within the scope of an investigation in progress by the authority.

The individual, defendant in an administrative proceeding in which an alleged cartel in the market of PVC pipes and fittings is investigated, had disclosed information which he had access to on a confidential basis for the sole purpose of enabling his defense at a meeting of an association which he is a member of (Brazilian Association of Material for Sanitation Manufacturers – ASFAMAS), according to other attending members’ testimony.

According to the defendant, the information disclosed by him at the meeting was not unheard of, but had already been published by a press vehicle. The Reporting Commissioner João Paulo de Resende disagreed with that and found it to be a serious misconduct, considering the exposure of content restricted to the companies under investigation. The fine was unanimously fixed at R$50,000.00 (US$ 15,230.00).

2017/06/14 by GCA Conteúdo

SETTLEMENT AGREEMENT NEGOTIATIONS AT CADE

The negotiation of a settlement agreement (TCC) with the Administrative Council for Economic Defense (Cade) is more complicated than it appears. This difficulty stems from the opinion of two commissioners who understand that the amount of a fine resulting from an administrative procedure should be calculated based on the amount earned (i.e. advantage gained) from the conduct instead of gross revenue from the year prior to the initiation of the procedure.

This divergence began its descent into paroxysm when a settlement agreement was negotiated by a member of this minority which defends a fine based on advantage gained, was refused by the disagreeing majority, being worth reminding that the majority today is 3×2. This means that when a settlement agreement is negotiated with a commissioner of the minority current, the interested parties should look for a commissioner of the majority current.

It is worth remembering that the party requesting a settlement agreement does not pick the reporting commissioner, which is defined by a draw, being that the reporting commissioner will negotiate in Cade’s name. A situation where a party will have to negotiate with both currents, one with the power to impose a calculation method of the pecuniary contribution and the other with the power to decide against it, will be very complicated.

2017/02/06 by Grinberg e Cordovil Advogados

Predatory pricing as a cartel tool

On January 23rd, 2017, Cade convicted the companies Elegê Alimentos S.A., Thurmer & Leitzke Ltda. and Indústria de Laticínios Santa Silvana Ltda., the cooperatives Consulati and Coopal, the syndicate Sindilat and several individuals of cartel in the Type C pasteurized milk market in the Pelotas micro-region.

The Federal Police Department of Pelotas started to investigate the case in 2004, after they received a complaint made by a local milk producer. The Department counted with under covered cops to investigate this conduct.

This case is special because of the dynamics of the cartel. Elegê and Consulati, as market leaders, enforced the participation of other smaller companies in the cartel, by threatening them with predatory pricing, and used this tactic to ensure that they followed the prices imposed by them.

The Companies, in fact, kept their prices below the cost of production between June 2003 and early 2004, but Cade’s Commissioners did not agree if it characterizes predatory pricing or not, as well as its importance on the organization of the cartel, which existed from January/February of 2004. During the cartel, prices were set at around R$ 1,00, with smaller companies charging R$ 0,95.

Despite the divergence between the Commissioners, Cade’s Tribunal understood that the practice of predatory pricing is the price reduction in order to exclude competitors from the market, for the subsequent charge of monopoly prices. In other words, an exclusionary goal must exist. However, in the present case, the predatory pricing was used as a coercive and maintenance mechanism of the cartel.

The companies were only convicted of cartel practice. However, the divergence was extended to the calculation of the fine, with two Commissioners arguing that it should be based on the advantage received by the companies, while the majority agreed to base it on 2011 gross revenue.

2017/02/01 by Grinberg e Cordovil Advogados

THEORY OF CONTROL OVER THE ACT IS NOT ABSOLUTE

During the trial of Habeas Corpus 127.397/BA, the Supreme Court (STF), following the opinion of Minister Dias Toffoli, addressed limits to the Theory of Control Over the Act, which was commented during the trial of Criminal Case 470 (also known as the “Mensalão” case), also before the STF.

The opinion states that: “The unenforceability of the individualization, in the complaint, of the conducts of the directors of the legal entity must part from the fact that responsibilities of the members of the administrative council or the directors of the company, or the partners or the managers of the limited company are not differentiated in the statute or in the social contract,”.

Also: “When it is possible to differentiate liabilities, the complaint shall not be grounded generically on the condition of director or partner of the company”.

Thus, the logic that all the senior officials are automatically responsible for everything bad a company does falls apart. Obviously, such officials will be responsible according to their participation in the events.

2017/01/03 by Grinberg e Cordovil Advogados

CORRUPTION: LENIENCY PROCEDURE

On 12/15/2016, the Attorney General’s Office (“AGU”) and the Comptroller’s Office, the latter including the Department of Transparency, signed the joint ordinance establishing the procedures to enter into leniency agreements in matters of corruption.

The procedures are quite clear but don’t make any provisions about the position and eventual participation of the Public Prosecutors.

2017/01/03 by Grinberg e Cordovil Advogados

From 2002 to 2016: the Nestlé/Garoto merger

After almost 12 years in court, the merger between Garoto and Nestlé is inching closer to an approval from Cade. This may happen due to the approval, on November 18th, of Nestlé’s administrative motion for resolution of the case, which was filed in December 2015. In this package of proposals, the company suggested the enforcement of competitive remedies, which would allow the approval of the merger and, therefore, the end of the lawsuit. Cade’s change of attitude is due to changes in the market since 2012. Considering only the ice cream toppings’ segment, other companies entered the Brazilian market and Nestlé/Garoto are no longer the leader, moreover, they also have a high level of idle capacity in their factories. A different situation is seen in the chocolate market segment, since Cade considered the existence of a high degree of loyalty between consumers and brands and that the highest barrier to enter the market is actually due to recipes, textures and chocolate flavors. Therefore, having a portfolio with products that have high consumer fidelity brings competitive advantage to the company, which is Nestlé’s and Garoto’s case, who has remained the leader of the market during the last 15 years. For the approval of the merger, the companies will have to meet the proposed remedies, which will imply reducing their participation in the chocolate market. As of this moment no acquisition of assets has been notified to Cade. Finally, Cade’s Commissioners believe that this review of their decision will not create an unstable environment for their decisions, since this has occurred in a very specific and unique case.

2016/12/05 by Grinberg e Cordovil Advogados

Case filed: Lack of evidence or lack of causal link with dominant position?

Cade’s Court understood, on the trial session held on November 3rd, 2016, that there was not an anticompetitive conduct committed by Oi regarding cable cuts and cancellations of GVT lines that have been considered fraudulent, and decided, therefore, to file the case. The Reporting Commissioner João Paulo de Resende understood that Oi’s actions have been serious and could construe a violation to the regulatory standards of Anatel, however, to establish infringements of a competitive nature, a link should be established between those conducts and Oi abuse of dominant position, “demonstrating that in addition to the individual interests of GVT, the diffuse and collective interests related to the regular development of the free market economy could also have been affected’. The Reporting Commissioner stated that distorting connections and cutting cables may harm GVT, but both actions could have been taken by any other competitor, regardless of their position as market leader. Commissioner Gilvandro de Araújo, although agreeing to the Reporting Commissioner’s  decision, disagreed with the vote reasons. He voted for the filing of the case due to the absence of evidence to show that the occurrences have been capable of jeopardizing the competitive structure in the market. “The material action has to produce a diffuse lesivity, which characterizes the competitive problem”, affirmed the Commissioner. “If we come across material actions that have abstract potentialities, we have to bring them to the concrete effect. Otherwise, any action would have anticompetitive effect”.

2016/11/28 by Grinberg e Cordovil Advogados

CADE reaffirms prohibition of standardized fees

In a trial session which took place on November 9th, 2016, CADE fined Unidas, a doctors’ association from the Brazilian state of Mato Grosso[1], for demanding that its associates charge standardized medical fees for anesthesia services. According to the Reporting Commissioner, Márcio de Oliveira Jr., this standardization will be illicit whenever the association responsible for it (i) is not entitled by law to negotiate prices collectively; (ii) uses direct or indirect means of coercion; and (iii) prevents negotiations that would allow both parties to bargain freely. The Commissioner also mentions in his vote that this issue raises discussions on the existence of countervailing power, and whether or not it could eliminate the conduct’s potential to harm competition. This argument was previously made by former Commissioner Ana Frazão, in a dissenting opinion in a similar case [2]. The former Commissioner emphasized in her opinion that the market of healthcare services is characterized by serious asymmetry of information due to market power held by healthcare providers, which are the main customers of medical doctors’ associations. The former Commissioner thus concluded that the economic advantages gained by healthcare providers when negotiating with patients were not being properly transferred to doctors. In this scenario, collective negotiations between doctors could be a licit manner of confronting the providers. This opinion, however, was not followed by any other Commissioners, though Commissioner João Paulo has stated that, regarding the Unidas case, he is concerned about the relationship between healthcare providers and medical doctors’ associations, which is getting close to a monopoly on both ends.

2016/11/25 by Grinberg e Cordovil Advogados

Credit Bureau: Efficiencies Analysis

In a recent trial session held on November 9, CADE’s Court judged the transaction which consisted in creating a new Intelligent Credit Manager (“GIC”) formed by the country’s five largest banks – Itaú, Banco do Brasil, Caixa Econômica Federal, Santander and Bradesco. The Bureau seeks to boost the development of registration of positive and negative credit information from both companies and individuals. The analysis of the case was marked by the debate concerning the efficiencies and possible concerns caused by the transaction. On the side of possible competition concerns, it was indicated the vertical integration between the banks and the new company, having the Commissioner João Paulo de Resende highlighted that there is a double concern due the existent vertical integration in other related markets (such as the credit card market). Regarding the positive effects of the transaction, the Rapporteur-Commissioner Paulo Burnier presented, specially, the potential increase of the concession of credits and the decrease of risk involved in loans, due to the development of this positive registration. Finally, following the General Superintendence’s opinion, the transaction was approved by majority by CADE’s Court, conditioned to remedies to ensure the complete independence of the parts, such as (i) the prohibition to share structures with the GIC, (ii) the prohibition of the GIC to operate in other markets and (iii) the prohibition of marketing campaigns to promote the GIC.

2016/11/23 by Grinberg e Cordovil Advogados

CADE ANALYZES CARTEL BASED ON THE RATIONALITY RULING

The Administrative Council of Economic Defense (Cade), at its 94th session, on November 9th, judged a cartel accusation in special food biddings. The collusion had allegedly occurred between Support and its distributors, within the public bids of Ceará and Santa Catarina States, to provide food products to people who are unable to digest certain amino acids, such as phenylalanine. The Tribunal, partially following the General Superintendence (SG)’s opinion, closed the proceeding on both the predatory pricing and cartel accusations concerning Support, due to the lack of evidence and economic rationality in its alleged conduct, since the company would benefit regardless of which distributor wins the lots. The other defendants, the distributors within the corresponding States, were unanimously condemned for the practice of cartel in bids. The antitrust authority understood that there was evidence of communication between them, such as documents with the same formatting, jointly submitted proposals and same prices, which were aggravated by the verification of family ties. There was divergence between the Reporting Commissioner, Alexandre Cordeiro, and João Paulo de Resende, on penalty dosimetry. Commissioner João Paulo de Resende suggested that only the bidding lots values that had an actual similarity of prices be added, with an estimated overpricing rate of 20%, so as to calculate fine values that could reflect a real intention to defraud the public bids. Commissioner Alexandre Cordeiro, on the other hand, suggested that the penalty be based on the sales derived from the corresponding economic activity in 2009, with the application of a 13% rate. His vote was fully followed by the other Commissioners.

2016/11/18 by Grinberg e Cordovil Advogados

“D&O” insurance for administrative proceedings

One of the insurance segments that has become more attractive due to risks of public contracting, and the persecution of cartels and corruption refers to directors and officers liability insurance (“D&O”). This type of policy offers personal financial and patrimonial protection for administrators and directors of companies that are sued for damages from acts during their administration. In regards to administrative litigation, many insurance companies who are called upon in matters of fines, procedures and deals with Cade deny coverage stressing that this protection would not encompass liability in the punitive-administrative sphere. On this matter, the Superintendence on Private Insurance (Susep) approved Norm nº 541, in which it states that in the case of culpable acts (excluding coverage from intentional acts) carried out while exercising their administrative function “coverage can encompass contractual and administrative fines and penalties imposed on the insured (…)”. That is, in some instances this type of insurance may offer coverage for punitive-administrative measures, which can be very useful in light of increasing interest by antitrust authorities to hold individuals responsible for anticompetitive conducts (in this sense, see the repercussion from the Yates memo). However, one issue that is still undefined is the possibility of this type of insurance to encompass pecuniary contributions to be disbursed in agreements with the authority, since Cade requires that parties who enter into agreements recognize their participation in the investigated conducts if these concern deals, combinations, manipulation or arrangements between competitors. It is worth remembering that in 2013 Brazil’s Federal Audit court authorized public companies to contract this type of insurance for its councilors, directors and administrators, whose coverage “shall not encompass ilicit or illegal acts carried out intentionally or with guilt”; in the case of culpable acts, coverage is possible as long as it is “shown that normative and legal precautions and measures that one would except from the common man were adopted”. Obviously, there will always be a doubt on whether or not the participation of executives in cartels will be seen as intentional or culpable.

2016/11/11 by Grinberg e Cordovil Advogados

CADE Commissioner seeks changes to negotiations of plea agreements

During a trial session, which took place in the end of June (06/22), commissioner João Paulo de Resende signaled he would start voting against plea agreements (TCCs) in hardcore cartel cases when found that the financial contribution does not correlate to the amount of damages caused to competition by the investigated conduct. Months after this statement, the commissioner has maintained this position in many cases the Tribunal has scrutinized. In a recent session (10/18), he voted against the approval of three plea agreement requests, on the grounds that there had not been a single attempt to calculate the benefits/profits received by the offender, neither had the offender’s turnover been calculated based on the fields of activity set forth by CADE’s Resolution no. 3. The commissioner had previously stated, in a session which took place in July 27th, that he considers the variation of fine and discount rates as the variables that can be manipulated to reach a proportional amount, while the basis of calculation would be strictly defined by law and Cade’s resolutions. As so, it would be impossible, in his point of view, to change how this basis is calculated. Other Commissioners, however, do not agree with this stance. Commissioner Gilvandro de Araújo has already said on another occasion that a change to calculation of pecuniary contribution in order to contemplate the profits gained by the offender in all cases may create some uncertainty in the market, stating also that there are other benefits in plea agreements other than a financial contribution, such as the confession of the practice and the opportunity to prevent cases from being discussed at the Judiciary. Commissioner Márcio de Oliveira, in turn, believes that proportionality is a broad principle, which means that the contribution can be considered proportional even if it does not take into consideration the profits gained alone; also, using the field of activity established by CADE’s Resolution no. 3 can sometimes lead to clearly unproportionate results. Other commissioners believe that changing how plea agreements are negotiated is a risky task that must be carefully undertaken in order to prevent CADE’s settlement program from suffering any damage.

2016/11/09 by Grinberg e Cordovil Advogados

Cement: (ii) bis in idem

CADE decided, in the trial session which took place in October 18th, to terminate a proceeding which investigated eight cement companies accused of refusing to sell cement to some of their clients. According to the Reporting Commissioner, whose Opinion was unanimously joined by the Council, the practice under investigation in this proceeding had already been convicted previously, at the time when the “cement cartel” was judged, in May 2014. The conclusion was that convicting the companies in this new case would violate the principle of ne bis in idem, which prevents someone from being convicted twice for the same set of facts. Due to the complexity of infractions against the economic order, an illicit practice may, in many cases, comprise other conducts which are also individually illicit. In this specific case, the companies would refuse to supply cement as a way to implement the market allocation they had agreed on, in the midst of a cartel which lasted over two decades. Thus, when the eight companies had been convicted in 2014, the practice of refusing to sell was already encompassed in the cartel practices.

2016/11/08 by Grinberg e Cordovil Advogados

Cade reassess transaction involving companies JBS, Rodopa and Forte

During CADE’s last trial session, held on October 18, 2016, the Authority reviewed the clauses stipulated in the agreement signed in 2014 with the JBS, Rodopa and Fort concerning the transaction approved with restrictions by the Authority in 2014. The review was initiated due to the recommendation of CADE’s Attorney’s Office, given the breach, by the companies, of a number measures stipulated in the agreement to decrease the competition problems identified during the analysis of the transaction. The Reporting Commissioner Márcio de Oliveira Júnior, besides applying a non-compliance fine, stipulated new terms and conditions for the fulfillment of the obligations, and determined that the non-compliance of this decisions will result in the complete rejection of the transaction. The Commissioner pointed out that this measure has not been imposed at this moment only due to Rodopa’s difficult financial situation. Therefore, CADE determined the early expiration of the lease between JBS, Rodopa and Forte, besides the immediate sale of plants and brands. Nonetheless, a fine for deceitfulness was imposed in the amount of R$ 3,5 million to the companies, due to lack of information to CADE on the prior existence of a license that prevents fulfillment of certain clauses of the ACC. The Council highlighted that the document was already known by Rodopa, and it was never mentioned when analyzing the approval of the merger.

2016/11/01 by Grinberg e Cordovil Advogados

Cement: (i) lack of evidence

In its latest trial session (10/18/2016), the Administrative Council for Economic Defense (Cade) shelved an administrative proceeding investigating cement producers accused of refusing to sell and/or unreasonably raising prices of certain types of cement to concrete producers who are not vertically integrated with the intent of harming them in the market. This shelving was determined due to a lack of evidence, among other reasons. In their votes, Paulo Burnier and Cristiane Alkmin highlighted that despite the parallelism in the conduct, there is no evidence that this was agreed upon by the parties. In other words, the “plus factor”, i.e. evidence of communication between the parties and/or economic evidence that would configure an anticompetitive conduct, was absent. Cristiane highlighted that “the burden of proof belongs to the antitrust authority (…) there is no direct evidence proving that there was a cartel, there is no evidence of a product shortage or of refusal to sell from the majority of the market.” In this case there would have been a change in the market regarding the standards of what was produced, which, although occurring simultaneously, does not prove collusion between companies. As so, the antitrust authority shelved the case.

2016/11/01 by Grinberg e Cordovil Advogados

Cade issues new Resolution on associative agreements

The Brazilian antitrust law (Law 12.529/2011, that entered into effect on May 30, 2012) establishes that “associative agreements” are also subject to merger control. However, since the enactment of the law, and even after the approval of Resolution 10/2014 (aimed at clarifying what constitutes an associative agreement), there were several doubts related to how to identify if an agreement is associative, whose notification to the Administrative Council for Economic Defense – CADE is mandatory.   CADE has just approved a new Resolution aimed at clarifying what constitutes an associative agreement. The Resolution 17/2016 will enter in force on November 24th, 2016 (when the Resolution 10/2014 will no longer be in force).   The new Resolution determines that associative agreements are those (i) with a term equal to or greater than two years; (ii) that establish a common enterprise to explore economic activities, (iii) that provide for the sharing of risk and results between the parties; and (iv) where contracting parties are competitors in the relevant market related to the agreement.   As previously provided for in Resolution 10/2014, the term period criteria was maintained, as so, agreements will only be considered associative if their term is equal to or greater than two years, considering any extensions of the original term of the agreement. Resolution 17/2016 clarifies that contracts with indefinite term, or less than two years term, should be filed in the event that the term of 2 years (counted from the date of the signature of the contract) will be reached or surpassed. Note that the filing of the contract, or of its amendment, must be done so in a timely manner so that approval from CADE can be obtained before the term of 2 years is reached (since enforcement of the contract from this period on depends on approval from the antitrust authority). The new Resolution applies to agreements that, despite being signed during the term of Resolution 10/2014, reach or surpass the two years of duration while Resolution 17/2016 is in force.   Economic activity is defined as the acquisition or offer of goods or services, even on a non-profit basis, as long as the activity can, at least in theory, be explored by a private company with lucrative purposes.   One significant alteration brought by Resolution 17/2016 is the exclusion of the obligation to file agreements in cases where the parties are vertically related in regards to the object of the contract. Filing is, therefore, restricted to cases where the parties are competitors in the same relevant market related to the contract.   The market share criteria existent in the Resolution 10/2014, however, was eliminated. That is, for notification to be mandatory, it is sufficient that the parties be competitors in the same relevant market related to the contract, regardless of their market share. On the other hand, the sharing of risks and results of the economic activity related to the contract is now a mandatory requirement to characterize a contract as associative.   Please note that CADE considers as contracting parties not only the parties of the contract, but also their respective economic groups.   Finally, we note that if the revenue threshold set forth in art. 88, items I and II of Law 12.529/2011 is not reached (the threshold is: revenue of the economic group in the previous year should be of at least BRL 750 million for one party and, at least, of BRL 75 million for the other or one of the other parties), even if the criteria provided for in Resolution 17/2016 are present, then filing the contract is not mandatory.

2016/10/24 by Grinberg e Cordovil Advogados

Cade issues new Resolution on associative agreements

The Brazilian antitrust law (Law 12.529/2011, that entered into effect on May 30, 2012) establishes that “associative agreements” are also subject to merger control. However, since the enactment of the law, and even after the approval of Resolution 10/2014 (aimed at clarifying what constitutes an associative agreement), there were several doubts related to how to identify if an agreement is associative, whose notification to the Administrative Council for Economic Defense – CADE is mandatory. CADE has just approved a new Resolution aimed at clarifying what constitutes an associative agreement. The Resolution 17/2016 will enter in force on November 24th, 2016 (when the Resolution 10/2014 will no longer be in force).  The new Resolution determines that associative agreements are those (i) with a term equal to or greater than two years; (ii) that establish a common enterprise to explore economic activities, (iii) that provide for the sharing of risk and results between the parties; and (iv) where contracting parties are competitors in the relevant market related to the agreement.  As previously provided for in Resolution 10/2014, the term period criteria was maintained, as so, agreements will only be considered associative if their term is equal to or greater than two years, considering any extensions of the original term of the agreement. Resolution 17/2016 clarifies that contracts with indefinite term, or less than two years term, should be filed in the event that the term of 2 years (counted from the date of the signature of the contract) will be reached or surpassed. Note that the filing of the contract, or of its amendment, must be done so in a timely manner so that approval from CADE can be obtained before the term of 2 years is reached (since enforcement of the contract from this period on depends on approval from the antitrust authority). The new Resolution applies to agreements that, despite being signed during the term of Resolution 10/2014, reach or surpass the two years of duration while Resolution 17/2016 is in force.  Economic activity is defined as the acquisition or offer of goods or services, even on a non-profit basis, as long as the activity can, at least in theory, be explored by a private company with lucrative purposes. One significant alteration brought by Resolution 17/2016 is the exclusion of the obligation to file agreements in cases where the parties are vertically related in regards to the object of the contract. Filing is, therefore, restricted to cases where the parties are competitors in the same relevant market related to the contract.  The market share criteria existent in the Resolution 10/2014, however, was eliminated. That is, for notification to be mandatory, it is sufficient that the parties be competitors in the same relevant market related to the contract, regardless of their market share. On the other hand, the sharing of risks and results of the economic activity related to the contract is now a mandatory requirement to characterize a contract as associative.  Please note that CADE considers as contracting parties not only the parties of the contract, but also their respective economic groups.  Finally, we note that if the revenue threshold set forth in art. 88, items I and II of Law 12.529/2011 is not reached (the threshold is: revenue of the economic group in the previous year should be of at least BRL 750 million for one party and, at least, of BRL 75 million for the other or one of the other parties), even if the criteria provided for in Resolution 17/2016 are present, then filing the contract is not mandatory.

2016/10/24 by Grinberg e Cordovil Advogados

CADE discusses field of activity

During its 93rd trial session, the Administrative Council for Economic Defense’s Tribunal opened a Public Consultation (n. 04/2016) to discuss alterations to Resolution n. 3/2012, which provides for and defines fields of activity for the purpose of defining the basis of calculation of fines for anticompetitive conducts. This Resolution defined filed of activity based on groups of the National Classification of Economic Activities (CNAE). The Tribunal has recognized that utilizing the criteria of the Resolution currently in force could imply disproportionate amounts which do not correspond to the market in which infractions occurred. As so, the draft proposed by the authority introduces a new provision, allowing the field of activity to be adopted “to the specificities of the conduct when the dimensions indicated in art. 1º are clearly disproportional”.

2016/10/24 by Grinberg e Cordovil Advogados

Cade calculates benefits received in CDA contribution

During the trial session held on 09.14.2016, CADE’s Tribunal approved a CDA proposed in a cartel investigation concerning public tenders for the purchase of medicine by several states. The relevance of this case stems from an opinion issued by Commissioner João Paulo, who conducted an analysis of the benefits received by the company during the years in which the cartel was in place; in order to verify whether the proposed amount of the pecuniary contribution was proportional and appropriate. During previous sessions, the Commissioner criticized the amounts that were being proposed for contributions, stating that these were not corresponding to the damages caused by the agent in the market and were lower than the benefits received. The Commissioner presented his methodology in the opinion, noting that “two extrapolations were considered: (i) calculation of the average monthly revenue from May of 2007 to January of 2012 and added to the corresponding [RESTRICTED ACCESS]; then (ii) I doubled the value found in order to encompass bids from other States, whose information was not presented by the Applicant “, concluding that the amount was found to be proportional to the advantage obtained by the party.

2016/10/14 by Grinberg e Cordovil Advogados

Cade applies fine for deceitful information

In its latest trial session (14.09.2016), Cade’s Tribunal reduced the fine amount applied to Azul due to deceitful information provided in its notified transaction with Trip. The company, when filing the transaction, refrained from informing its activity in the travel agency sector. The fine originally suggested by the General-Superintendence (SG) was of R$1,4million and was reduced by the Tribunal to R$250,000. By reducing the fine, the Tribunal understood that the party was not a repeat offender, nor was there bad faith by the company. The authority also stated that the infraction was not of great magnitude, since it would not affect the analysis of the concentration act involving Azul and Trip. The error/ommission in the information provided was initially investigated by the authority after a filing presented by the Brazilian Association of Tourism Operators (Braztoa), which states that Azul was abusing its dominant position in the sales of airline tickets. The reported practice was that the company mentioned carried out price discrimination in its own benefit.

2016/09/22 by Grinberg e Cordovil Advogados

Cade scrutinizes Radius Clause

During the trial session held on August 31st, Commissioner João Paulo issued his decision in the proceeding which investigated abuse in the adoption of radius clauses in rental contracts entered into between store owners and shopping centers in Porto Alegre/RS. The decision raised issues relating to the protection of free enterprise of the store owners and the possible legality of the clause. Although the Superior Court’s decision concluded that the radius clause is lawful if agreed upon by both parties, the Commissioner highlighted the possibility of negative effects to the economy. According to the Commissioner’s analysis, for the clause to be deemed lawful it would be necessary to prove positive effects to counterbalance the damaging effects intrinsic to clauses of this nature. However, none of the arguments presented by the parties had demonstrated the generation of net positive effects to the end consumer. With the vote, the decision of the Reporting-Commisioner, hitherto suspended, was maintained and the sanctions of a R$ 15 million fine and the exclusion of the clause from all the contracts were applied to the representatives.

2016/09/14 by Grinberg e Cordovil Advogados

CADE will contribute to prevent cartels in public bids

On August 30th, Provisional Measure n. 727/2016, the first from Michel Temer’s government, was approved. This measure creates the Investment Partnership Program (Programa de Parceria de Investimento – PPI), which aims to strengthen the social interaction between the government and the private sector by means of contracts to develop infrastructure, fostering competition by means of partnerships and advancing previously suspended concessions projects. In order to anticipate and prevent the occurrence of unlawful agreements among companies in bidding procedures, the Administrative Council for Economic Defense – CADE shall act as a permanent contributor to the PPI Office. This preventive and educational participation will be of extreme importance, since it will contribute to the reduction of the number of cartels in bids and, at the same time, to developing bid notices free of potential frauds and lapses; resulting in a clear economy of public resources. This demonstrates a change in the traditional manner of operation by the authority, which, from now on, shall work not only as a repressive (prosecuting) body but also as a preventive one. Until now, the authority acted essentially in an ex post manner, by conducting investigations and convicting for conducts already consummated or in progress. At the government’s request, the authority also presented suggestions for the PPI, including the indication that the new proposed bid notices should incorporate the rules of Differentiated Regime of Public Contracting (Regime Diferenciado de Contratação – RDC), a system designed as a faster model. Among the rules of the PPI, there is an imposition that the parties sign a declaration stating that their bids were prepared without sharing commercial information with competitors and that they are genuine. Moreover, such bids cannot be previously disclosed, so that each competitor has no previous references as to the amount to present. Depending on the government’s interest, the authority could also be invited to participate in later stages of the bidding procedures. This preventive activity by the antitrust authority will serve to suppress anticompetitive acts at their origin. This will be a different form of operation in regards to its traditional scope of prosecuting cartels.

2016/09/09 by Grinberg e Cordovil Advogados

RFIs and CADE

The Administrative Council for Economic Defense (CADE) frequently sends RFIs (Request for Information) to companies so as to gather information/evidence for their procedures, both those aimed at investigating conducts as well as merger reviews. These requests are actually orders that the law allows the authority to issue and answering these requests is an obligation of the recipient. It is common for the recipients ask for extensions to fulfill these obligations and it is also common for these [extensions] to be granted. During the trial session held on 08.31.2016, CADE scrutinized proceeding n° 08700.004501/2016-55, in which a company tried to cancel a fine applied by the authority as a result of the delay in providing the information requested. CADE upheld the fine and emphasized the common duty of collaboration, since the issues that are under analysis are of public/collective interest. Even if the data requested is impossible to obtain, it is clear that the recipient must demonstrate they put forth their best efforts to do so.

2016/09/02 by Grinberg e Cordovil Advogados

CADE establishes fast-track review term

During the 91st trial session held on 08/31/2016, the Administrative Council for Economic Defense (CADE) approved Resolution n. 16/2016 (altering Resolution n. 2/2012), which formally establishes a 30 day fast-track merger review term. It is worth noting that applying the fast-track review proceeding is under CADE’s discretion. The Resolution entered into force on 09/02/2016, date in which it was published in the Official Gazette. The Resolution states that if this term is exceeded, the General-Superintendence shall inform and justify the delay to the Tribunal by means of a decision. This decision shall also make the case a priority for analysis and will determine that the notice giving publicity to the transaction also be published (if this has not been done so already). A proposal of this Resolution was made public for comments during May/2016.

2016/09/02 by Grinberg e Cordovil Advogados

Down payment is not gun jumping

CADE’s Tribunal understands that providing a down payment is not considered gun jumping (partial or total consummation of a transaction without the authority’s previous and required approval). This decision was handed down during the trial session on Aug 17th, 2016, and diverged from the General-Superintendence’s recommendation of convicting the companies Hypermarcas and Reckitt Benckiser. The analysis focused on the classification of an advance payment (allegedly improper) of 20% of a transaction’s total value as prior consummation. Reporting Commissioner Paulo Burnier understood that down payments are an exception provided for in CADE’s Guide on Gun Jumping and are “typical of commercial transactions”; furthermore, the contract establishes reimbursement of the amount in case CADE does not approve the transaction. Regarding the amount itself, the Commissioner pointed out that “it is not for to CADE to define what the minimum down payment amount is, establishing limits in down payments in M & A’s could increase the costs of the transaction and derail operations in markets that require higher amounts”. The vote also made clear that, even with the reverse break-up fee clause, in which the purchasing party would lose the down payment if the transaction was not approved, it would be compensated by the seller’s obligation to reimburse the down payment. Due to this eventual compensation, CADE admitted, in practice and implicitly, that losing the down payment would be possible without this incurring in gun jumping. This break-up fee clause was justified by the opportunity loss of the seller when negotiating with a specific buyer and ceasing to negotiate with other possible buyers. However, the vote also warned that in future transactions “companies should be very careful when using the institute of down payment, utilizing values that do not get confused with undue advanced payment, in order to avoid violation of the law by gun jumping”. The Plenary has not yet ruled on the merits of the merger. The GS, on the other hand, contested the transaction since it, if approved in the terms it was presented, would result a in high level of concentration in the market of sexual health and well-being.

2016/08/26 by Grinberg e Cordovil Advogados

CADE applies nullity sanction in gun jumping case

The Administrative Council for Economic Defense (CADE), during the trial session held on 08/17/2016, approved, by a majority vote, the use of the nullity sanction in a gun jumping case (initiating operations before CADE’s approval) after Commissioner Paulo Burnier presented his opinion on the matter. Therefore, the effects of the joint venture contract entered into by the parties were suspended, in addition to a fine imposed in the amount of R$1,5 million. This is the first time in which this measure [nullity] was adopted. The company created by the suspended joint venture contract — which will be an exclusive distributor of bicycle parts — will only be able to operate after the authority has examined the merits of the transaction. The distribution of parts will continue to operate as it did before the contract, by means of various distributors, until a final decision by CADE has been rendered. CADE made clear that it does not intend to apply this sanction in an arbitrary way, the authority took advantage of this case — due to the fact that the suspension would not harm third parties and the market, since the contract had provisions concerning the abrupt suspension of the contract between the parties — to demonstrate the importance of prior notification in merger cases.

2016/08/25 by Grinberg e Cordovil Advogados

CADE’s jurisdiction in infractions carried out abroad

CADE’s Attorneys have presented an important opinion in Administrative Proceeding n. 08012.005255/2010-11 concerning a sensitive issue for the authority, its jurisdiction to investigate and try alleged international cartels, considering that Brazilian legislation determines that if there are potential effects in the country there is jurisdiction. In their opinion, the Attorneys state that an “absolute”, “pure and literal” application of the effects (and potential effects) theory would imply “scrutiny of almost all cartels in the world by almost all of the antitrust authorities in the entire planet, including CADE”. As so, the opinion states that it would be necessary to verify the matter of effects (and consequently jurisdiction) in a rational and balanced manner. After commenting the leading international cartel cases already scrutinized by the Tribunal, the Attorneys argue that in all cases there was a link in order to associate, “with relative concreteness”, the conduct to the Brazilian market, whether direct (involving a Brazilian company) or indirect (Latin America as part of the agreement). In the proceeding in which the opinion was issued, the Attorneys found that none of the documents mentioned Brazil and that there were only mere suppositions and deductions that do not hold evidential value; therefore, they recommended closing the procedure.

2016/08/22 by Grinberg e Cordovil Advogados

Territoriality and fines

After requesting the case files for a more in-depth analysis of the Administrative Procedure to Inspect Concentration Acts (initials APAC in Portuguese) – procedure used to investigate consummated mergers, whether their filing is mandatory or not –, Commissioner Paulo Burnier presented a dissenting opinion regarding the fine calculation for gun jumping (consummation of the transaction prior to analysis and approval by CADE). This opinion was followed by the remaining Commissioners, triumphing over the position originally presented by the reporting commissioner. Initially, João Paulo Resende used the company’s worldwide revenue as the basis of calculation for the fine, applying a rate of 0.1%, totaling R$ 5 million. Commissioner Burnier decided to analyze the APAC in greater detail as it is the first case of gun jumping in a joint venture. During the trial session held on August 8th, Commissioner Burnier said that worldwide revenue could not have been used, since the antitrust law provides that only effects in Brazil should be considered, besides the fact that the revenue registered in the transactions’ filing form was disregarded. Therefore, there was an infringement of the principle of territoriality of the law. Thus, and considering that the company’s operations in Brazil started in March of 2016, an estimated revenue based on sales over five months was adopted, avoiding a fine “too lenient or too high”, reducing the amount to R$ 1.5 million.

2016/08/19 by Grinberg e Cordovil Advogados

CADE analyzes gun jumping

During its latest trial session (07/27), CADE’s Administrative Tribunal analyzed another case of gun jumping, concerning a joint venture for the exclusive distribution of bicycle parts. The case originated from an administrative proceeding to investigate consummated mergers, initiated after a complaint was received. During the proceeding the parties admitted to consummating the transaction before approval by the authority. The companies alleged that they did not act in bad faith since they were unaware of the need to notify the authority; the transaction was notified after the proceeding initiated. The Reporting Commissioner, João Paulo Resende, convicted the companies of gun jumping and applied a fine of 5 million BRL, stating that the parties initially omitted the existence of the joint venture, which was only confirmed after a second RFI was sent. The trial was suspended after Commissioner Paulo Burnier requested the case files so he could further review the amount of the fine.

2016/08/08 by Grinberg e Cordovil Advogados

Hague Apostille makes legalization of documents used abroad easier

From August 14th, 2016, the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (also known as the “Apostille Convention”) will be effective in Brazil. This Apostille Convention will make the acceptance of foreign documents in Brazil and of Brazilian documents abroad easier. After the Convention comes into force, the submission of public documents to consularization will no longer be necessary in order to make them legally enforceable in other countries. This is due to the fact that the Convention establishes that the validity of a foreign or Brazilian public document can be evidenced by an Apostille. The Apostille Convention applies only to public documents, but can also have implications for private documents. Any acts made by notaries on private documents (such as a certification of signature) can also receive an Apostille. In order to do so, a person simply needs to present the document to a Brazilian notary public with the digital system “SEI Apostila” implemented. Regarding foreign documents in Brazil, the Apostille must be issued in the country of origin of the document for it to be accepted in Brazil.

2016/08/01 by Grinberg e Cordovil Advogados

Competition in healthcare plans

An important step towards competition in healthcare plans – and the criterion each beneficiary must take into account in choosing a plan – was taken on June 22nd, 2016, by the Third Panel of the Brazilian Superior Court of Justice (STJ), by the Reporting Minister Villas Boas Cueva. The STJ has ruled that the inclusion of a coinsurance clause – such as a deductible amount and financial limits – is allowed when contracting a healthcare plan. This decision was based on Art. 16 of Law 9.656/98, which authorized the inclusion of moderating elements, in parallel to the monthly fees, in the pricing of healthcare plans. However, the decision goes much further than allowing the inclusion of the clause, since the companies can, in theory, offer cheaper plans, and, therefore, create an environment of free-competition, which can be very important for the market and the users themselves. Obviously, the restrictions must be clear and properly stipulated in the contract, and the beneficiary must be aware that, while having the advantage of paying a lower price when compared to a healthcare plan that does not include a coinsurance clause, there will be a cost for whenever he is in need of treatment. This is how the free-competition works.

2016/06/23 by Grinberg e Cordovil Advogados

CADE and labor issues

CADE’s ruling on the concentration act involving banks HSBC and Bradesco raised a controversial issue within antitrust law in regards to what are the goals of this field of study, as well as the protected interests. In this case, a union of bank employees requested to be admitted as an interested third party in the case to defend protection of labor issues by CADE. During the trial session held on 06/08, the Reporting-Commissioner João Paulo Resende stated that the issues raised by the union are legitimate in light of those that would be affected by the transaction; however, maintaining/protecting jobs would not be an stricto sensu antitrust goal/concern. The Commissioner emphasized that the antitrust authority cannot reject a transaction based solely on this argument/premise, nor can the maintenance of jobs considered as a necessary condition for the transaction. In conclusion, CADE, while addressing a longstanding and controversial debate, stated that the antitrust authority is responsible for competition in the market.

2016/06/09 by Grinberg e Cordovil Advogados

CADE and banks

During the trial session held on 06/08, CADE reinforced, albeit implicitly (since this was not the central issue discussed in the trial), its jurisdiction to analyze concentration acts in the financial sector by clearing the transaction between HSBC and Bradesco. This approval is subject to the parties signing an Agreement in the Control of Concentration Acts (ACC) which will set forth various antitrust remedies. The Reporting Commissioner, João Paulo Resende, stated during the session that the banking sector is highly concentrated worldwide with high barriers to entry, where consumers are subject to high transaction costs and information asymmetry. As so, the Agreement — which comprises six central notions, including the need to put in place a compliance program, quality indicators and transparency — would be a means to try and correct these distortions. One of the remedies imposed to Bradesco is a restriction to acquire financial institutions for the term of 30 months, which would serve is a sign to the market of CADE’s worry in the growing consolidation in the sector. Notwithstanding, the Commissioner, opened an exception to the transactions deemed necessary by the Central Bank (BACEN) to guarantee soundness in the financial sector, since this would be under the regulatory body’s jurisdiction to analyze/decide. On this issue, Commissioner Gilvandro emphasized during the session that the conflict of jurisdiction in this sector should not exist and that CADE would be open to cooperating with BACEN. *** The Extraordinary Appeal (RE 664189) that concerns this conflict of jurisdiction (CADE/BACEN), which originated from BCN’s acquisition by Bradesco, was redistributed to Justice Celso de Mello on 06/06. This was done after Gilmar Mendes declared himself as impeded from analyzing the matter, just as Dias Toffoli, the previous reporting Justice, did.

2016/06/09 by Grinberg e Cordovil Advogados

Nestlé-Garoto: a second look

Rejected by Cade in 2004, the merger between Nestlé and Garoto may have a new outcome, since Nestlé handed in a new motion for administrative resolution in December 2015, in which they presented some solutions for the antitrust issues raised during the rejection of said merger. As the said case does not meet the necessary requirements for a settlement, Cade understood that it could review their administrative decision, considering the parameters presented in the new proposal, which can lead to the approval of the transaction. This case is unique in Cade. At the time, Cade rejected the merger due to its potential harm to the market, mainly in the chocolate box segment. With the refusal, Nestlé filed a judicial petition requesting the annulment of Cade’s decision. This proceeding is lasting more than a decade. Facing the fact that the market has changed during this period, with the entry of several new competitors, besides the fact that any judicial decision taken would not be neither effective nor useful for the parties, Nestlé proposed the consensual solution to Cade. CADE’s Attorney General and CADE General Superintendency (GS) have given their opinions affirming that the administrative decision can be reviewed, and GS, additionally, have imposed a market test regarding the remedies proposed by Nestlé, in order to ensure an effective competition in the referred markets. The files have been sent to CADE’s Tribunal and Mr. Alexandre Cordeiro has been indicated as the Reporting Commissioner. The final decision will be issued within this year.

2016/06/08 by Grinberg e Cordovil Advogados

Publishing excerpts of decisions and effectiveness

Among the penalties provided for in regards to infractions to the economic order set forth in article 38 of Law 12.529/2012, there is the obligation to publish, “in half of a page and at the expense of the offender, in a newspaper indicated by the decision, a statement/excerpt of the convicting decision, on two consecutive days, from one to three consecutive weeks”. The applicability and effectiveness of this measure was discussed during CADE’s latest trial session, which took place on May 25th, where the Reporting Commissioner Alexandre Macedo voted to apply the penalty to oncology clinics located in the city of Campinas, State of São Paulo, convicted of participating in a cartel. The other commissioners also made comments on the measure. Commissioner Márcio de Oliveira Jr. considered that the publication could be more effective if it contemplated newspapers with general circulation in the city of Campinas, while commissioner Gilvandro de Araújo noted that, in some cases, the press already reports the result of the trial on its own, which causes the obligation of publishing at the expense of the parties to be unnecessary. Commissioner Cristiane Schmidt, in turn, declared that, if the content to be published in not pre-determined, the parties may present an inflection of disagreement with what is being disclosed; in other cases, a long period of time may pass between the practice/act and the conviction, which would diminish the effectiveness of the measure. At the end of the debate, the Council voted unanimously to apply the penalty to the defendants.

2016/06/01 by Grinberg e Cordovil Advogados

Radius clauses and shopping centers

The Superior Court of Justice (STJ) recently ruled that radius clauses in shopping center lease contracts are not unfair (abusive) to competition (REsp nº 1.535.727/RS). In this case, the radius restriction clause stablished that retailers that ran the same branch of activity had to maintain a specific radius of distance from the mall, not creating competition around the establishment, which could restrict the offer of goods and services. Rio Grande do Sul’s Court of Appeals (TJRS), from which the Special Appeal originated, stated that radius restriction violates free competition, harming both retailers and consumers; the STJ, on the other hand, decided that contracts between shopping malls and retailers have their own internal logic, which seeks to make the establishment economically and administratively viable. For the Superior Court’s Justices, this clause ends up stimulating competition, with the opening of other new stores around the establishment, thus, it cannot be considered illegal or unfair. The Administrative Council for Economic Defense – CADE is investigating the same matter in a proceeding encompassing other establishments in Porto Alegre. The General-Superintendence (SG) follows TRJS’ understanding and suggested that shopping centers that added radius clauses in loan contracts for retailers be condemned, finding this practice to be anticompetitive. According to the SG, even though the clause itself is not illegal, it can create anticompetitive effects, depending on the other conditions created by the mall. The proceeding against establishments in Porto Alegre is in its final phase and might be tried by CADE’s Tribunal this year.

2016/05/30 by Grinberg e Cordovil Advogados

Administrative proceeding and curtailment of ample defense

On 05/11, the Federal Regional Tribunal (TRF) of the 1st Region handed down a decision in a case where the discussion centered on the nullity of an administrative proceeding investigating a cartel in the market of steel rebars (Civil Appeal n. 2003.34.00.019038-3/DF). In this matter, the TRF reinforced the Judiciary’s stance that nullity of a procedural act must be based on the party’s effective proof of harm/damages. An interesting issue concerning the alleged nullities refers to the allegation that various RFIs were issued, although not all of them were attached to the administrative proceeding. That is, only those that would interest the investigation were made available. The decision, in quoting the first instance judge’s opinion, states that “there is no irregularity on this matter, the public agents responsible for conducting the investigation have powers or jurisdiction to know what interests that proceeding and what does not, and aim to not clutter the case files with useless documents and make proceedings difficult”. Also, the decision states that the parties had the opportunity to appoint these flaws administratively. This stance is controversial since, in a sense, it opposes the principle of public disclosure concerning administrative proceedings, as well as the constitutional procedural right to ample defense, where access should be granted to all documents of the proceeding, whose pertinence/usefulness should not be determined solely by the authority.

2016/05/27 by Grinberg e Cordovil Advogados

CADE releases Leniency Guide

CADE, during its 86th trial session (25/05) released the final version of the Guide on the Antitrust Leniency Program, which had previously been subject to comments and suggestions by the general public. The Guide, which adopts the format of questions and answers, presents a description of proceedings adopted by the organ when negotiating these agreements, as well as clarifies doubts regarding general aspects of this instrument. Although it is not binding, nor law, the Guide presents the experience and best practices adopted by the authority. A final version has yet to be made available in English, but the Portuguese version can be accessed here: http://www.cade.gov.br/acesso-a-informacao/publicacoes-institucionais/guias_do_Cade/guia_programa-de-leniencia-do-cade-final.pdf

2016/05/27 by Grinberg e Cordovil Advogados

Nullity of evidence in the gas cartel case

The Federal Regional Tribunal of the 1st Region declared as null the fine applied by the Administrative Council for Economic Defense – CADE in the case of the alleged gas cartel. The Federal Court based its decision on the theory of the fruits of the poisonous tree, stating that all evidence obtained by the authority would be null and void; since none of the evidence was autonomous, being that they all derived from an illicit origin. The Judiciary power has been handing down several decisions in this sense regarding the gas cartel case. In this particular case, the Judiciary went even further and stated that without the illegally obtained evidence, proof of the alleged cartel was weak and limited to mere indications that an anti-competitive conduct occurred, which would not be sufficient for an administrative conviction.

2016/05/19 by Grinberg e Cordovil Advogados

CADE opened two Public Consultations

The Administrative Council for Economic Defense – CADE released, during the 85th trial session held on May 11th, 2016, a preliminary version of a new Resolution concerning the submission of “associative agreements” for scrutiny by the Brazilian antitrust authority. Contributions regarding its content may be sent until May 31st to the following e-mail address: consultapublica22016@cade.gov.br. Simultaneously, the authority submitted to public consultation a modification of Article 7 of Resolution n. 2 that includes a deadline of 30 days for CADE’s General Superintendence to render a decision in concentration acts presented in the fast track procedure. Contributions regarding its content may be sent until May 31st to the following e-mail address: consultapublica12016@cade.gov.br. [1] Access the draft of the Resolution of the “Associative Agreements” through the link: http://sei.cade.gov.br/sei/institucional/pesquisa/documento_consulta_externa.php?UUuNM2jjTtymH8suBJGlco-E8u0wu89BWj9VpzdgMolngZROrhB6zT5BPiy3aLOxi8YSrKJ4KzJApq09dNBqdA,, [2] Access the draft of the modification of the Article 7 of the Resolution n. 2 through the link: http://sei.cade.gov.br/sei/institucional/pesquisa/documento_consulta_externa.php?oc8hza7Wm_gmViu5ne867I1jW-Sg97lVUnnLzBHyXv_M__MikaEagj4CppwgWbJ_1VcHtH-TProfbLIf-N3OzA.

2016/05/18 by Grinberg e Cordovil Advogados

Interface between regulation and competition

CADE’s latest plenary session (05/11) was marked by the analysis of concentration acts (AC) in highly regulated sectors (open television and payment systems), where the antitrust authority emphasized complementarity between regulation and competition defense policy. In the AC referring to the payment systems market, which involved vertically related agents – issuer and brand -, CADE emphasized that, in spite of the market’s high concentration levels, the regulatory bodies, rather than simply prohibiting vertical integration, opted to impose rules in order to foster competition. Thus, the reporting commissioner stated that “despite some concerns expressed in this vote being aligned with the answer provided by the Brazilian Central Bank to a RFI (…) one observation seems to be fundamental (…): in spite of all the existing issues, which are potentially aggravated by the JV (…) the market’s regulation does not prohibit vertical integration”, this being a legitimate option for the regulator, who, if it deemed appropriate, could limit the involvement of issuers in the brand market. This shows the need for exploring the interface between regulation and competition. In the whole world, there are attempts to answer the following questions: can regulated markets be subject to decisions from the antitrust authority? Should compliance with a regulatory body be punished by the antitrust authority?

18/5/2016 por GCALAW

2016/05/18 by Grinberg e Cordovil Advogados

Revision of agreement litigated

During its 84th plenary session (04/27), CADE, in revising a Performance Commitment Agreement (TCD), authorized Companhia Siderúrgica Nacional – CSN to appoint names to its direct competitor’s (Usiminas) Board of Directors and Fiscal Council. After CADE’s decision, one of Usiminas’ shareholders opted to litigate and filed a suit contesting this decision, requesting an injunction for the immediate suspension of the mandates of the directors and councilors indicated by CSN. A Federal Court, in 05/11, with grounds on its general cautionary power, suspended the Board of Director’s meeting, stating that attendance by the directors appointed by CSN would render “immutable the fact concerning access of these individuals to Usiminas’ sensitive information”, and also raised “doubts regarding the validity of the proceeding adopted by CADE”. In addition, it was determined that the injunction demanded [suspension of mandates] would be examined the following day. The next day (05/12), the claimants decided to withdraw the injunction request, stating that carrying out the board meeting, despite the attendance of the directors appointed by the competitor, would be essential to approve “crucial measures to preserve the company”, and the Court rendered its previous decision void.

2016/05/16 by Grinberg e Cordovil Advogados

CADE in the new government

Brazil’s interim president, Michel Temer, will have limited powers, at least during the next six months, to appoint names for regulatory agencies; being that, if president Dilma is removed from office, these powers will increase substantially, leading to a virtual renovation of the technical-political personnel of these entities. This renovation will also occur within CADE, since the term of the current president of the agency, Vinícius Marques de Carvalho, expires at the end of May. The nomination of CADE’s President will be made by Michel Temer, after Senate approval. The appointment of names for the position is usually done by the Minister/Ministry of Justice, to which CADE is linked. There is no word on possible names to be indicated by the new Minister, Alexandre de Moraes.

2016/05/13 by Grinberg e Cordovil Advogados

CADE releases Guide on plea agreements

The Administrative Council for Economic Defense – CADE, during its 85th trial session held on May 11th 2016, approved and released the Guide on Plea Agreements (initials TCC in Portuguese), which was submitted to public consultation in January. The final version of the Guide, according to the authority, was made available on its website on May 13th. As mentioned when the preliminary version was released, the guide is not legally binding, but serves as a parameter for the authority in regards to the matter.

2016/05/13 by Grinberg e Cordovil Advogados

Atypical remedies and independent directors

CADE’s 85th trial session (11/05) was marked by the Commissioners’ emphasis on the fact that atypical cases/transactions demand atypical remedies; this being mentioned several times during the analysis of the concentration acts on the day’s agenda. In this sense, one of the remedies imposed on a joint venture (Concentration Act no. 08700.009363/2015-10) stood out due to its use of a trigger, set when a specific degree of market share was reached/obtained. The reporting commissioner, Paulo Burnier, negotiated a remedy in which, once the 15% market share threshold is reached, one of the parties, which has the right to appoint half of the directors to the joint venture’s Board of Directors, must indicate two “independent directors”. Commissioner João Paulo, in regards to this remedy, expressed some concerns on the matter of independent directors, since it seems that this is becoming an easy way to approve problematic mergers.

2016/05/13 by Grinberg e Cordovil Advogados

Banks and CADE

Two years after handing down a decision dismissing appeals that discussed jurisdiction to analyze mergers involving financial institutions, Supreme Court (STF) Justice Dias Toffoli has declared himself as impeded from trying the subsequent appeals. As so, the case was redistributed to Justice Gilmar Mendes, randomly selected as the new reporting Justice. The Superior Tribunal of Justice (STJ) has already decided in favor of the Central Bank, giving them jurisdiction on the matter, but it will be up to the Supreme Court to give the final word on the issue, clarifying a controversy that has spread over many years. It is worth emphasizing that there are legislative proposals in course that aim to clearly outline jurisdiction of both entities.

2016/05/03 by Grinberg e Cordovil Advogados

CADE and corporate governance

During its 84th session (04.27.2016), CADE authorized Companhia Siderúrgica Nacional – CSN to indicate names for Usiminas’, its direct competitor, Board of Directors and Supervisory/Fiscal Board. When CSN acquired shares of its rival, CADE imposed a suspension of voting rights of these shares by means of an agreement, being that this suspension was put in place precisely to preserve competition in the market. CSN based their request on the current status of the steel sector, which is facing a crisis, as well as “growing corporate conflicts among controlling shareholders and the deterioration of CSN’s financial conditions”. CADE, whilst authorizing the election of members to the board, conditioned their tenure to the signing of a term of commitment with the authority, which sets forth obligations of acting with independence and supplying information whenever requested.

2016/05/02 by Grinberg e Cordovil Advogados

Third parties in Agreement in Merger Control

On April 25th, 2016, Cade rejected a third party’s request of access to the documents concerning negotiations of an Agreement in Merger Control (“ACC”, in Portuguese). According to Commissioner Alexandre Cordeiro Macedo, the negotiation has information of the applicants that are protected by trade secrets. The preservation of the restriction of access of third parties to such information is akin to compliance with the constitutional principle of protection of free enterprise and free competition. Thus, the Commissioner established a term for third parties to present their contribution about possible remedies to mitigate the competition issues found during the merger control proceeding and emphasized that a public version of the agreement will be made available.

2016/04/29 by Grinberg e Cordovil Advogados

Brazil ratifies Bali Trade Facilitation Agreement

The president of Brazil, Dilma Rousseff, signed the letter ratifying the World Trade Organization’s (WTO) Trade Facilitation Agreement at a reception ceremony for the organization’s Director-General, which was held at the Presidential Palace. The agreement was the result of negotiations carried out at the Ministerial Conference in Bali in December 2013, whose final text of the Protocol Amendment was approved by members in November 2014. The agreement establishes a series of rules intended to expedite and reduce bureaucracy within the traffic of goods and services, particularly in customs, reducing costs and facilitating the global chain of production and sales. The negotiation of the WTO Trade Facilitation Agreement is in line with the conclusions reached by a report released in January 2013 by the World Economic Forum (prepared jointly with the World Bank), entitled Enabling Trade Valuing Growth Opportunities, which estimates that the worldwide reduction of barriers to supply chains would result in a 4.7 % increase of global GDP and 14.5 % of international trade. The Protocol Amendment will only come into force after it is ratified by two thirds of the members of the WTO (108 countries), and with no deadline concerning the internal approval process. To the present date, only 45 member States notified the WTO of having fulfilled all the formal steps for its domestic ratification (Brazil has not yet formally notified the entity).

2016/04/20 by Grinberg e Cordovil Advogados

CADE approves FedEx’s acquisition of TNT

During the trial session held on March 30th, 2016, the Administrative Council for Economic Defense (CADE) maintained the decision rendered by the General-Superintendence, approving FedEx’s acquisition of TNT without restrictions, thereby rejecting the appeal filed by UPS do Brasil on its merits. The Reporting Commissioner, Cristiane Schmidt, clarified in her vote that controlling a substantial amount of market share cannot be considered, in and of itself, as the sole reason for the exercise of market power and blocking the transaction. In this sense, the Commissioner refuted the argument presented by UPS regarding the absence of bargaining power, stating that, in accordance with the information presented by clients in the market, if the new TNT/FedEx company raised their prices, clients would alter their courier service, given the low costs involved in switching and the existence of competitors. Finally, the Commissioner emphasized that, as stated in CADE’s internal bylaws, appeals against decisions handed down by the General Superintendence approving a transaction must be supported by arguments, facts and documents essential to the analysis of the allegations, which was not observed by UPS, where its appeal was filed to procrastinate the decision.

2016/04/20 by Grinberg e Cordovil Advogados

Limitations to the Confidentiality of Leniency Agreements

A recent decision handed down by the Superior Court of Justice limited the confidentiality of documents linked to agreements between CADE and companies, which may increase the number of private suits for damages stemming from the practices confessed in such agreements. In the matter at hand, the plaintiff filed a law suit against companies which had signed leniency and plea agreements with CADE in the Administrative Proceeding (i.e., administrative sphere), admitting to anti-competitive practices. The lower tier judge rejected a request by the plaintiff to send official letters requesting copies of the corroborating documents. The Superior Court of Justice dismissed a later appeal (REsp 1.554.986/SP) filed by the defendants, concluding that access to the leniency agreement would allow/facilitate damage claims by third parties harmed by the conduct. By granting access to the documents of the Administrative Proceeding, the Superior Court of Justice emphasized that the confidentiality of agreements with the competition authority is not absolute. As for the effectiveness of access, the documents should be analyzed by the competent court, in order to ensure the confidentiality of the industrial secrets therein contained.

2016/04/18 by Grinberg e Cordovil Advogados

CADE lowers penalty for breach of agreement

After verifying that the penalty for breach of a Performance Agreement (currently Agreement in Concentration Act) was disproportional — since breach was only partial and the penalty was repealing the transaction’s approval — CADE promoted its alteration; which was approved on 04/13. The authority received various complaints of breach of the deal entered into to approve Merger no. 53500.029599/2006-00, which were investigated and confirmed. However, considering that the measure to be imposed was excessive, CADE understood that it would be more adequate to alter the terms of the Agreement to include provision of a fine, which was subsequently imposed by the Tribunal. CADE stated that alteration of an agreement would be possible if it was requested by a party and approved by the Plenary.

2016/04/16 by Grinberg e Cordovil Advogados

Wiretaps and CADE

CADE’s Tribunal, during the trial of Administrative Proceeding no. 08012.003321/2007-71 on 04/13, in its 83rd session, presented the authority’s stance on the possibility of using wiretaps as evidence. After dismissing claims of illegality, CADE clarified that only a judge could determine that a wiretap be carried out, but there would be no obstacle to using this evidence in administrative procedures. The authority reiterated that, although the audio files of the conversation were not present in the case files, an integral transcript was presented; and that there would be no harm in presenting a partial transcript containing only what is relevant to the investigation, so as to not unnecessarily violate privacy. It concluded that the parties did not prove any procedural harm, since the evidence was subjected to scrutiny and comments.

2016/04/15 by Grinberg e Cordovil Advogados

IT PLATFORMS: COOPERATION AMONG COMPETITORS

The European Court of Justice (ECJ) recently issued a judgement assessing how, when, and if antitrust price-fixing rules should be applied to interactions between the administrator of a shared technology platform and its users. The E-TURAS IT platform, which was shared by 30 Lithuanian travel agencies to facilitate online bookings by end customers, was capping member agent’s advertised discounts on holidays at 3% by unilaterally implementing technical measures that made it harder for agents to offer higher discounts. Even though European case law argues the agent must publicly distance itself from an unlawful initiative (such as attending a cartel meeting without saying anything) and that infringements may be characterized by objective and consistent indicia, the ECJ concluded that when a company participates in an unlawful concerted practice, it requires not just evidence of concertation between the companies but also a subsequent conduct on the market and a relationship of cause and effect between the two. it was still possible for agents to bypass such measures

2016/04/14 by Grinberg e Cordovil Advogados

Untimely Merger Filings

In a recent decision, CADE condemned a company for an untimely merger filing. Despite the General-Superintendence’s recommendation to approve the merger without restrictions, the proceeding was submitted to the Tribunal due to noncompliance with the filing term. The applicants alleged that the fine for the untimely filing of the transaction would be unacceptable because it was not provided for in the current law, applying the hypothesis of retroaction of the “most beneficial” law. Moreover, the merger would not even be notifiable according to the new law. CADE’s Tribunal said the applicable law was the law in force at the time of the events; the hypothesis of applying the “most beneficial law” is unacceptable due to a lack of symmetry between the material content of the law and the penalties provided. The inapplicability resulted from the laws being systematically different in their merger analysis (ex ante in the current law; ex post in the post law), moving away from symmetry.

2016/04/14 by Grinberg e Cordovil Advogados

Cartel: Cade and the Judiciary

An opportune question: if the Administrative Council for Economic Defense (CADE) shelves a proceeding concerning violations to the economic order are the involved companies’ problems solved? Answer: not always. The case herein described illustrates the answer. Around 2007 the Administrative Council for Economic Defense (CADE) filed an administrative proceeding against the National Association of Vehicle Carriers (ANTV) and the Autonomous Vehicle Carriers and Small and Micro Vehicle Carrier Companies Union (SINDICAM). However, in 11/03/2016 the Federal Judge of the 6th Court of Porto Alegre, in a public civil action, contemporaneous with the proceeding before CADE, condemned the same companies for the practice of the alleged cartel involving the same facts investigated in the aforementioned administrative proceeding. Obviously this decision will be appealed, thus it cannot be seen as final. Notwithstanding, we have to consider that a decision by CADE to shelve a procedure does not always mean the end of the issue.

2016/04/04 by Grinberg e Cordovil Advogados

Intercurrent Statute of Limitations before Cade

The interim statute of limitations is the institute that manages the extinction of the State’s punitive intention due to a halt in the execution of procedural acts; aiming to prevent an administrative offense from being verified/investigated and, mainly, to curb inaction by the public administration. A recent judicial decision (BR nº 1000267-28.2016.4.01.0000) suspended an order by CADE commencing an Administrative Procedure (AP nº 08012.003021/2005-72), and its processing, on these grounds. In this case, the Federal Regional Court of the 1st Region condemned Cade’s sluggishness in practicing just one act in the procedure during a period of more than three years. The aforementioned act referred to a mere attachment of documents, which were insignificant to verify the offense. The decision is appealable. On another occasion, Cade’s Tribunal presented the scenarios and criteria for the admissibility of this institute at the administrative level, establishing that the criteria for verifying the characterization of the interim statute of limitations would be (i) the passing of a period of three years (ii) without the practice of any acts by the Public Administration intending to verify the offense. Thus, it is clear that, if the act had the intent to verify/investigate the infringement, the effectiveness of its result is irrelevant.

2016/03/18 by Grinberg e Cordovil Advogados

CADE releases guide on merger review

The Administrative Council of Economic Defense – CADE released, during their 81st trial session held on March 16th, 2016, a preliminary version of their Guide on the Analysis of Horizontal Concentration Acts. The Guide aims to “give greater transparency to the analysis carried out by the authority; orientate public authorities to adopt best antitrust practices on the matter; and help players in the market understand the phases, techniques and criteria adopted by Cade in their analysis of horizontal mergers”. Although it is not binding nor obligatory, the document reflects CADE’s current vision on the matter of merger review, being that the methodology that will be used by the authority will depend on the peculiarities of the matter at hand. This Guide is undergoing public consultation and contributions regarding its content will be received until April 30th, 2016; suggestions should be sent to the email: guiah@cade.gov.br.

2016/03/17 by Grinberg e Cordovil Advogados

ESSENTIALITY AND ESSENTIAL FACILITY

During CADE’s 80th trial session, Commissioner Cristiane analyzed an issue that is highly relevant to antitrust, the matter of essential facilities, presenting the historical context of the concept and how it emerged from the analysis of infrastructure sectors. These sectors, in which duplicating a certain structure would be economically inefficient (e.g. railroads), there would be an incentive, by its holder, to raise the costs of rivals by either charging excessive prices of use or impeding access altogether. In these cases, lack of access would make it impossible to carry out certain economic activity. The Commissioner presented a subtle, albeit important distinction between essentiality and essential facility, emphasizing that although an “input” or “good” may be important to an activity, it is not necessarily essential to its operation, impeding it if absent; even if it leads to a decrease in revenue. That is, the distinction would center on the degree of “fundamentalness”, “indispensability” and, ultimately, “necessity/need” of access to the input to carry out certain economic activity; the absence of which would make this impossible.

2016/03/04 by Grinberg e Cordovil Advogados

NULLITY BY DERIVATION AFFECTS AP

CADE’s General-Superintendence (“SG/CADE”) issued an opinion suggesting the discontinuation of an administrative proceeding investigating cartel formation involving distribution and resale of automobile fuels in Cuiabá/MT, due to lack of evidence to prove the authorship and materiality of the analyzed facts. SG/Cade’s decision was handed down after evidence that was illegal by derivation (fruits of the poisonous tree) — as recognized by a judicial decision from the state of Mato Grosso’s Tribunal (“TJ/MT”) in Habeas Corpus (nº 64.684/11) — was removed from the case files. TJ/MT understood that witnesses’ testimonies collected by the criminal prosecution, evidence that would support the administrative proceeding before CADE, were invalid since they were derived from wire-taps formerly declared null and avoid. The Tribunal in Mato Grosso had understood that these telephone taps should not be considered since the judicial decisions that granted and extended this measure were lacking in adequate grounds.

2016/03/03 by Grinberg e Cordovil Advogados

GUN JUMPING

Gun Jumping is, generally speaking, the practice of acts resulting from a transaction, which should be notified to the antitrust authority, prior to its notification. The Administrative Council for Economic Defense’s (CADE) Tribunal, in a trial session on 20.01.2016, fined the applicants of the merger between Cisco and Technicolor, transaction where the latter acquired the former’s connectivity division, for gun jumping. The applicants presented an explanation by means of a carve-out agreement, whereby the Brazilian transaction would have been out of the first negotiation. The Tribunal accepted the General-Superintendence’s Opinion by which, “if a relevant market is supposedly worldwide and if the supply of products and services in Brazil is done so by means of imports, it is clear that the consumption of the transaction in other parts of the world will affect the Brazilian market”. Thereby, it became clear that the practice of acts that reveal the consumption of a transaction, in a worldwide market, should be preceded by an approval by the Brazilian antitrust authority, under penalty of a fine by gun jumping.

2016/02/10 by Grinberg e Cordovil Advogados

INTERVENTION AND VOLUNTARY APPEAL

On 01/25, CADE, in their investigation concerning a possible cartel in the fuel resale market in the Federal District of Brasília, instituted a preventative intervention in the Cascol group, one of the investigated companies that hold 91 of 315 gas stations in the region. This intervention put several measures in place to limit Cascol’s administrative powers over their gas stations. This is a milestone in Brazilian antitrust, since this is the first time a measure of this nature, which is exceptional in and of itself, is applied. The Cascol group, in response to this decision, presented a Voluntary Appeal to CADE, which was rejected by the Tribunal.

2016/02/04 by Grinberg e Cordovil Advogados

CARTEL DRIVING SCHOOLS

On February 3rd, the Administrative Council for Economic Defense’s Tribunal unanimously decided to convict companies and individuals from Santa Bárbara D’Oeste/SP for participating in a cartel. In light of the alleged seriousness of the breach, the Court imposed fines and prohibited the association from fixing or suggesting prices to be charged on services to be provided by the associated companies. According to CADE, the owners of the driving schools met at the head office of the association to discuss prices and, after a consensus was reached, they would sign terms committing to observe the prices, under penalty if they were not observed. Furthermore, the Tribunal emphasized that mechanisms (internal system) were also put in place to monitor students, which generated a record of default of payment; thereby, if the student would look for another driving school, their social security number was recorded in the system and they would be prevented from hiring services from another company. Comissioner Alexandre Cordeiro highlighted that the cartel stood out due to its organization and great effort to be kept in place.

2016/02/04 by Grinberg e Cordovil Advogados

INSURANCE/GUARANTEES TO SUE CADE

Many individuals and legal entities, when sentenced by the Administrative Council for Economic Defense (CADE), go to court with the intention to annul the applied penalty or fine. In these cases, the courts require that insurance/guarantees be provided so that, if the plaintiff is not successful in his claim, it will be possible for CADE to collect the fine. While parties try to offer real estate or other assets, CADE insists on a cash deposit. The New Brazilian Civil Procedure Code, in the second paragraph of article 835, states that now, “for the purposes of substituting the attachment order, Guarantee Insurance or Bank Warranties are considered to be equivalent to cash, as long as their value is not smaller than the amount specified in the complaint plus 30%”. Therefore, as soon as the new code is in force, guarantee insurance will be another option, ensured by law, to cover suits against CADE.

2016/02/01 by Grinberg e Cordovil Advogados

CADE’S DATABASE IS HACKED

A hacker activist group entitled Anonymous raided Cade’s – Administrative Council for Economic Defense – database on Monday evening, January 18th, as a statement against the Brazilian government. The hackers disclosed the Authority’s inside information such as logins and passwords of its employees. Classified documents or petitions were not disclosed. The curious goal of the Anonymous group was to show dissatisfaction regarding President Dilma Rousseff’s veto to a section of the Multiannual Plan (PPP, in Portuguese) related to the auditing of the public debt. According to the group, the public debt prevents the country from presenting a “balanced socioeconomic development […] and consumes almost half of the Union’s budget”. CADE’s team was able to quickly react in order to avoid further damages, however, the Authority will not provide more details on the event so that such practices are not encouraged.

2016/01/22 by Grinberg e Cordovil Advogados

CADE RELEASES GUIDE ON PLEA AGREEMENTS

The administrative Council for Economic Defense – CADE released, during their 78th trial session held on January 21st, 2016, a preliminary version of their Guide regarding Plea Agreements (TCC in Portuguese). The Guide aims to “serve as a reference for civil servants, lawyers and society in general on proceedings relating to this instrument, providing greater transparency, predictability, effectiveness and speed to negotiations” of these agreements. Although it is not binding nor is it law, the Guide demonstrates practices and parameters that have been utilized by CADE in their negotiations. However, it is worth noting that these parameters may be modified so that they are compatible with the case under analysis. This Guide is undergoing public consultation and contributions regarding its content will be received until February 19th; suggestions should be sent to the email guiatcc@cade.gov.br

2016/01/21 by Grinberg e Cordovil Advogados

COUNTING OF CADE’S TERMS IN BUSINESS DAYS

Law 12.529, of 2011, refers to deadlines for parties and the authority in different ways. For instance, the deadline to present a defense in an administrative proceeding is 30 days, as set forth in Article 70. It does not refer to business days, but consecutive days; especially since the same law, when referring to several deadlines applied to the authority – Article 72, for example, which grants 30 days for the authority to determine evidence production –, explicitly states that such deadlines are to be counted in business days. Thereby, since in certain cases business days are explicitly mentioned, when this reference is absent it is understood, due to a lack of law stating the opposite, that it refers to consecutive days. The New Civil Procedure Code, however, establishes in Article 219: “In the calculation of a deadline in days, as determined by law or by a judge, only business days shall be counted”. Thus, now there is a law which states the opposite, this being the reason why the understanding that the deadline, not expressly determined in consecutives days, should not be counted as so, is valid. In fact, the subsidiary application of the New Civil Procedure Code is the result of Article 115 of Law 12.529, of 2011.

2016/01/18 by Grinberg e Cordovil Advogados

CORRUPTION: REWARD TO THE WHISTLEBLOWER

The most recent Legislative Bill regarding rewards to whistleblowers in corruption acts is bill n. 83/2015, which was attached to bill n. 6,132/2013, and this one was later attached to bill n. 1,701/2011. The first bill prescribes that, in order to make the denunciation (and, therefore, to receive the reward), the whistleblower must provide “clear and detailed description of the facts, including information useful to the assessment of the narrated facts”, as well as “pieces of evidence and documents that can demonstrate the commitment of the illicit act, if possible”. Furthermore, it establishes many obligations to the whistleblower. Apparently recognizing the infeasibility of the requirements present on both previous bills, the one from 2015 (which repeats a bill from 2013), establishes that “the receiving of the referred amount shall be conditioned to the consistency of the denunciation and if it is helpfulhelps to unravel the crime”. However, there is a clear amount of subjectivity in this wording, mostly due to the fact it does not explain which authority must decide if the denunciation is consistent and if it helps to unravel the illicit act.

2016/01/12 by Grinberg e Cordovil Advogados

CADE OPENS PROCEEDING IN “LAVA-JATO”

CADE published in December 23rd, 2015’s Official Gazette an order opening an Administrative Procedure to investigate an “alleged cartel in the market of industrial onshore engineering, construction and assembly services” referring to the “lava-jato”/carwash case. The aforementioned order received the Technical Note prepared by the General-Superintendence which alleged that robust evidence was found pertaining to infractions to the economic order. In observation of the procedural established by the antitrust authority, the investigated parties shall be notified in the following week to present defense pleas within a term of 30 (thirty) days — which shall be doubled due to parties having different counsel —, while also being able to indicate witnesses; subsequently, a new discovery phase will be carried out to examine the allegations made by CADE’s General-Superintendence.

2015/12/23 by Grinberg e Cordovil Advogados

ABUSIVE PORT CHARGES ARE CONVICTED BY CADE

On December 9th, after a complaint by the National Agency of Water Transports (ANTAQ) ,the Adminstrative Council for Econoic Defense’s Court unanimously decided to convict port operators Agência Marítima Orion, AGM Operadora Portuária, Sirius – Assesoria Comercial and D&F Logística e Representação, as well as the Workmanship Management Agency of Porto Alegre Port (OGMO), for coordinated offense to free competition. In this case, the defendants allegedly decided, in an assembly, mandatorily charging payment from new pre-qualified port operators of Porto Alegre Port Who present requests for port workforces. Such operators would thus be chargeable a pecuniary contribution for participation in financial costs amounting to BRL 250.000,00 at the time. Under CADE’s General-Superintendence it was pointed out that the fact that the OGMO be an input provider did not hinder its liability for abuse of market Power in the workforce market, and that the conduct should be classified as cartel, and not as coordinated practices for closing the market. In order to solve this issue, Reporting Commissioner Alexandre Cordeiro Macedo concluded that the conduct could not be considered a cartel “given that (…) the foreseen in item I [coordinated agreement and manipulation of economic conditions] does not comprise the creation of barriers to entry the market, due to a legislative choice”. This position was endorsed by most of the Deciding Body, with the exception of Commissioner Márcio de Oliveira, among others, who understood that it was, in fact, a cartel (i.e. “competitor behaving as guided by one will, and acting in a coordinated matter to keep others from threatening the united dominance”). Despite this matter, the Deciding Body unanimously considered the charge unjustifiable, as it was a result of abuse of dominant position aiming to create barriers to entry the market. Given this fact, CADE imposed fines varying from BRL 108.000 and 1,6 million, public retraction by all the Defendants. The OGMO was attributed greater responsibility, as its institutional intrinsic role was distorted to obtain improper competitive advantage and for effectively having market Power able to restrain the entrance of new port operators.

2015/12/22 by Grinberg e Cordovil Advogados

CORRUPTION AND BIDDINGS

The Provisional Measure nº 703, dated December 18, 2015, was announced by some as a “Christmas Gift” to contractors involved in corruption accusations. This measure does indeed allow accused contractors to tender bids again. However, it is not exactly a gift. The sensitive point is the wording change to Law 12.846, dated August 1st, 2012 (known as the anti-corruption law), specifically to article 16, 2nd paragraph, item I: “Leniency Agreements entered into by the administrative authority shall “exempt the legal entity […] from the restrictive sanctions of impediment to participate in public bids and impediment to contract with the Government, as established in Federal Law 8.666, dated June 21, 1993, and in other laws that address the matters of biddings and contracts”. Regardless of the presumption of innocence (which means that no one can be found guilty until a condemning sentence is final), in order for one to be entitled to the benefits of the Provisional Measure under analysis, it is required that a leniency agreement with a confession and recognition of all acts and facts be signed, as well as the payment of eventual fines and assumption of other obligations. Therefore, a new stimulus has been created to enter into leniency agreements, in which the contractor must cooperate with the authorities in charge of the investigation.

2015/12/16 by Grinberg e Cordovil Advogados

CADE AND INTERIM STATUTE OF LIMITATIONS

In the judgement of the Administrative Proceeding nº 08012.012081/2007-48 against companies that manage shopping malls, the Administrative Council for Economic Defense (CADE) did not analyze the merit (radius clause), since it decided for the closing of the case due to the verification of a statute of limitations period: They explain there are two kinds of statute of limitations: (i) the direct, by the authority’s inaction in proposing a lawsuit within certain time period and (ii) the interim statute of limitations, by the authority’s inaction for at least three years after the case has already been opened. Thus, the proceedings that are under CADE’s investigation can be affected by the interim statute of limitations if the authority – which exercises at the same time the functions of investigation and judgment – does not give the necessary push. The applicable legislation at the time of the events established that prescription (in this case the interim statute of limitations) could be interrupted by “any unequivocal act that results in the investigation of the facts”. Commissioner João Paulo de Resende’s leading vote declared that there were two types of actions that occurred in the case at hand: (i) the parties’ active participation in the proceeding, requiring copy of the case records, and/or the submission of power of attorney, etc.. In other words, petitions which do not demand any material analysis by the Agency or have the capacity to contribute to the closing of the case” or (ii) The Authority’s submission of orders/decisions related to the Settlement Requirement (…) that are linked to three defendants. The orders and decisions were not actually filed in the present administrative proceeding, but were merely attached to the case records. Finally, CADE understood that none of the described actions, practiced at a period longer than three years, constituted “an unequivocal act that concerns the verification of the facts”, reason why they recognized the interim statute of limitations and closed the case.

2015/12/09 by Grinberg e Cordovil Advogados

ORAL STATEMENTS: STJ AND CADE

There is a discussion in the Superior Court of Justice, among the ministers of such Court, concerning the oral statement of attorneys during trial sessions. A complaint of the Ministers has been found, according to which lawyers should not read summaries that have been previously delivered to the Ministers. The Plenary has been divided between those who think they should not interfere in the attorney’s activities (positioning that has been supported by the Brazilian Bar Association) and those who have suggested such interference. One of the Ministers has declared that attorneys who cannot memorize their oral statement do not deserve to make such statement before the Superior Court of Justice; but the major part of this group understands that notes can be consulted. Whatever the outcome, it must have consequences for the other Courts, not to mention its influence in the trials held by the Administrative Council for Economic Defense (CADE).

2015/12/08 by Grinberg e Cordovil Advogados

SHAM LITIGATION: GENERAL ABUSE

During CADE’s trial sessions it is common for the authority to reveal their positions regarding issues that are not relevant to the case at but, but that are nonetheless very important. On 11.25.2015 CADE held a trial session where they analyzed a merger filing in which a third party requested that CADE impose to the applicants a prohibition of seeking relief regarding trade protection (basically antidumping measures). CADE denied this request, but the Reporting-Commissioner declared that eventual abuses by the applicants in their requests for trade defense could result in procedures pertaining to sham litigation. This practice consists basically of filing various suits/procedures whose real object is not what is objective and subjectively declared, but to impose barriers to competitors. The revealed position, which did not pertain specifically to the matter at hand, appears in the Commissioner Cristiane Schmidt’s decision. She made it very clear that requests presented to any of the power – Judiciary, Executive and Legislative – can result in the opening of procedures for sham litigation. The position is important since notorious cases of sham litigation revolve around abuse of legal measures, whereas trade defense occurs within the Executive Power. As so, it is clear that other possibilities of sham litigation exist.

2015/11/30 by Grinberg e Cordovil Advogados

ATTORNEY’S FEES AND ANTITRUST

MLex published on 11.23.2015 an article in which it was reported that the Public Prosecutors of Minas Gerais requested to the Administrative Council for Economic Defense (CADE) that a decision be handed down soon in the procedure filed against the Brazilian Bar (Ordem dos Advogados do Brasil – OAB) relating to the alleged table of attorney’s fees which harmed competition between lawyers. In fact, the Prosecutor’s presented a new fact, stating that the text of the recently approved Ethics Code, Resolution no. 02/2015, which comes into force on April/2016, constitutes a competitive infraction. Our objective is not to give an opinion on the matter, especially because, according to art. 42, item II of the same Ethics Code, an attorney is forbidden from “debating, by any means of communication, a suit under the auspices of another attorney”. Having stated what isn’t our objective, it is possible to mention what effectively is: to mention the items of the new Ethics Code that are under fire by the Public Prosecutors of Minas Gerais (also because we do not have full knowledge on the matter, besides the article mentioned above). As so, herein follows our comments. According to the item VIII of the sole paragraph of article 2, “it is an attorney’s duty” “to refrain from” “contracting fees in degrading amounts”. On the other hand, §6 of art. 48 establishes that is “A lawyer must observe the minimum amounts established in the Tables of Attorney’s Fees instituted by the Sectional Council where services will be rendered, including those pertaining to diligences, under penalty of characterization of degrading fees”. CADE has already condemned other professional associations which imposed to their affiliates tables of prices or obligatory fees – that is, those that are not mere indication or that aim to guide. According to the Public Prosecutors of Minas Gerais, this is apparently (again, knowledge on the matter is based on an article by a specialized news source) the case of the Ethics Code which stipulated obligatory minimum prices to be fixed by Sectional Councils (of the States).

2015/11/30 by Grinberg e Cordovil Advogados

CADE RELEASES A GUIDE REGARDING THEIR LENIENCY PROGAM

The Administrative Council For Economic Defense – CADE released during their 75th trial session on November 11th 2015 a preliminary version of their Guide regarding the Antitrust Leniency Program, aiming to consolidate “best practices and procedures usually adopted for the negotiation of Antitrust Leniency Agreements” and to “serve as a reference for future negotiations”. Although the Guide, which is presented in the format of questions and answers, is not to be seen as law, its importance is due to its intention of being instructive, serving as a source of information and support to potentially interested parties (companies, natural persons, lawyers, etc.), and strives to make the procedures adopted by the antitrust authority in these negotiations more transparent a certain. The content of the Guide is directly derived from Brazil’s antitrust legislation and serves to disseminate best practices adopted by the organ in a moment when institutional dialogue regarding this instrument [Leniency] is at its highest. Alongside this, a proposal to change the authority’s bylaws (Internal Regiment), modifying provisions pertaining to “Leniency Plus” and “Plea Agreements (TCC)”, was presented. CADE will make both the preliminary version of the Guide and the proposal to alter the bylaws available on their website, and suggestions may be presented until January 10th 2016.

2015/11/13 by Grinberg e Cordovil Advogados

CANADAS’S COMPETITION BUREAU APPROVES EXCLUSIVITY DEAL TO NHL BROADCAST RIGHTS UNTIL 2026

Canada’s Competition Bureau has approved a C$5.2 billion broadcast agreement that grants Rogers Communications exclusive rights to broadcast the National Hockey League across the country for 12 years, reducing the number of national broadcasters from two to one. It is the largest media rights deal in the league’s history. Given the popularity of this sport and the league, the Competition Bureau had been adopting a safe approach since 2013 – the year the contract was celebrated. In fact, during last season, the Bureau was even able to collect actual evidence, as the agreement was already in place. Based on said evidence, the Competition Bureau concluded that Rogers would not hold a position of enhanced market power due to the deal, as it was already regarded as a relevant broadcaster before the agreement, since it Rogers is a multi-platform telecommunications company offering television, internet and mobile services and since consumers use web streaming more and more to watch NHL games. Furthermore, according to advertisers, their investments would not, as the deal would not affect the audience ratings. Although the agreement has been approved, it is possible other analysis in case new evidence comes to light. It is even possible to consider a regulatory analysis by the Canadian Radio-television and Telecommunications Commission.

2015/11/06 by Grinberg e Cordovil Advogados

CADE SUGGESTS CLOSING INVESTIGATIONS DUE TO LACK OF EVIDENCE

On October 7th, 2015, Cade’s General-Superintendence (SG) issued a legal opinion suggesting the closing of the investigation, in regards to all parties of the procedure, of an alleged cartel in the market of steel-grit for the cutting of marble and granite. The proceeding, which originated from a complaint, probed alleged client division, and the fixing of prices and price readjustments in the state of São Paulo. The awaited decision, handed down 8 years after the commencement of the proceeding, stated that the evidence available in the files was insufficient to confirm the alleged practices. The forensic analyses made in the tapes delivered by the complainant in the beginning of the investigations showed inconsistencies, since he had delivered 7 tapes as evidence but only 5 were analyzed, which had different content than expected and alteration marks. Those inconsistencies led the SG to conclude that they could not be used as main evidence. Besides that, the other supporting evidence available in the files was as fragile as the analyzed records. Documents collected during the search and seizure proceedings did not prove the existence of any meeting between the competitors, presenting only studies or strategic documents that are normal in a competitive environment. Furthermore, witness testimony did not bring any other valid evidence, including the complainant’s testimony, which was vague and with inconclusive information. Correctly, after almost 10 years of investigation, SG recognized all these facts and suggested the closing of the administrative proceeding. However, this not the end of the case; which was sent to Cade’s Tribunal, who can carry out a complementary investigation or simply put the case up for trial so that the decision to close the case can be accepted or not.

2015/11/04 by Grinberg e Cordovil Advogados

THE LEGAL 500 RANKS GCA AS ONE OF THE BEST IN THE AREAS OF COMPETITION/ANTITRUST AND INTERNATIONAL TRADE.

The Legal 500 is a British publication that evaluates law firms from different countries based mainly on comments from clients worldwide. GCA was ranked as one of the best in the practice areas of competition/antitrust and international trade and customs by the 2016 edition of The Legal 500 Latin America. According to The Legal 500, in relation to competition/antitrust, GCA “has gone from strength to strength since its launch in 2010, and combines ‘excellent market knowledge with partner-led service’. Its lawyers are ‘very capable specialists’ praised for their ability to ‘add value on complex transactions’”. Partners Mauro Grinberg was cited as a ‘leading light’ and Leonor Cordovil as an ‘excellent’ professional. In regards to the international law, GCA was highlighted as having a “tenacious and client-focused team’ attracts praise for its ‘strong professionalism’ and ‘deep knowledge of the anti-dumping process’”. Partner Leonor Cordovil was identified as a ‘safe pair of hands’. To read more see the full article at: http://www.legal500.com/firms/52700/offices/56019

2015/11/03 by Grinberg e Cordovil Advogados

CADE WILL PUBLISH GUIDELINES FOR CEASE AND DECEASE AGREEMENTS

The 21st International Competition Seminar, organized by IBRAC took place on October 16th and 17th, 2015. One of the main subjects discussed was the fact that CADE is drafting guidelines for negotiations and signing of Cease and Decease Agreements (TCC). Diogo Andrade, Deputy General-Superintendent, stated that the changes in the negotiation policies for agreements, which took place in March, 2013 were a great advance for CADE. However, the antitrust authority intends to improve it even more by publishing guidelines for its servants and for the public. The internal guidelines aim to reduce transaction costs by improving and standardizing the internal procedures during negotiations. The public guidelines will be focused on transparency for companies and individuals interested in celebrating Cease and Decease Agreements. As it has been seen in other jurisdictions, particularly in the US, the incentives for celebrating a Cease and Decease Agreement should be based on two fundamental premises: transparency and predictability. For this reason, according to the Deputy General-Superintendent, the guidelines will have two key topics: (i) transparency and predictability; and (ii) uniformity and standardization. The first will address the company’s concerns, such as how its collaboration will be measured and the methodology for calculating the financial contribution, as well as more complex issues such as the joint use of Leniency Plus and Cease and Decease Agreements. The second key topic aims to create a standard model based on CADE’s jurisprudence and experience. Note that CADE is increasingly concerned about the issuance of guidelines for both its servers and for the public, given the well-known need that their procedures and negotiations are clear, predictable and standardized, so as to give greater security to citizens and the agency.

2015/10/30 by Grinberg e Cordovil Advogados

FINES APPLIED BY CADE MAY INCREASE

Fines applied by the Administrative Council of Economic Defense (CADE) to companies and individuals involved in antitrust violations must be higher than the profits gained with the illegal practice, whenever it is possible to estimate said profit. Based on this legal provision, Counselor Cristina Junqueira, who recently became part of CADE’s Court, has indicated her intention to apply harsher punishments. In a recent Trial Session, the Counselor stated that the fines applied by CADE serve two purposes: (a) remedying the damages caused by the illegal practice and (b) discouraging players to commit new antitrust infractions. She pointed out that to achieve those objectives, CADE’s fine must reflect what the Law states. This matter was again addressed by the Counselor in the 21st International Competition Seminar, held last October, 16th. Counselor Cristiane asserted that CADE has been too conservative regarding fines and that this subject must be treated as priority by the authority. According to her, the fines applied so far have not considered the profits and advantages gained by the companies by means of the antitrust violation. At this seminar, Counselor Cristiane presented a hypothetical case of a cartel that lasted six years. Her understanding was that, even if it was not possible to estimate the damages caused by the violators, the maximum penalty (which is 20% of the revenue of the economic group in the year before the administrative proceeding was opened) would be lower than the damages caused throughout those years, as the penalty would only consider the revenues of one year. This is s subject of great relevance to antitrust law, and its evolution before CADE must be closely watched. Anyway, the Counselor is merely reinforcing a very well-known saying: the “crime” must not pay.

2015/10/30 by Grinberg e Cordovil Advogados

CARTEL AGREEMENT IN THORACIC SURGERY MARKET

On September 16th, 2015, the Administrative Council of Economic Defense (CADE) imposed to the Cooperativa dos Cirurgiões Cardiovasculares e Torácicos do Estado da Bahia – Cardiotórax a fine of R$ 106,410.00 (one hundred and six thousand, four hundred and ten Reais) for entering into cartel agreements in the market of thoracic surgery. In a complaint filed by the Public Prosecutor Office of the State of Bahia, on November 30th, 2005, Cardiotórax was accused of implementing a cartel agreement by demanding to intervene in any proceeding in this kind of surgery, as well as by exclusively establishing the price and method of collecting the medical fees. Also, the defendant had allegedly standardized the values of the services of cardiovascular surgeries, submitting its own price list to the health plan operators, with values exceeding in 700% (seven hundred per cent) the ones presented by the Brazilian Hierarchical Classification of Medical Procedures (“CBHPM”), and had charged the patients directly, regardless of health plan. At that, CADE’s Tribunal unanimously understood that, beyond the fact that the defendant had monopolized the doctors in Bahia, it had also applied a mandatory list of fees. Notwithstanding this initial unanimous decision, in the same full session some Commissioners disagreed on the calculation of the fine, such as João Paulo de Resende. According to him, the amount imposed by the Reporting Commissioner did not reflect the actual income of the doctors; thus not being able to actually hinder anticompetitive practices by the Cooperative – for him, the fine had to be set at R$ 872,562.00 (eight hundred, seventy-two thousand and five hundred and sixty-two Reais). Even so, the majority of the deciding body rejected these arguments submitted by the Commissioner and followed the initial vote of the Reporting Commissioner, also in terms of the value of the fine. Accordingly, Commissioner Márcio de Oliveira Júnior voted for upholding the amount of the fine and argued that, so as to even lawfully consider the actual income of the doctors, they should have been party to the proceeding from the very first moment.

2015/10/27 by Grinberg e Cordovil Advogados

CADE APPROVES ASSOCIATION AMONG BANKS

On September 9th, the Administrative Council of Economic Defense (CADE) published a decision approving the transaction involving Bradesco, Itaú Unibanco, Santander Brasil, BTG Pactual, BB Banco de Investimento (linked to Banco do Brasil), Citibank, Deutsche Bank, HSBC Brasil, BNY Mellon, Votorantim Asset Management, BNP Paribas Brasil, Caixa Econômica Federal and BM&FBovespa – institutions that are part of the Brazilian Association of Finance and Capital Market Entities (ANBIMA). Said association among these Brazilian and foreign banks will result in a platform called NewCo, which will be used for information exchange among its participants regarding investment funds and portfolios related to these banks. According to the applicants, there will be no sensitive information involved, as NewCo will only manage information and data that are currently exchanged among players, ANBIMA and the Securities and Trade Commission (CVM). In brief, the role of this new association will be to implement uniform means of communication among the abovementioned players, so as to make these contacts more efficient. CADE’s General-Superintendence recognized that the transaction would not result in vertical integration or horizontal overlapping. However, the authority stated that since NewCo is an association formed by competitiors, some precautions were necessary to avoid its use in an anticompetitive manner. Thus, the GS/CADE demanded that corporate governance rules be established to avoid collusion among the involved parties.

2015/10/21 by Grinberg e Cordovil Advogados

CHAMBERS AND PARTNERS RANKS GCA AMONG THE BEST IN THE COMPETITION/ANTITRUST AND INTERNATIONAL TRADE/WTO AREAS

GCA was ranked among the best law firms in the competition/antitrust and international trade/WTO areas by the English publication Chambers and Partners in the 2016 edition. According to Chambers and Partners, in the competition/antitrust area, GCA is a “Highly regarded domestic firm with a significant foothold in the competition and antitrust arena. Advises on large domestic and cross-border cartel investigations. Notable expertise in leniency agreements and merger control matters. Clients frequently praise the team’s hands-on approach”. Chambers and Partners highlights the opinion of one GCA’s clients that “Grinberg, Cordovil Advogados has a very specialized team. Their lawyers are very pro-business, dedicated and committed”. Regarding partner Leonor Cordovil, the publication accentuates that “She is an outstanding professional” and that “She is a leading name in the field and always manages to be available with unfailing dedication”. Regarding Mauro Grinberg, Chambers and Partners remarks that he frequently advises clients on cross-border issues and is singled out by sources for his pragmatic approach. In international trade/WTO, according to Chambers and Partners, the team is known as a “Well-regarded boutique advising on competition and international trade matters. Significant experience advising big name clients from the chemical, energy and steel sectors on anti-dumping investigations, customs law and temporary tariff adjustments before the Brazilian trade authorities”. Chambers and Partners emphasizes one of GCA’s client’s opinion that “GCA is marked by its great experience and technical accuracy in commercial defence”. Furthermore, “They have the advantage of being a young, extremely dynamic and specialized boutique focused on economic law. Additionally, they have excellent working relationships with the relevant authorities in Brasília including DECOM”. Leonor Cordovil is recognized by peers as “an expert in trade and antitrust matters with a solid international practice”. Chambers and Partners highlights that partner Ricardo Casanova Motta “provides valuable support to Cordovil and is praised by clients for his solid legal foundations and dedication to their causes”. See the full articles at: http://www.chambersandpartners.com/41/26/editorial/9/1#RankedLawyers_Tab and http://www.chambersandpartners.com/41/455/editorial/9/1#241846_editorial

2015/10/04 by Grinberg e Cordovil Advogados

CHALLENGED LAWFULNESS OF FINE

On September 15th, 2015, the Federal Court of Brasília decided to cancel the fine of R$ 1.7 billion, imposed by the Administrative Council for Economic Defense (“CADE”), in 2010, to White Martins, for criminal cartel activity in the sector of industrial and hospital gases. This is one of the biggest cases in terms of fines value, in the history of the antitrust agency, as the fines exceeded R$ 2.3 billion. The Court found that the application of the fine, pursuant to the terms of Cade’s final decision, were illegal, since it had allegedly been imposed after telephone calls interceptions solely based on an anonymous complaint and, once excluded these evidences, there would be no other elements that could justify a conviction. In fact, the Superior Court of Justice (“STJ”) already ruled against the application of a penalty solely derived from these types of procedures. In this cartel at issue, the gases companies allegedly entered into deals to fraud bids, by means of dividing costumers among themselves within several markets, such as health, food, beverages and metallurgy, which was reported, back in 2003, by an anonymous complaint to CADE. During the course of this proceeding, judicial orders determined that call interceptions and search and seizure orders be conducted against the investigated parties, in which headquarters certain rules indicating how these costumer divisions would be operated. (Administrative Proceeding No. 08012.009888/2003-70, White Martins gases Industriais Ltda.; Air Liquide Brasil Ltda.; AGA S.A. and others). At that time, CADE concluded that the fines imposed to White Martins should be even higher than the fines applied to the other companies involved, for reasons of the company’s relapse: it had already been condemned, in 2002, for purchasing an raw materials from its competitors in an amount higher than necessary to manufacture, preventing other competitors from having access to essential inputs (i.e., hoarding behavior). Despite this, both White Martins and the other companies involved, such as Air Liquide (a fine value of R$ 197 million), Air Products (R$ 179 million), Indústria Brasileira de Gases (IBG) (R$ 6.7 million) and Linde Gases (R$ 188 million), denied the practice of cartel and appealed against the fines before the Brazilian Courts. Besides these companies, executive officers were also convicted with fines values varying from 67 thousand Reais to R$ 3.5 million. As this decision can be appealed, CADE, acting through its President, Vinícius Carvalho, affirms that the agency will challenge the referred decision, pointing out that a cartel had taken place in this sector, as it had been suitable and promptly proved within the aforementioned administrative decision. Furthermore, the Council also argued that the administrative conviction was not applied based on the sole content of the call interceptions, but, apart from that, it had been due to other documents obtained by means of search and seizure orders; thus not allowing that a potential illegality of the collected evidences was declared whatsoever.

2015/09/22 by Grinberg e Cordovil Advogados

GUIDELINES FOR THE ANALYSIS OF THE PREMATURE CONSUMMATION OF ACTS OF ECONOMIC CONCENTRATION.

With the implementation of Law 12.527 in 2011, Brazil joined the list of countries which apply the premerger notification rule. In other words, now the competitive conditions between the merging companies and their infrastructure must not be altered until the final approval by the Brazilian Antitrust Authority – CADE. This means the premature consummation of mergers now characterizes the anti-competitive practice known as gun jumping. The conduct is punishable by fine (between R$ 60,000.00 and R$ 60,000,000.00), declaration of invalidity of the operation, and can also lead to the opening of an administrative proceeding against the merging parties before CADE. With the intention of promoting greater legal certainty for market players, in May of this year the Agency published a document entitled “Guidelines for the analysis of the premature consummation of acts of economic concentration”. At the same time the Guidelines admit the sharing of information is a natural element to the negotiations of merging parties; it also warns its abuse will be understood as gun jumping. For this reason, the parties must be particularly careful when exchanging competitively sensitive information by avoiding the sharing of data concerning company expenditures, production capacities, expansion plans, prices and discounts, main clients, wages and staff, etc. Furthermore, the same care needs to be applied to maintaining an intact competitive environment until CADE concludes its analysis of the operation. This means contractual arrangements that may result in premature consolidation of the merging parties should not be used, such as: previous non-compete clauses, having the contract’s term start before its signing (when this entails the integration of the parties), in anticipated payment or payment in full clauses, among others. The Guidelines suggest a list of measures to reduce the risks of gun jumping, such as the creation of an “Antitrust Protocol” (document that reflects the procedures adopted by the parties until CADE’s final decision), the establishment of “Clean Teams” (neutral teams indicated for complex operations) and the use of “Parlor Rooms” (monitored settings for discussions related to the operation). In addition, the document defines the practice and gives examples of actions that could be characterized as gun jumping as well as details of possible punishments that can be imposed on offenders. Although the suggestions contained in the Guidelines are not binding, its compliance is highly recommended to private agents.

2015/09/18 by Grinberg e Cordovil Advogados

FEDERAL PROSECUTOR’S OFFICE AND SOCCER: PAYMENT TO FOOTBALL SOCCER

News published by the press reports that the Federal Prosecutor’s Office has presented to the Administrative Counsel of Economic Defense (CADE) a request for investigation as to how the compensation is made, by Rede Globo, to soccer clubs in the Brazilian Championship. Until 2011, the division of fees was calculated by the teams themselves, through a group ofthem called The 13 Club (Clube dos 13). For this point on, some major teams started to negotiate directly with TV networks, resulting in higher payments. The claim by the Federal Prosecutor’s Office was due to complaints by smaller teams that felt harmed. It is important to follow this discussion closely, since CADE’s trend, as the competition watchdog, is not to intervene in the market. According to the prevailing understanding, each team’s popularity should attract thelarger sponsorship, resulting in higher revenue quotas.

2015/09/16 by Grinberg e Cordovil Advogados

CORRUPTION: LENIENCY AGREEMENT NO LONGER EXECUTED BY THE PUBLIC PROSECUTOR’S OFFICE?

The Third Panel of the Federal Regional Court of the Fourth Region (“TRF4”), based in Porto Alegre, decided on August 22, 2017 that the Public Prosecutor’s Office does not have the proper authority to execute leniency agreements that involve acts of administrative improbity without the participation of other bodies.

The Court understood that, if the leniency agreements lead to some kind of availability of public assets, the Office of the Comptroller General (CGU, in Portuguese) is the only one with power to execute such agreements. Obviously, it does not exclude the participation of the Public Prosecutor’s Office, which is able to execute the leniency agreements, provided that they are submitted, as a necessary condition, to the CGU.

It is obvious that the decision may, in principle, be modified by the Court itself or by the Superior Court of Justice, but it indicates that caution is needed in case someone aims at executing a leniency agreement involving an act of administrative improbity.

2017/08/29 by GCA Conteúdo

New Cade’s Attorney General has just been appointed

 

The President of the Republic has just appointed the lawyer Walter Agra Júnior, from Paraíba, to act as Attorney General of the Administrative Council for Economic Defense (CADE). This is an external choice of a professional who holds in his resumé a Master Degree in Procedural Law by the prestigious Federal University of Pernambuco, which indicates it could give a great contribution to the autarchy in procedural matters.

His duties include not only the legal guidance to Cade, in cases to be judged by the Court (and in which it will deliver opinions), as well as to represent the autarchy in the cases it figures as plaintiff or defendant.

The appointment still depends on the Senate’s approval.

2017/08/29 by GCA Conteúdo

ITAU/CITIBANK: THE FINANCIAL MARKET AT CADE

Brazil’s Administrative Council for Economic Defense (“CADE”) approved, in the last trial session, held on August 18th 2017, the partial acquisition of the Brazilian operation of Citibank Bank by Itau Bank. The acquisition was partial because it only involved the credit market, which consists of 71 agencies in 26 cities.

It was feared that the great severity shown in the two recent cases (Kroton/Estácio and Ipiranga/Alesat) would remain in this case, but it did not occur; it was pointed out, for example, that this procedure is much smaller than the acquisition of HSBC by Bradesco, approved in 2016.

However, behavior remedies (restrictions on competitive language) were applied. To clarify, remedies can be structural (where there is an obligation, for example, of selling assets) or behavioral (where there are obligations to do or not do something). In this case, the main remedy is the obligation to not acquire any other financial institution for 30 months (which does not include Itau / XP, already under review by Cade).

2017/08/28 by GCA Conteúdo

Banking System, CADE and Bacen: Finally in peace?

The Administrative Council for Economic Defense (CADE) and the Central Bank of Brazil (BACEN) have created a Work Group (WG) to study the defense of competition in the banking system and possibly seal the peace between the agencies.

Not that there has been a serious conflict, but, historically, the two agencies defend their own jurisdiction for the competition analysis. We have, curiously, bank mergers (a very recent case is Itaú/Citibank) that have continued to be conducted by CADE even after a court decision recognizing BACEN’s jurisdiction (Bracesco/BCN). In conduct matters, CADE has recently opened two processes concerning the exchange market.

What the WG will do (exchange of information between the two agencies, workshop, etc.) could certainly lead to a greater understanding, something that will certainly bring more legal certainty to the sector.

2017/08/28 by GCA Conteúdo

REGULATION AND COMPETITION: LIMIT TO CADE’S ACTION

The Brazilian Association of Radio and Television Stations (Abert), by means of a consultation related to the Merger Review n. 08700.001390/2017-14, has questioned whether the Administrative Council for Economic Defense (CADE) should consider a regulatory restriction related to a legislation or specific regulation concerning certain economic activity. The case was about an alleged prohibition of a share superior to 30% in the capital of telecommunication companies with headquarters in Brazil.

CADE’s Attorney General submitted the Report n. 27/2017 on July 12, 2017, concluding that CADE had no jurisdiction to apply regulatory dispositions, especially when there are regulatory agencies with such jurisdiction.

2017/07/26 by GCA Conteúdo

CADE recommends the filing of the case on exclusivity agreements in the ice cream market

On July 14, The General Superintendence of the Administrative Council for Economic Defense – CADE concluded the analysis of the administrative proceeding concerning the establishment of exclusivity agreements by the companies Unilever and Nestlé in the impulse ice cream market (immediate consumption). In the Technical Note, CADE’s General Superintendence (GS/CADE) recommended the filing of the investigation considering the lack of evidence to support the allegation that the companies were performing anticompetitive practices.

In the decision, GS/CADE analyzed two specific conducts: (i) the exclusivity of the use of freezers, by Nestlé and Unilever, with the requirement of exclusive packaging of the ice cream of each of the companies, ; (ii) the exclusivity of merchandising/sales (merchandising regarding Unilever and sales regarding Nestlé), including, in addition to the freezer exclusivity, minimum volume clauses, minimum capital, concession of bonus and preferences in the renewal.

Regarding the freezers exclusivity agreements, the companies have demonstrated the economic rationality of this exclusivity requirement, once they bear the costs of installation and maintenance. Therefore, CADE understood that the exclusivity of the use of freezers is reasonable – which, in addition to be an usual market practice, would not create barriers to entry for new competitors.

Concerning the exclusivity of sales and merchandise agreements, SG/CADE verified that the companies enter into this kind of agreement with a small amount of sale points. Consequently, the exclusivity in the limits practiced by the companies would not lead to market foreclosure.

The Superintendence concluded that the ice cream market, in general, is very dynamic in the country, with a great evolution since the commencement of the administrative proceeding at issue. Even if Unilever and Nestlé remain as leaders of the market, new competitors are entering it and they have potential to compete with them, especially on a regional basis.

The case was forwarded to CADE’s Administrative Tribunal, which will carry out the trial.

2017/07/26 by GCA Conteúdo

Approval of the transaction which submission has been requested by CADE

On June 6, the Administrative Council for Economic Defense (CADE) approved without restrictions the acquisition of the contrast media and delivery systems (CMDS) of Mallinckrodt by Guerbet.  Since the companies did not have enough revenue for a mandatory notification, the transaction was concluded on November 27 of 2015, without submission to the authority. CADE, however, has received a report from GE Healthcare of Brazil, claiming that there was a high market concentration arising from said transaction.

After considering that the involved companies’ market shares were very high, amounting to 2/3 in some cases, Cade has requested the filing of the transaction. Nevertheless, after a comprehensive analysis of the case, CADE’s General Superintendence (SG/CADE) has recognized there were no evidences that the companies exercised market power after the merger – it, in fact, has not been seen in a negative way by the clients. Finally, SG/CADE has also recognized that there was rivalry in the analyzed markets in a way that competitors could contest an eventual abuse of dominant position by Guebert.

Thus, SG/CADE has recommended the approval of the transaction without restrictions. CADE’s Court has accepted the recommendation, approving the completed transaction.

2017/06/16 by GCA Conteúdo

CADE fines individual for confidential information disclosed

At the trial session held on June 7th, 2017, CADE’s Tribunal fined an individual for the disclosure of information considered confidential within the scope of an investigation in progress by the authority.

The individual, defendant in an administrative proceeding in which an alleged cartel in the market of PVC pipes and fittings is investigated, had disclosed information which he had access to on a confidential basis for the sole purpose of enabling his defense at a meeting of an association which he is a member of (Brazilian Association of Material for Sanitation Manufacturers – ASFAMAS), according to other attending members’ testimony.

According to the defendant, the information disclosed by him at the meeting was not unheard of, but had already been published by a press vehicle. The Reporting Commissioner João Paulo de Resende disagreed with that and found it to be a serious misconduct, considering the exposure of content restricted to the companies under investigation. The fine was unanimously fixed at R$50,000.00 (US$ 15,230.00).

2017/06/14 by GCA Conteúdo

SETTLEMENT AGREEMENT NEGOTIATIONS AT CADE

The negotiation of a settlement agreement (TCC) with the Administrative Council for Economic Defense (Cade) is more complicated than it appears. This difficulty stems from the opinion of two commissioners who understand that the amount of a fine resulting from an administrative procedure should be calculated based on the amount earned (i.e. advantage gained) from the conduct instead of gross revenue from the year prior to the initiation of the procedure.

This divergence began its descent into paroxysm when a settlement agreement was negotiated by a member of this minority which defends a fine based on advantage gained, was refused by the disagreeing majority, being worth reminding that the majority today is 3×2. This means that when a settlement agreement is negotiated with a commissioner of the minority current, the interested parties should look for a commissioner of the majority current.

It is worth remembering that the party requesting a settlement agreement does not pick the reporting commissioner, which is defined by a draw, being that the reporting commissioner will negotiate in Cade’s name. A situation where a party will have to negotiate with both currents, one with the power to impose a calculation method of the pecuniary contribution and the other with the power to decide against it, will be very complicated.

2017/02/06 by Grinberg e Cordovil Advogados

Predatory pricing as a cartel tool

On January 23rd, 2017, Cade convicted the companies Elegê Alimentos S.A., Thurmer & Leitzke Ltda. and Indústria de Laticínios Santa Silvana Ltda., the cooperatives Consulati and Coopal, the syndicate Sindilat and several individuals of cartel in the Type C pasteurized milk market in the Pelotas micro-region.

The Federal Police Department of Pelotas started to investigate the case in 2004, after they received a complaint made by a local milk producer. The Department counted with under covered cops to investigate this conduct.

This case is special because of the dynamics of the cartel. Elegê and Consulati, as market leaders, enforced the participation of other smaller companies in the cartel, by threatening them with predatory pricing, and used this tactic to ensure that they followed the prices imposed by them.

The Companies, in fact, kept their prices below the cost of production between June 2003 and early 2004, but Cade’s Commissioners did not agree if it characterizes predatory pricing or not, as well as its importance on the organization of the cartel, which existed from January/February of 2004. During the cartel, prices were set at around R$ 1,00, with smaller companies charging R$ 0,95.

Despite the divergence between the Commissioners, Cade’s Tribunal understood that the practice of predatory pricing is the price reduction in order to exclude competitors from the market, for the subsequent charge of monopoly prices. In other words, an exclusionary goal must exist. However, in the present case, the predatory pricing was used as a coercive and maintenance mechanism of the cartel.

The companies were only convicted of cartel practice. However, the divergence was extended to the calculation of the fine, with two Commissioners arguing that it should be based on the advantage received by the companies, while the majority agreed to base it on 2011 gross revenue.

2017/02/01 by Grinberg e Cordovil Advogados

THEORY OF CONTROL OVER THE ACT IS NOT ABSOLUTE

During the trial of Habeas Corpus 127.397/BA, the Supreme Court (STF), following the opinion of Minister Dias Toffoli, addressed limits to the Theory of Control Over the Act, which was commented during the trial of Criminal Case 470 (also known as the “Mensalão” case), also before the STF.

The opinion states that: “The unenforceability of the individualization, in the complaint, of the conducts of the directors of the legal entity must part from the fact that responsibilities of the members of the administrative council or the directors of the company, or the partners or the managers of the limited company are not differentiated in the statute or in the social contract,”.

Also: “When it is possible to differentiate liabilities, the complaint shall not be grounded generically on the condition of director or partner of the company”.

Thus, the logic that all the senior officials are automatically responsible for everything bad a company does falls apart. Obviously, such officials will be responsible according to their participation in the events.

2017/01/03 by Grinberg e Cordovil Advogados

CORRUPTION: LENIENCY PROCEDURE

On 12/15/2016, the Attorney General’s Office (“AGU”) and the Comptroller’s Office, the latter including the Department of Transparency, signed the joint ordinance establishing the procedures to enter into leniency agreements in matters of corruption.

The procedures are quite clear but don’t make any provisions about the position and eventual participation of the Public Prosecutors.

2017/01/03 by Grinberg e Cordovil Advogados

From 2002 to 2016: the Nestlé/Garoto merger

After almost 12 years in court, the merger between Garoto and Nestlé is inching closer to an approval from Cade. This may happen due to the approval, on November 18th, of Nestlé’s administrative motion for resolution of the case, which was filed in December 2015. In this package of proposals, the company suggested the enforcement of competitive remedies, which would allow the approval of the merger and, therefore, the end of the lawsuit. Cade’s change of attitude is due to changes in the market since 2012. Considering only the ice cream toppings’ segment, other companies entered the Brazilian market and Nestlé/Garoto are no longer the leader, moreover, they also have a high level of idle capacity in their factories. A different situation is seen in the chocolate market segment, since Cade considered the existence of a high degree of loyalty between consumers and brands and that the highest barrier to enter the market is actually due to recipes, textures and chocolate flavors. Therefore, having a portfolio with products that have high consumer fidelity brings competitive advantage to the company, which is Nestlé’s and Garoto’s case, who has remained the leader of the market during the last 15 years. For the approval of the merger, the companies will have to meet the proposed remedies, which will imply reducing their participation in the chocolate market. As of this moment no acquisition of assets has been notified to Cade. Finally, Cade’s Commissioners believe that this review of their decision will not create an unstable environment for their decisions, since this has occurred in a very specific and unique case.

2016/12/05 by Grinberg e Cordovil Advogados

Case filed: Lack of evidence or lack of causal link with dominant position?

Cade’s Court understood, on the trial session held on November 3rd, 2016, that there was not an anticompetitive conduct committed by Oi regarding cable cuts and cancellations of GVT lines that have been considered fraudulent, and decided, therefore, to file the case. The Reporting Commissioner João Paulo de Resende understood that Oi’s actions have been serious and could construe a violation to the regulatory standards of Anatel, however, to establish infringements of a competitive nature, a link should be established between those conducts and Oi abuse of dominant position, “demonstrating that in addition to the individual interests of GVT, the diffuse and collective interests related to the regular development of the free market economy could also have been affected’. The Reporting Commissioner stated that distorting connections and cutting cables may harm GVT, but both actions could have been taken by any other competitor, regardless of their position as market leader. Commissioner Gilvandro de Araújo, although agreeing to the Reporting Commissioner’s  decision, disagreed with the vote reasons. He voted for the filing of the case due to the absence of evidence to show that the occurrences have been capable of jeopardizing the competitive structure in the market. “The material action has to produce a diffuse lesivity, which characterizes the competitive problem”, affirmed the Commissioner. “If we come across material actions that have abstract potentialities, we have to bring them to the concrete effect. Otherwise, any action would have anticompetitive effect”.

2016/11/28 by Grinberg e Cordovil Advogados

CADE reaffirms prohibition of standardized fees

In a trial session which took place on November 9th, 2016, CADE fined Unidas, a doctors’ association from the Brazilian state of Mato Grosso[1], for demanding that its associates charge standardized medical fees for anesthesia services. According to the Reporting Commissioner, Márcio de Oliveira Jr., this standardization will be illicit whenever the association responsible for it (i) is not entitled by law to negotiate prices collectively; (ii) uses direct or indirect means of coercion; and (iii) prevents negotiations that would allow both parties to bargain freely. The Commissioner also mentions in his vote that this issue raises discussions on the existence of countervailing power, and whether or not it could eliminate the conduct’s potential to harm competition. This argument was previously made by former Commissioner Ana Frazão, in a dissenting opinion in a similar case [2]. The former Commissioner emphasized in her opinion that the market of healthcare services is characterized by serious asymmetry of information due to market power held by healthcare providers, which are the main customers of medical doctors’ associations. The former Commissioner thus concluded that the economic advantages gained by healthcare providers when negotiating with patients were not being properly transferred to doctors. In this scenario, collective negotiations between doctors could be a licit manner of confronting the providers. This opinion, however, was not followed by any other Commissioners, though Commissioner João Paulo has stated that, regarding the Unidas case, he is concerned about the relationship between healthcare providers and medical doctors’ associations, which is getting close to a monopoly on both ends.

2016/11/25 by Grinberg e Cordovil Advogados

Credit Bureau: Efficiencies Analysis

In a recent trial session held on November 9, CADE’s Court judged the transaction which consisted in creating a new Intelligent Credit Manager (“GIC”) formed by the country’s five largest banks – Itaú, Banco do Brasil, Caixa Econômica Federal, Santander and Bradesco. The Bureau seeks to boost the development of registration of positive and negative credit information from both companies and individuals. The analysis of the case was marked by the debate concerning the efficiencies and possible concerns caused by the transaction. On the side of possible competition concerns, it was indicated the vertical integration between the banks and the new company, having the Commissioner João Paulo de Resende highlighted that there is a double concern due the existent vertical integration in other related markets (such as the credit card market). Regarding the positive effects of the transaction, the Rapporteur-Commissioner Paulo Burnier presented, specially, the potential increase of the concession of credits and the decrease of risk involved in loans, due to the development of this positive registration. Finally, following the General Superintendence’s opinion, the transaction was approved by majority by CADE’s Court, conditioned to remedies to ensure the complete independence of the parts, such as (i) the prohibition to share structures with the GIC, (ii) the prohibition of the GIC to operate in other markets and (iii) the prohibition of marketing campaigns to promote the GIC.

2016/11/23 by Grinberg e Cordovil Advogados

CADE ANALYZES CARTEL BASED ON THE RATIONALITY RULING

The Administrative Council of Economic Defense (Cade), at its 94th session, on November 9th, judged a cartel accusation in special food biddings. The collusion had allegedly occurred between Support and its distributors, within the public bids of Ceará and Santa Catarina States, to provide food products to people who are unable to digest certain amino acids, such as phenylalanine. The Tribunal, partially following the General Superintendence (SG)’s opinion, closed the proceeding on both the predatory pricing and cartel accusations concerning Support, due to the lack of evidence and economic rationality in its alleged conduct, since the company would benefit regardless of which distributor wins the lots. The other defendants, the distributors within the corresponding States, were unanimously condemned for the practice of cartel in bids. The antitrust authority understood that there was evidence of communication between them, such as documents with the same formatting, jointly submitted proposals and same prices, which were aggravated by the verification of family ties. There was divergence between the Reporting Commissioner, Alexandre Cordeiro, and João Paulo de Resende, on penalty dosimetry. Commissioner João Paulo de Resende suggested that only the bidding lots values that had an actual similarity of prices be added, with an estimated overpricing rate of 20%, so as to calculate fine values that could reflect a real intention to defraud the public bids. Commissioner Alexandre Cordeiro, on the other hand, suggested that the penalty be based on the sales derived from the corresponding economic activity in 2009, with the application of a 13% rate. His vote was fully followed by the other Commissioners.

2016/11/18 by Grinberg e Cordovil Advogados

“D&O” insurance for administrative proceedings

One of the insurance segments that has become more attractive due to risks of public contracting, and the persecution of cartels and corruption refers to directors and officers liability insurance (“D&O”). This type of policy offers personal financial and patrimonial protection for administrators and directors of companies that are sued for damages from acts during their administration. In regards to administrative litigation, many insurance companies who are called upon in matters of fines, procedures and deals with Cade deny coverage stressing that this protection would not encompass liability in the punitive-administrative sphere. On this matter, the Superintendence on Private Insurance (Susep) approved Norm nº 541, in which it states that in the case of culpable acts (excluding coverage from intentional acts) carried out while exercising their administrative function “coverage can encompass contractual and administrative fines and penalties imposed on the insured (…)”. That is, in some instances this type of insurance may offer coverage for punitive-administrative measures, which can be very useful in light of increasing interest by antitrust authorities to hold individuals responsible for anticompetitive conducts (in this sense, see the repercussion from the Yates memo). However, one issue that is still undefined is the possibility of this type of insurance to encompass pecuniary contributions to be disbursed in agreements with the authority, since Cade requires that parties who enter into agreements recognize their participation in the investigated conducts if these concern deals, combinations, manipulation or arrangements between competitors. It is worth remembering that in 2013 Brazil’s Federal Audit court authorized public companies to contract this type of insurance for its councilors, directors and administrators, whose coverage “shall not encompass ilicit or illegal acts carried out intentionally or with guilt”; in the case of culpable acts, coverage is possible as long as it is “shown that normative and legal precautions and measures that one would except from the common man were adopted”. Obviously, there will always be a doubt on whether or not the participation of executives in cartels will be seen as intentional or culpable.

2016/11/11 by Grinberg e Cordovil Advogados

CADE Commissioner seeks changes to negotiations of plea agreements

During a trial session, which took place in the end of June (06/22), commissioner João Paulo de Resende signaled he would start voting against plea agreements (TCCs) in hardcore cartel cases when found that the financial contribution does not correlate to the amount of damages caused to competition by the investigated conduct. Months after this statement, the commissioner has maintained this position in many cases the Tribunal has scrutinized. In a recent session (10/18), he voted against the approval of three plea agreement requests, on the grounds that there had not been a single attempt to calculate the benefits/profits received by the offender, neither had the offender’s turnover been calculated based on the fields of activity set forth by CADE’s Resolution no. 3. The commissioner had previously stated, in a session which took place in July 27th, that he considers the variation of fine and discount rates as the variables that can be manipulated to reach a proportional amount, while the basis of calculation would be strictly defined by law and Cade’s resolutions. As so, it would be impossible, in his point of view, to change how this basis is calculated. Other Commissioners, however, do not agree with this stance. Commissioner Gilvandro de Araújo has already said on another occasion that a change to calculation of pecuniary contribution in order to contemplate the profits gained by the offender in all cases may create some uncertainty in the market, stating also that there are other benefits in plea agreements other than a financial contribution, such as the confession of the practice and the opportunity to prevent cases from being discussed at the Judiciary. Commissioner Márcio de Oliveira, in turn, believes that proportionality is a broad principle, which means that the contribution can be considered proportional even if it does not take into consideration the profits gained alone; also, using the field of activity established by CADE’s Resolution no. 3 can sometimes lead to clearly unproportionate results. Other commissioners believe that changing how plea agreements are negotiated is a risky task that must be carefully undertaken in order to prevent CADE’s settlement program from suffering any damage.

2016/11/09 by Grinberg e Cordovil Advogados

Cement: (ii) bis in idem

CADE decided, in the trial session which took place in October 18th, to terminate a proceeding which investigated eight cement companies accused of refusing to sell cement to some of their clients. According to the Reporting Commissioner, whose Opinion was unanimously joined by the Council, the practice under investigation in this proceeding had already been convicted previously, at the time when the “cement cartel” was judged, in May 2014. The conclusion was that convicting the companies in this new case would violate the principle of ne bis in idem, which prevents someone from being convicted twice for the same set of facts. Due to the complexity of infractions against the economic order, an illicit practice may, in many cases, comprise other conducts which are also individually illicit. In this specific case, the companies would refuse to supply cement as a way to implement the market allocation they had agreed on, in the midst of a cartel which lasted over two decades. Thus, when the eight companies had been convicted in 2014, the practice of refusing to sell was already encompassed in the cartel practices.

2016/11/08 by Grinberg e Cordovil Advogados

Cade reassess transaction involving companies JBS, Rodopa and Forte

During CADE’s last trial session, held on October 18, 2016, the Authority reviewed the clauses stipulated in the agreement signed in 2014 with the JBS, Rodopa and Fort concerning the transaction approved with restrictions by the Authority in 2014. The review was initiated due to the recommendation of CADE’s Attorney’s Office, given the breach, by the companies, of a number measures stipulated in the agreement to decrease the competition problems identified during the analysis of the transaction. The Reporting Commissioner Márcio de Oliveira Júnior, besides applying a non-compliance fine, stipulated new terms and conditions for the fulfillment of the obligations, and determined that the non-compliance of this decisions will result in the complete rejection of the transaction. The Commissioner pointed out that this measure has not been imposed at this moment only due to Rodopa’s difficult financial situation. Therefore, CADE determined the early expiration of the lease between JBS, Rodopa and Forte, besides the immediate sale of plants and brands. Nonetheless, a fine for deceitfulness was imposed in the amount of R$ 3,5 million to the companies, due to lack of information to CADE on the prior existence of a license that prevents fulfillment of certain clauses of the ACC. The Council highlighted that the document was already known by Rodopa, and it was never mentioned when analyzing the approval of the merger.

2016/11/01 by Grinberg e Cordovil Advogados

Cement: (i) lack of evidence

In its latest trial session (10/18/2016), the Administrative Council for Economic Defense (Cade) shelved an administrative proceeding investigating cement producers accused of refusing to sell and/or unreasonably raising prices of certain types of cement to concrete producers who are not vertically integrated with the intent of harming them in the market. This shelving was determined due to a lack of evidence, among other reasons. In their votes, Paulo Burnier and Cristiane Alkmin highlighted that despite the parallelism in the conduct, there is no evidence that this was agreed upon by the parties. In other words, the “plus factor”, i.e. evidence of communication between the parties and/or economic evidence that would configure an anticompetitive conduct, was absent. Cristiane highlighted that “the burden of proof belongs to the antitrust authority (…) there is no direct evidence proving that there was a cartel, there is no evidence of a product shortage or of refusal to sell from the majority of the market.” In this case there would have been a change in the market regarding the standards of what was produced, which, although occurring simultaneously, does not prove collusion between companies. As so, the antitrust authority shelved the case.

2016/11/01 by Grinberg e Cordovil Advogados

Cade issues new Resolution on associative agreements

The Brazilian antitrust law (Law 12.529/2011, that entered into effect on May 30, 2012) establishes that “associative agreements” are also subject to merger control. However, since the enactment of the law, and even after the approval of Resolution 10/2014 (aimed at clarifying what constitutes an associative agreement), there were several doubts related to how to identify if an agreement is associative, whose notification to the Administrative Council for Economic Defense – CADE is mandatory.   CADE has just approved a new Resolution aimed at clarifying what constitutes an associative agreement. The Resolution 17/2016 will enter in force on November 24th, 2016 (when the Resolution 10/2014 will no longer be in force).   The new Resolution determines that associative agreements are those (i) with a term equal to or greater than two years; (ii) that establish a common enterprise to explore economic activities, (iii) that provide for the sharing of risk and results between the parties; and (iv) where contracting parties are competitors in the relevant market related to the agreement.   As previously provided for in Resolution 10/2014, the term period criteria was maintained, as so, agreements will only be considered associative if their term is equal to or greater than two years, considering any extensions of the original term of the agreement. Resolution 17/2016 clarifies that contracts with indefinite term, or less than two years term, should be filed in the event that the term of 2 years (counted from the date of the signature of the contract) will be reached or surpassed. Note that the filing of the contract, or of its amendment, must be done so in a timely manner so that approval from CADE can be obtained before the term of 2 years is reached (since enforcement of the contract from this period on depends on approval from the antitrust authority). The new Resolution applies to agreements that, despite being signed during the term of Resolution 10/2014, reach or surpass the two years of duration while Resolution 17/2016 is in force.   Economic activity is defined as the acquisition or offer of goods or services, even on a non-profit basis, as long as the activity can, at least in theory, be explored by a private company with lucrative purposes.   One significant alteration brought by Resolution 17/2016 is the exclusion of the obligation to file agreements in cases where the parties are vertically related in regards to the object of the contract. Filing is, therefore, restricted to cases where the parties are competitors in the same relevant market related to the contract.   The market share criteria existent in the Resolution 10/2014, however, was eliminated. That is, for notification to be mandatory, it is sufficient that the parties be competitors in the same relevant market related to the contract, regardless of their market share. On the other hand, the sharing of risks and results of the economic activity related to the contract is now a mandatory requirement to characterize a contract as associative.   Please note that CADE considers as contracting parties not only the parties of the contract, but also their respective economic groups.   Finally, we note that if the revenue threshold set forth in art. 88, items I and II of Law 12.529/2011 is not reached (the threshold is: revenue of the economic group in the previous year should be of at least BRL 750 million for one party and, at least, of BRL 75 million for the other or one of the other parties), even if the criteria provided for in Resolution 17/2016 are present, then filing the contract is not mandatory.

2016/10/24 by Grinberg e Cordovil Advogados

Cade issues new Resolution on associative agreements

The Brazilian antitrust law (Law 12.529/2011, that entered into effect on May 30, 2012) establishes that “associative agreements” are also subject to merger control. However, since the enactment of the law, and even after the approval of Resolution 10/2014 (aimed at clarifying what constitutes an associative agreement), there were several doubts related to how to identify if an agreement is associative, whose notification to the Administrative Council for Economic Defense – CADE is mandatory. CADE has just approved a new Resolution aimed at clarifying what constitutes an associative agreement. The Resolution 17/2016 will enter in force on November 24th, 2016 (when the Resolution 10/2014 will no longer be in force).  The new Resolution determines that associative agreements are those (i) with a term equal to or greater than two years; (ii) that establish a common enterprise to explore economic activities, (iii) that provide for the sharing of risk and results between the parties; and (iv) where contracting parties are competitors in the relevant market related to the agreement.  As previously provided for in Resolution 10/2014, the term period criteria was maintained, as so, agreements will only be considered associative if their term is equal to or greater than two years, considering any extensions of the original term of the agreement. Resolution 17/2016 clarifies that contracts with indefinite term, or less than two years term, should be filed in the event that the term of 2 years (counted from the date of the signature of the contract) will be reached or surpassed. Note that the filing of the contract, or of its amendment, must be done so in a timely manner so that approval from CADE can be obtained before the term of 2 years is reached (since enforcement of the contract from this period on depends on approval from the antitrust authority). The new Resolution applies to agreements that, despite being signed during the term of Resolution 10/2014, reach or surpass the two years of duration while Resolution 17/2016 is in force.  Economic activity is defined as the acquisition or offer of goods or services, even on a non-profit basis, as long as the activity can, at least in theory, be explored by a private company with lucrative purposes. One significant alteration brought by Resolution 17/2016 is the exclusion of the obligation to file agreements in cases where the parties are vertically related in regards to the object of the contract. Filing is, therefore, restricted to cases where the parties are competitors in the same relevant market related to the contract.  The market share criteria existent in the Resolution 10/2014, however, was eliminated. That is, for notification to be mandatory, it is sufficient that the parties be competitors in the same relevant market related to the contract, regardless of their market share. On the other hand, the sharing of risks and results of the economic activity related to the contract is now a mandatory requirement to characterize a contract as associative.  Please note that CADE considers as contracting parties not only the parties of the contract, but also their respective economic groups.  Finally, we note that if the revenue threshold set forth in art. 88, items I and II of Law 12.529/2011 is not reached (the threshold is: revenue of the economic group in the previous year should be of at least BRL 750 million for one party and, at least, of BRL 75 million for the other or one of the other parties), even if the criteria provided for in Resolution 17/2016 are present, then filing the contract is not mandatory.

2016/10/24 by Grinberg e Cordovil Advogados

CADE discusses field of activity

During its 93rd trial session, the Administrative Council for Economic Defense’s Tribunal opened a Public Consultation (n. 04/2016) to discuss alterations to Resolution n. 3/2012, which provides for and defines fields of activity for the purpose of defining the basis of calculation of fines for anticompetitive conducts. This Resolution defined filed of activity based on groups of the National Classification of Economic Activities (CNAE). The Tribunal has recognized that utilizing the criteria of the Resolution currently in force could imply disproportionate amounts which do not correspond to the market in which infractions occurred. As so, the draft proposed by the authority introduces a new provision, allowing the field of activity to be adopted “to the specificities of the conduct when the dimensions indicated in art. 1º are clearly disproportional”.

2016/10/24 by Grinberg e Cordovil Advogados

Cade calculates benefits received in CDA contribution

During the trial session held on 09.14.2016, CADE’s Tribunal approved a CDA proposed in a cartel investigation concerning public tenders for the purchase of medicine by several states. The relevance of this case stems from an opinion issued by Commissioner João Paulo, who conducted an analysis of the benefits received by the company during the years in which the cartel was in place; in order to verify whether the proposed amount of the pecuniary contribution was proportional and appropriate. During previous sessions, the Commissioner criticized the amounts that were being proposed for contributions, stating that these were not corresponding to the damages caused by the agent in the market and were lower than the benefits received. The Commissioner presented his methodology in the opinion, noting that “two extrapolations were considered: (i) calculation of the average monthly revenue from May of 2007 to January of 2012 and added to the corresponding [RESTRICTED ACCESS]; then (ii) I doubled the value found in order to encompass bids from other States, whose information was not presented by the Applicant “, concluding that the amount was found to be proportional to the advantage obtained by the party.

2016/10/14 by Grinberg e Cordovil Advogados

Cade applies fine for deceitful information

In its latest trial session (14.09.2016), Cade’s Tribunal reduced the fine amount applied to Azul due to deceitful information provided in its notified transaction with Trip. The company, when filing the transaction, refrained from informing its activity in the travel agency sector. The fine originally suggested by the General-Superintendence (SG) was of R$1,4million and was reduced by the Tribunal to R$250,000. By reducing the fine, the Tribunal understood that the party was not a repeat offender, nor was there bad faith by the company. The authority also stated that the infraction was not of great magnitude, since it would not affect the analysis of the concentration act involving Azul and Trip. The error/ommission in the information provided was initially investigated by the authority after a filing presented by the Brazilian Association of Tourism Operators (Braztoa), which states that Azul was abusing its dominant position in the sales of airline tickets. The reported practice was that the company mentioned carried out price discrimination in its own benefit.

2016/09/22 by Grinberg e Cordovil Advogados

Cade scrutinizes Radius Clause

During the trial session held on August 31st, Commissioner João Paulo issued his decision in the proceeding which investigated abuse in the adoption of radius clauses in rental contracts entered into between store owners and shopping centers in Porto Alegre/RS. The decision raised issues relating to the protection of free enterprise of the store owners and the possible legality of the clause. Although the Superior Court’s decision concluded that the radius clause is lawful if agreed upon by both parties, the Commissioner highlighted the possibility of negative effects to the economy. According to the Commissioner’s analysis, for the clause to be deemed lawful it would be necessary to prove positive effects to counterbalance the damaging effects intrinsic to clauses of this nature. However, none of the arguments presented by the parties had demonstrated the generation of net positive effects to the end consumer. With the vote, the decision of the Reporting-Commisioner, hitherto suspended, was maintained and the sanctions of a R$ 15 million fine and the exclusion of the clause from all the contracts were applied to the representatives.

2016/09/14 by Grinberg e Cordovil Advogados

CADE will contribute to prevent cartels in public bids

On August 30th, Provisional Measure n. 727/2016, the first from Michel Temer’s government, was approved. This measure creates the Investment Partnership Program (Programa de Parceria de Investimento – PPI), which aims to strengthen the social interaction between the government and the private sector by means of contracts to develop infrastructure, fostering competition by means of partnerships and advancing previously suspended concessions projects. In order to anticipate and prevent the occurrence of unlawful agreements among companies in bidding procedures, the Administrative Council for Economic Defense – CADE shall act as a permanent contributor to the PPI Office. This preventive and educational participation will be of extreme importance, since it will contribute to the reduction of the number of cartels in bids and, at the same time, to developing bid notices free of potential frauds and lapses; resulting in a clear economy of public resources. This demonstrates a change in the traditional manner of operation by the authority, which, from now on, shall work not only as a repressive (prosecuting) body but also as a preventive one. Until now, the authority acted essentially in an ex post manner, by conducting investigations and convicting for conducts already consummated or in progress. At the government’s request, the authority also presented suggestions for the PPI, including the indication that the new proposed bid notices should incorporate the rules of Differentiated Regime of Public Contracting (Regime Diferenciado de Contratação – RDC), a system designed as a faster model. Among the rules of the PPI, there is an imposition that the parties sign a declaration stating that their bids were prepared without sharing commercial information with competitors and that they are genuine. Moreover, such bids cannot be previously disclosed, so that each competitor has no previous references as to the amount to present. Depending on the government’s interest, the authority could also be invited to participate in later stages of the bidding procedures. This preventive activity by the antitrust authority will serve to suppress anticompetitive acts at their origin. This will be a different form of operation in regards to its traditional scope of prosecuting cartels.

2016/09/09 by Grinberg e Cordovil Advogados

RFIs and CADE

The Administrative Council for Economic Defense (CADE) frequently sends RFIs (Request for Information) to companies so as to gather information/evidence for their procedures, both those aimed at investigating conducts as well as merger reviews. These requests are actually orders that the law allows the authority to issue and answering these requests is an obligation of the recipient. It is common for the recipients ask for extensions to fulfill these obligations and it is also common for these [extensions] to be granted. During the trial session held on 08.31.2016, CADE scrutinized proceeding n° 08700.004501/2016-55, in which a company tried to cancel a fine applied by the authority as a result of the delay in providing the information requested. CADE upheld the fine and emphasized the common duty of collaboration, since the issues that are under analysis are of public/collective interest. Even if the data requested is impossible to obtain, it is clear that the recipient must demonstrate they put forth their best efforts to do so.

2016/09/02 by Grinberg e Cordovil Advogados

CADE establishes fast-track review term

During the 91st trial session held on 08/31/2016, the Administrative Council for Economic Defense (CADE) approved Resolution n. 16/2016 (altering Resolution n. 2/2012), which formally establishes a 30 day fast-track merger review term. It is worth noting that applying the fast-track review proceeding is under CADE’s discretion. The Resolution entered into force on 09/02/2016, date in which it was published in the Official Gazette. The Resolution states that if this term is exceeded, the General-Superintendence shall inform and justify the delay to the Tribunal by means of a decision. This decision shall also make the case a priority for analysis and will determine that the notice giving publicity to the transaction also be published (if this has not been done so already). A proposal of this Resolution was made public for comments during May/2016.

2016/09/02 by Grinberg e Cordovil Advogados

Down payment is not gun jumping

CADE’s Tribunal understands that providing a down payment is not considered gun jumping (partial or total consummation of a transaction without the authority’s previous and required approval). This decision was handed down during the trial session on Aug 17th, 2016, and diverged from the General-Superintendence’s recommendation of convicting the companies Hypermarcas and Reckitt Benckiser. The analysis focused on the classification of an advance payment (allegedly improper) of 20% of a transaction’s total value as prior consummation. Reporting Commissioner Paulo Burnier understood that down payments are an exception provided for in CADE’s Guide on Gun Jumping and are “typical of commercial transactions”; furthermore, the contract establishes reimbursement of the amount in case CADE does not approve the transaction. Regarding the amount itself, the Commissioner pointed out that “it is not for to CADE to define what the minimum down payment amount is, establishing limits in down payments in M & A’s could increase the costs of the transaction and derail operations in markets that require higher amounts”. The vote also made clear that, even with the reverse break-up fee clause, in which the purchasing party would lose the down payment if the transaction was not approved, it would be compensated by the seller’s obligation to reimburse the down payment. Due to this eventual compensation, CADE admitted, in practice and implicitly, that losing the down payment would be possible without this incurring in gun jumping. This break-up fee clause was justified by the opportunity loss of the seller when negotiating with a specific buyer and ceasing to negotiate with other possible buyers. However, the vote also warned that in future transactions “companies should be very careful when using the institute of down payment, utilizing values that do not get confused with undue advanced payment, in order to avoid violation of the law by gun jumping”. The Plenary has not yet ruled on the merits of the merger. The GS, on the other hand, contested the transaction since it, if approved in the terms it was presented, would result a in high level of concentration in the market of sexual health and well-being.

2016/08/26 by Grinberg e Cordovil Advogados

CADE applies nullity sanction in gun jumping case

The Administrative Council for Economic Defense (CADE), during the trial session held on 08/17/2016, approved, by a majority vote, the use of the nullity sanction in a gun jumping case (initiating operations before CADE’s approval) after Commissioner Paulo Burnier presented his opinion on the matter. Therefore, the effects of the joint venture contract entered into by the parties were suspended, in addition to a fine imposed in the amount of R$1,5 million. This is the first time in which this measure [nullity] was adopted. The company created by the suspended joint venture contract — which will be an exclusive distributor of bicycle parts — will only be able to operate after the authority has examined the merits of the transaction. The distribution of parts will continue to operate as it did before the contract, by means of various distributors, until a final decision by CADE has been rendered. CADE made clear that it does not intend to apply this sanction in an arbitrary way, the authority took advantage of this case — due to the fact that the suspension would not harm third parties and the market, since the contract had provisions concerning the abrupt suspension of the contract between the parties — to demonstrate the importance of prior notification in merger cases.

2016/08/25 by Grinberg e Cordovil Advogados

CADE’s jurisdiction in infractions carried out abroad

CADE’s Attorneys have presented an important opinion in Administrative Proceeding n. 08012.005255/2010-11 concerning a sensitive issue for the authority, its jurisdiction to investigate and try alleged international cartels, considering that Brazilian legislation determines that if there are potential effects in the country there is jurisdiction. In their opinion, the Attorneys state that an “absolute”, “pure and literal” application of the effects (and potential effects) theory would imply “scrutiny of almost all cartels in the world by almost all of the antitrust authorities in the entire planet, including CADE”. As so, the opinion states that it would be necessary to verify the matter of effects (and consequently jurisdiction) in a rational and balanced manner. After commenting the leading international cartel cases already scrutinized by the Tribunal, the Attorneys argue that in all cases there was a link in order to associate, “with relative concreteness”, the conduct to the Brazilian market, whether direct (involving a Brazilian company) or indirect (Latin America as part of the agreement). In the proceeding in which the opinion was issued, the Attorneys found that none of the documents mentioned Brazil and that there were only mere suppositions and deductions that do not hold evidential value; therefore, they recommended closing the procedure.

2016/08/22 by Grinberg e Cordovil Advogados

Territoriality and fines

After requesting the case files for a more in-depth analysis of the Administrative Procedure to Inspect Concentration Acts (initials APAC in Portuguese) – procedure used to investigate consummated mergers, whether their filing is mandatory or not –, Commissioner Paulo Burnier presented a dissenting opinion regarding the fine calculation for gun jumping (consummation of the transaction prior to analysis and approval by CADE). This opinion was followed by the remaining Commissioners, triumphing over the position originally presented by the reporting commissioner. Initially, João Paulo Resende used the company’s worldwide revenue as the basis of calculation for the fine, applying a rate of 0.1%, totaling R$ 5 million. Commissioner Burnier decided to analyze the APAC in greater detail as it is the first case of gun jumping in a joint venture. During the trial session held on August 8th, Commissioner Burnier said that worldwide revenue could not have been used, since the antitrust law provides that only effects in Brazil should be considered, besides the fact that the revenue registered in the transactions’ filing form was disregarded. Therefore, there was an infringement of the principle of territoriality of the law. Thus, and considering that the company’s operations in Brazil started in March of 2016, an estimated revenue based on sales over five months was adopted, avoiding a fine “too lenient or too high”, reducing the amount to R$ 1.5 million.

2016/08/19 by Grinberg e Cordovil Advogados

CADE analyzes gun jumping

During its latest trial session (07/27), CADE’s Administrative Tribunal analyzed another case of gun jumping, concerning a joint venture for the exclusive distribution of bicycle parts. The case originated from an administrative proceeding to investigate consummated mergers, initiated after a complaint was received. During the proceeding the parties admitted to consummating the transaction before approval by the authority. The companies alleged that they did not act in bad faith since they were unaware of the need to notify the authority; the transaction was notified after the proceeding initiated. The Reporting Commissioner, João Paulo Resende, convicted the companies of gun jumping and applied a fine of 5 million BRL, stating that the parties initially omitted the existence of the joint venture, which was only confirmed after a second RFI was sent. The trial was suspended after Commissioner Paulo Burnier requested the case files so he could further review the amount of the fine.

2016/08/08 by Grinberg e Cordovil Advogados

Hague Apostille makes legalization of documents used abroad easier

From August 14th, 2016, the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (also known as the “Apostille Convention”) will be effective in Brazil. This Apostille Convention will make the acceptance of foreign documents in Brazil and of Brazilian documents abroad easier. After the Convention comes into force, the submission of public documents to consularization will no longer be necessary in order to make them legally enforceable in other countries. This is due to the fact that the Convention establishes that the validity of a foreign or Brazilian public document can be evidenced by an Apostille. The Apostille Convention applies only to public documents, but can also have implications for private documents. Any acts made by notaries on private documents (such as a certification of signature) can also receive an Apostille. In order to do so, a person simply needs to present the document to a Brazilian notary public with the digital system “SEI Apostila” implemented. Regarding foreign documents in Brazil, the Apostille must be issued in the country of origin of the document for it to be accepted in Brazil.

2016/08/01 by Grinberg e Cordovil Advogados

Competition in healthcare plans

An important step towards competition in healthcare plans – and the criterion each beneficiary must take into account in choosing a plan – was taken on June 22nd, 2016, by the Third Panel of the Brazilian Superior Court of Justice (STJ), by the Reporting Minister Villas Boas Cueva. The STJ has ruled that the inclusion of a coinsurance clause – such as a deductible amount and financial limits – is allowed when contracting a healthcare plan. This decision was based on Art. 16 of Law 9.656/98, which authorized the inclusion of moderating elements, in parallel to the monthly fees, in the pricing of healthcare plans. However, the decision goes much further than allowing the inclusion of the clause, since the companies can, in theory, offer cheaper plans, and, therefore, create an environment of free-competition, which can be very important for the market and the users themselves. Obviously, the restrictions must be clear and properly stipulated in the contract, and the beneficiary must be aware that, while having the advantage of paying a lower price when compared to a healthcare plan that does not include a coinsurance clause, there will be a cost for whenever he is in need of treatment. This is how the free-competition works.

2016/06/23 by Grinberg e Cordovil Advogados

CADE and labor issues

CADE’s ruling on the concentration act involving banks HSBC and Bradesco raised a controversial issue within antitrust law in regards to what are the goals of this field of study, as well as the protected interests. In this case, a union of bank employees requested to be admitted as an interested third party in the case to defend protection of labor issues by CADE. During the trial session held on 06/08, the Reporting-Commissioner João Paulo Resende stated that the issues raised by the union are legitimate in light of those that would be affected by the transaction; however, maintaining/protecting jobs would not be an stricto sensu antitrust goal/concern. The Commissioner emphasized that the antitrust authority cannot reject a transaction based solely on this argument/premise, nor can the maintenance of jobs considered as a necessary condition for the transaction. In conclusion, CADE, while addressing a longstanding and controversial debate, stated that the antitrust authority is responsible for competition in the market.

2016/06/09 by Grinberg e Cordovil Advogados

CADE and banks

During the trial session held on 06/08, CADE reinforced, albeit implicitly (since this was not the central issue discussed in the trial), its jurisdiction to analyze concentration acts in the financial sector by clearing the transaction between HSBC and Bradesco. This approval is subject to the parties signing an Agreement in the Control of Concentration Acts (ACC) which will set forth various antitrust remedies. The Reporting Commissioner, João Paulo Resende, stated during the session that the banking sector is highly concentrated worldwide with high barriers to entry, where consumers are subject to high transaction costs and information asymmetry. As so, the Agreement — which comprises six central notions, including the need to put in place a compliance program, quality indicators and transparency — would be a means to try and correct these distortions. One of the remedies imposed to Bradesco is a restriction to acquire financial institutions for the term of 30 months, which would serve is a sign to the market of CADE’s worry in the growing consolidation in the sector. Notwithstanding, the Commissioner, opened an exception to the transactions deemed necessary by the Central Bank (BACEN) to guarantee soundness in the financial sector, since this would be under the regulatory body’s jurisdiction to analyze/decide. On this issue, Commissioner Gilvandro emphasized during the session that the conflict of jurisdiction in this sector should not exist and that CADE would be open to cooperating with BACEN. *** The Extraordinary Appeal (RE 664189) that concerns this conflict of jurisdiction (CADE/BACEN), which originated from BCN’s acquisition by Bradesco, was redistributed to Justice Celso de Mello on 06/06. This was done after Gilmar Mendes declared himself as impeded from analyzing the matter, just as Dias Toffoli, the previous reporting Justice, did.

2016/06/09 by Grinberg e Cordovil Advogados

Nestlé-Garoto: a second look

Rejected by Cade in 2004, the merger between Nestlé and Garoto may have a new outcome, since Nestlé handed in a new motion for administrative resolution in December 2015, in which they presented some solutions for the antitrust issues raised during the rejection of said merger. As the said case does not meet the necessary requirements for a settlement, Cade understood that it could review their administrative decision, considering the parameters presented in the new proposal, which can lead to the approval of the transaction. This case is unique in Cade. At the time, Cade rejected the merger due to its potential harm to the market, mainly in the chocolate box segment. With the refusal, Nestlé filed a judicial petition requesting the annulment of Cade’s decision. This proceeding is lasting more than a decade. Facing the fact that the market has changed during this period, with the entry of several new competitors, besides the fact that any judicial decision taken would not be neither effective nor useful for the parties, Nestlé proposed the consensual solution to Cade. CADE’s Attorney General and CADE General Superintendency (GS) have given their opinions affirming that the administrative decision can be reviewed, and GS, additionally, have imposed a market test regarding the remedies proposed by Nestlé, in order to ensure an effective competition in the referred markets. The files have been sent to CADE’s Tribunal and Mr. Alexandre Cordeiro has been indicated as the Reporting Commissioner. The final decision will be issued within this year.

2016/06/08 by Grinberg e Cordovil Advogados

Publishing excerpts of decisions and effectiveness

Among the penalties provided for in regards to infractions to the economic order set forth in article 38 of Law 12.529/2012, there is the obligation to publish, “in half of a page and at the expense of the offender, in a newspaper indicated by the decision, a statement/excerpt of the convicting decision, on two consecutive days, from one to three consecutive weeks”. The applicability and effectiveness of this measure was discussed during CADE’s latest trial session, which took place on May 25th, where the Reporting Commissioner Alexandre Macedo voted to apply the penalty to oncology clinics located in the city of Campinas, State of São Paulo, convicted of participating in a cartel. The other commissioners also made comments on the measure. Commissioner Márcio de Oliveira Jr. considered that the publication could be more effective if it contemplated newspapers with general circulation in the city of Campinas, while commissioner Gilvandro de Araújo noted that, in some cases, the press already reports the result of the trial on its own, which causes the obligation of publishing at the expense of the parties to be unnecessary. Commissioner Cristiane Schmidt, in turn, declared that, if the content to be published in not pre-determined, the parties may present an inflection of disagreement with what is being disclosed; in other cases, a long period of time may pass between the practice/act and the conviction, which would diminish the effectiveness of the measure. At the end of the debate, the Council voted unanimously to apply the penalty to the defendants.

2016/06/01 by Grinberg e Cordovil Advogados

Radius clauses and shopping centers

The Superior Court of Justice (STJ) recently ruled that radius clauses in shopping center lease contracts are not unfair (abusive) to competition (REsp nº 1.535.727/RS). In this case, the radius restriction clause stablished that retailers that ran the same branch of activity had to maintain a specific radius of distance from the mall, not creating competition around the establishment, which could restrict the offer of goods and services. Rio Grande do Sul’s Court of Appeals (TJRS), from which the Special Appeal originated, stated that radius restriction violates free competition, harming both retailers and consumers; the STJ, on the other hand, decided that contracts between shopping malls and retailers have their own internal logic, which seeks to make the establishment economically and administratively viable. For the Superior Court’s Justices, this clause ends up stimulating competition, with the opening of other new stores around the establishment, thus, it cannot be considered illegal or unfair. The Administrative Council for Economic Defense – CADE is investigating the same matter in a proceeding encompassing other establishments in Porto Alegre. The General-Superintendence (SG) follows TRJS’ understanding and suggested that shopping centers that added radius clauses in loan contracts for retailers be condemned, finding this practice to be anticompetitive. According to the SG, even though the clause itself is not illegal, it can create anticompetitive effects, depending on the other conditions created by the mall. The proceeding against establishments in Porto Alegre is in its final phase and might be tried by CADE’s Tribunal this year.

2016/05/30 by Grinberg e Cordovil Advogados

Administrative proceeding and curtailment of ample defense

On 05/11, the Federal Regional Tribunal (TRF) of the 1st Region handed down a decision in a case where the discussion centered on the nullity of an administrative proceeding investigating a cartel in the market of steel rebars (Civil Appeal n. 2003.34.00.019038-3/DF). In this matter, the TRF reinforced the Judiciary’s stance that nullity of a procedural act must be based on the party’s effective proof of harm/damages. An interesting issue concerning the alleged nullities refers to the allegation that various RFIs were issued, although not all of them were attached to the administrative proceeding. That is, only those that would interest the investigation were made available. The decision, in quoting the first instance judge’s opinion, states that “there is no irregularity on this matter, the public agents responsible for conducting the investigation have powers or jurisdiction to know what interests that proceeding and what does not, and aim to not clutter the case files with useless documents and make proceedings difficult”. Also, the decision states that the parties had the opportunity to appoint these flaws administratively. This stance is controversial since, in a sense, it opposes the principle of public disclosure concerning administrative proceedings, as well as the constitutional procedural right to ample defense, where access should be granted to all documents of the proceeding, whose pertinence/usefulness should not be determined solely by the authority.

2016/05/27 by Grinberg e Cordovil Advogados

CADE releases Leniency Guide

CADE, during its 86th trial session (25/05) released the final version of the Guide on the Antitrust Leniency Program, which had previously been subject to comments and suggestions by the general public. The Guide, which adopts the format of questions and answers, presents a description of proceedings adopted by the organ when negotiating these agreements, as well as clarifies doubts regarding general aspects of this instrument. Although it is not binding, nor law, the Guide presents the experience and best practices adopted by the authority. A final version has yet to be made available in English, but the Portuguese version can be accessed here: http://www.cade.gov.br/acesso-a-informacao/publicacoes-institucionais/guias_do_Cade/guia_programa-de-leniencia-do-cade-final.pdf

2016/05/27 by Grinberg e Cordovil Advogados

Nullity of evidence in the gas cartel case

The Federal Regional Tribunal of the 1st Region declared as null the fine applied by the Administrative Council for Economic Defense – CADE in the case of the alleged gas cartel. The Federal Court based its decision on the theory of the fruits of the poisonous tree, stating that all evidence obtained by the authority would be null and void; since none of the evidence was autonomous, being that they all derived from an illicit origin. The Judiciary power has been handing down several decisions in this sense regarding the gas cartel case. In this particular case, the Judiciary went even further and stated that without the illegally obtained evidence, proof of the alleged cartel was weak and limited to mere indications that an anti-competitive conduct occurred, which would not be sufficient for an administrative conviction.

2016/05/19 by Grinberg e Cordovil Advogados

CADE opened two Public Consultations

The Administrative Council for Economic Defense – CADE released, during the 85th trial session held on May 11th, 2016, a preliminary version of a new Resolution concerning the submission of “associative agreements” for scrutiny by the Brazilian antitrust authority. Contributions regarding its content may be sent until May 31st to the following e-mail address: consultapublica22016@cade.gov.br. Simultaneously, the authority submitted to public consultation a modification of Article 7 of Resolution n. 2 that includes a deadline of 30 days for CADE’s General Superintendence to render a decision in concentration acts presented in the fast track procedure. Contributions regarding its content may be sent until May 31st to the following e-mail address: consultapublica12016@cade.gov.br. [1] Access the draft of the Resolution of the “Associative Agreements” through the link: http://sei.cade.gov.br/sei/institucional/pesquisa/documento_consulta_externa.php?UUuNM2jjTtymH8suBJGlco-E8u0wu89BWj9VpzdgMolngZROrhB6zT5BPiy3aLOxi8YSrKJ4KzJApq09dNBqdA,, [2] Access the draft of the modification of the Article 7 of the Resolution n. 2 through the link: http://sei.cade.gov.br/sei/institucional/pesquisa/documento_consulta_externa.php?oc8hza7Wm_gmViu5ne867I1jW-Sg97lVUnnLzBHyXv_M__MikaEagj4CppwgWbJ_1VcHtH-TProfbLIf-N3OzA.

2016/05/18 by Grinberg e Cordovil Advogados

Interface between regulation and competition

CADE’s latest plenary session (05/11) was marked by the analysis of concentration acts (AC) in highly regulated sectors (open television and payment systems), where the antitrust authority emphasized complementarity between regulation and competition defense policy. In the AC referring to the payment systems market, which involved vertically related agents – issuer and brand -, CADE emphasized that, in spite of the market’s high concentration levels, the regulatory bodies, rather than simply prohibiting vertical integration, opted to impose rules in order to foster competition. Thus, the reporting commissioner stated that “despite some concerns expressed in this vote being aligned with the answer provided by the Brazilian Central Bank to a RFI (…) one observation seems to be fundamental (…): in spite of all the existing issues, which are potentially aggravated by the JV (…) the market’s regulation does not prohibit vertical integration”, this being a legitimate option for the regulator, who, if it deemed appropriate, could limit the involvement of issuers in the brand market. This shows the need for exploring the interface between regulation and competition. In the whole world, there are attempts to answer the following questions: can regulated markets be subject to decisions from the antitrust authority? Should compliance with a regulatory body be punished by the antitrust authority?

18/5/2016 por GCALAW

2016/05/18 by Grinberg e Cordovil Advogados

Revision of agreement litigated

During its 84th plenary session (04/27), CADE, in revising a Performance Commitment Agreement (TCD), authorized Companhia Siderúrgica Nacional – CSN to appoint names to its direct competitor’s (Usiminas) Board of Directors and Fiscal Council. After CADE’s decision, one of Usiminas’ shareholders opted to litigate and filed a suit contesting this decision, requesting an injunction for the immediate suspension of the mandates of the directors and councilors indicated by CSN. A Federal Court, in 05/11, with grounds on its general cautionary power, suspended the Board of Director’s meeting, stating that attendance by the directors appointed by CSN would render “immutable the fact concerning access of these individuals to Usiminas’ sensitive information”, and also raised “doubts regarding the validity of the proceeding adopted by CADE”. In addition, it was determined that the injunction demanded [suspension of mandates] would be examined the following day. The next day (05/12), the claimants decided to withdraw the injunction request, stating that carrying out the board meeting, despite the attendance of the directors appointed by the competitor, would be essential to approve “crucial measures to preserve the company”, and the Court rendered its previous decision void.

2016/05/16 by Grinberg e Cordovil Advogados

CADE in the new government

Brazil’s interim president, Michel Temer, will have limited powers, at least during the next six months, to appoint names for regulatory agencies; being that, if president Dilma is removed from office, these powers will increase substantially, leading to a virtual renovation of the technical-political personnel of these entities. This renovation will also occur within CADE, since the term of the current president of the agency, Vinícius Marques de Carvalho, expires at the end of May. The nomination of CADE’s President will be made by Michel Temer, after Senate approval. The appointment of names for the position is usually done by the Minister/Ministry of Justice, to which CADE is linked. There is no word on possible names to be indicated by the new Minister, Alexandre de Moraes.

2016/05/13 by Grinberg e Cordovil Advogados

CADE releases Guide on plea agreements

The Administrative Council for Economic Defense – CADE, during its 85th trial session held on May 11th 2016, approved and released the Guide on Plea Agreements (initials TCC in Portuguese), which was submitted to public consultation in January. The final version of the Guide, according to the authority, was made available on its website on May 13th. As mentioned when the preliminary version was released, the guide is not legally binding, but serves as a parameter for the authority in regards to the matter.

2016/05/13 by Grinberg e Cordovil Advogados

Atypical remedies and independent directors

CADE’s 85th trial session (11/05) was marked by the Commissioners’ emphasis on the fact that atypical cases/transactions demand atypical remedies; this being mentioned several times during the analysis of the concentration acts on the day’s agenda. In this sense, one of the remedies imposed on a joint venture (Concentration Act no. 08700.009363/2015-10) stood out due to its use of a trigger, set when a specific degree of market share was reached/obtained. The reporting commissioner, Paulo Burnier, negotiated a remedy in which, once the 15% market share threshold is reached, one of the parties, which has the right to appoint half of the directors to the joint venture’s Board of Directors, must indicate two “independent directors”. Commissioner João Paulo, in regards to this remedy, expressed some concerns on the matter of independent directors, since it seems that this is becoming an easy way to approve problematic mergers.

2016/05/13 by Grinberg e Cordovil Advogados

Banks and CADE

Two years after handing down a decision dismissing appeals that discussed jurisdiction to analyze mergers involving financial institutions, Supreme Court (STF) Justice Dias Toffoli has declared himself as impeded from trying the subsequent appeals. As so, the case was redistributed to Justice Gilmar Mendes, randomly selected as the new reporting Justice. The Superior Tribunal of Justice (STJ) has already decided in favor of the Central Bank, giving them jurisdiction on the matter, but it will be up to the Supreme Court to give the final word on the issue, clarifying a controversy that has spread over many years. It is worth emphasizing that there are legislative proposals in course that aim to clearly outline jurisdiction of both entities.

2016/05/03 by Grinberg e Cordovil Advogados

CADE and corporate governance

During its 84th session (04.27.2016), CADE authorized Companhia Siderúrgica Nacional – CSN to indicate names for Usiminas’, its direct competitor, Board of Directors and Supervisory/Fiscal Board. When CSN acquired shares of its rival, CADE imposed a suspension of voting rights of these shares by means of an agreement, being that this suspension was put in place precisely to preserve competition in the market. CSN based their request on the current status of the steel sector, which is facing a crisis, as well as “growing corporate conflicts among controlling shareholders and the deterioration of CSN’s financial conditions”. CADE, whilst authorizing the election of members to the board, conditioned their tenure to the signing of a term of commitment with the authority, which sets forth obligations of acting with independence and supplying information whenever requested.

2016/05/02 by Grinberg e Cordovil Advogados

Third parties in Agreement in Merger Control

On April 25th, 2016, Cade rejected a third party’s request of access to the documents concerning negotiations of an Agreement in Merger Control (“ACC”, in Portuguese). According to Commissioner Alexandre Cordeiro Macedo, the negotiation has information of the applicants that are protected by trade secrets. The preservation of the restriction of access of third parties to such information is akin to compliance with the constitutional principle of protection of free enterprise and free competition. Thus, the Commissioner established a term for third parties to present their contribution about possible remedies to mitigate the competition issues found during the merger control proceeding and emphasized that a public version of the agreement will be made available.

2016/04/29 by Grinberg e Cordovil Advogados

Brazil ratifies Bali Trade Facilitation Agreement

The president of Brazil, Dilma Rousseff, signed the letter ratifying the World Trade Organization’s (WTO) Trade Facilitation Agreement at a reception ceremony for the organization’s Director-General, which was held at the Presidential Palace. The agreement was the result of negotiations carried out at the Ministerial Conference in Bali in December 2013, whose final text of the Protocol Amendment was approved by members in November 2014. The agreement establishes a series of rules intended to expedite and reduce bureaucracy within the traffic of goods and services, particularly in customs, reducing costs and facilitating the global chain of production and sales. The negotiation of the WTO Trade Facilitation Agreement is in line with the conclusions reached by a report released in January 2013 by the World Economic Forum (prepared jointly with the World Bank), entitled Enabling Trade Valuing Growth Opportunities, which estimates that the worldwide reduction of barriers to supply chains would result in a 4.7 % increase of global GDP and 14.5 % of international trade. The Protocol Amendment will only come into force after it is ratified by two thirds of the members of the WTO (108 countries), and with no deadline concerning the internal approval process. To the present date, only 45 member States notified the WTO of having fulfilled all the formal steps for its domestic ratification (Brazil has not yet formally notified the entity).

2016/04/20 by Grinberg e Cordovil Advogados

CADE approves FedEx’s acquisition of TNT

During the trial session held on March 30th, 2016, the Administrative Council for Economic Defense (CADE) maintained the decision rendered by the General-Superintendence, approving FedEx’s acquisition of TNT without restrictions, thereby rejecting the appeal filed by UPS do Brasil on its merits. The Reporting Commissioner, Cristiane Schmidt, clarified in her vote that controlling a substantial amount of market share cannot be considered, in and of itself, as the sole reason for the exercise of market power and blocking the transaction. In this sense, the Commissioner refuted the argument presented by UPS regarding the absence of bargaining power, stating that, in accordance with the information presented by clients in the market, if the new TNT/FedEx company raised their prices, clients would alter their courier service, given the low costs involved in switching and the existence of competitors. Finally, the Commissioner emphasized that, as stated in CADE’s internal bylaws, appeals against decisions handed down by the General Superintendence approving a transaction must be supported by arguments, facts and documents essential to the analysis of the allegations, which was not observed by UPS, where its appeal was filed to procrastinate the decision.

2016/04/20 by Grinberg e Cordovil Advogados

Limitations to the Confidentiality of Leniency Agreements

A recent decision handed down by the Superior Court of Justice limited the confidentiality of documents linked to agreements between CADE and companies, which may increase the number of private suits for damages stemming from the practices confessed in such agreements. In the matter at hand, the plaintiff filed a law suit against companies which had signed leniency and plea agreements with CADE in the Administrative Proceeding (i.e., administrative sphere), admitting to anti-competitive practices. The lower tier judge rejected a request by the plaintiff to send official letters requesting copies of the corroborating documents. The Superior Court of Justice dismissed a later appeal (REsp 1.554.986/SP) filed by the defendants, concluding that access to the leniency agreement would allow/facilitate damage claims by third parties harmed by the conduct. By granting access to the documents of the Administrative Proceeding, the Superior Court of Justice emphasized that the confidentiality of agreements with the competition authority is not absolute. As for the effectiveness of access, the documents should be analyzed by the competent court, in order to ensure the confidentiality of the industrial secrets therein contained.

2016/04/18 by Grinberg e Cordovil Advogados

CADE lowers penalty for breach of agreement

After verifying that the penalty for breach of a Performance Agreement (currently Agreement in Concentration Act) was disproportional — since breach was only partial and the penalty was repealing the transaction’s approval — CADE promoted its alteration; which was approved on 04/13. The authority received various complaints of breach of the deal entered into to approve Merger no. 53500.029599/2006-00, which were investigated and confirmed. However, considering that the measure to be imposed was excessive, CADE understood that it would be more adequate to alter the terms of the Agreement to include provision of a fine, which was subsequently imposed by the Tribunal. CADE stated that alteration of an agreement would be possible if it was requested by a party and approved by the Plenary.

2016/04/16 by Grinberg e Cordovil Advogados

Wiretaps and CADE

CADE’s Tribunal, during the trial of Administrative Proceeding no. 08012.003321/2007-71 on 04/13, in its 83rd session, presented the authority’s stance on the possibility of using wiretaps as evidence. After dismissing claims of illegality, CADE clarified that only a judge could determine that a wiretap be carried out, but there would be no obstacle to using this evidence in administrative procedures. The authority reiterated that, although the audio files of the conversation were not present in the case files, an integral transcript was presented; and that there would be no harm in presenting a partial transcript containing only what is relevant to the investigation, so as to not unnecessarily violate privacy. It concluded that the parties did not prove any procedural harm, since the evidence was subjected to scrutiny and comments.

2016/04/15 by Grinberg e Cordovil Advogados

IT PLATFORMS: COOPERATION AMONG COMPETITORS

The European Court of Justice (ECJ) recently issued a judgement assessing how, when, and if antitrust price-fixing rules should be applied to interactions between the administrator of a shared technology platform and its users. The E-TURAS IT platform, which was shared by 30 Lithuanian travel agencies to facilitate online bookings by end customers, was capping member agent’s advertised discounts on holidays at 3% by unilaterally implementing technical measures that made it harder for agents to offer higher discounts. Even though European case law argues the agent must publicly distance itself from an unlawful initiative (such as attending a cartel meeting without saying anything) and that infringements may be characterized by objective and consistent indicia, the ECJ concluded that when a company participates in an unlawful concerted practice, it requires not just evidence of concertation between the companies but also a subsequent conduct on the market and a relationship of cause and effect between the two. it was still possible for agents to bypass such measures

2016/04/14 by Grinberg e Cordovil Advogados

Untimely Merger Filings

In a recent decision, CADE condemned a company for an untimely merger filing. Despite the General-Superintendence’s recommendation to approve the merger without restrictions, the proceeding was submitted to the Tribunal due to noncompliance with the filing term. The applicants alleged that the fine for the untimely filing of the transaction would be unacceptable because it was not provided for in the current law, applying the hypothesis of retroaction of the “most beneficial” law. Moreover, the merger would not even be notifiable according to the new law. CADE’s Tribunal said the applicable law was the law in force at the time of the events; the hypothesis of applying the “most beneficial law” is unacceptable due to a lack of symmetry between the material content of the law and the penalties provided. The inapplicability resulted from the laws being systematically different in their merger analysis (ex ante in the current law; ex post in the post law), moving away from symmetry.

2016/04/14 by Grinberg e Cordovil Advogados

Cartel: Cade and the Judiciary

An opportune question: if the Administrative Council for Economic Defense (CADE) shelves a proceeding concerning violations to the economic order are the involved companies’ problems solved? Answer: not always. The case herein described illustrates the answer. Around 2007 the Administrative Council for Economic Defense (CADE) filed an administrative proceeding against the National Association of Vehicle Carriers (ANTV) and the Autonomous Vehicle Carriers and Small and Micro Vehicle Carrier Companies Union (SINDICAM). However, in 11/03/2016 the Federal Judge of the 6th Court of Porto Alegre, in a public civil action, contemporaneous with the proceeding before CADE, condemned the same companies for the practice of the alleged cartel involving the same facts investigated in the aforementioned administrative proceeding. Obviously this decision will be appealed, thus it cannot be seen as final. Notwithstanding, we have to consider that a decision by CADE to shelve a procedure does not always mean the end of the issue.

2016/04/04 by Grinberg e Cordovil Advogados

Intercurrent Statute of Limitations before Cade

The interim statute of limitations is the institute that manages the extinction of the State’s punitive intention due to a halt in the execution of procedural acts; aiming to prevent an administrative offense from being verified/investigated and, mainly, to curb inaction by the public administration. A recent judicial decision (BR nº 1000267-28.2016.4.01.0000) suspended an order by CADE commencing an Administrative Procedure (AP nº 08012.003021/2005-72), and its processing, on these grounds. In this case, the Federal Regional Court of the 1st Region condemned Cade’s sluggishness in practicing just one act in the procedure during a period of more than three years. The aforementioned act referred to a mere attachment of documents, which were insignificant to verify the offense. The decision is appealable. On another occasion, Cade’s Tribunal presented the scenarios and criteria for the admissibility of this institute at the administrative level, establishing that the criteria for verifying the characterization of the interim statute of limitations would be (i) the passing of a period of three years (ii) without the practice of any acts by the Public Administration intending to verify the offense. Thus, it is clear that, if the act had the intent to verify/investigate the infringement, the effectiveness of its result is irrelevant.

2016/03/18 by Grinberg e Cordovil Advogados

CADE releases guide on merger review

The Administrative Council of Economic Defense – CADE released, during their 81st trial session held on March 16th, 2016, a preliminary version of their Guide on the Analysis of Horizontal Concentration Acts. The Guide aims to “give greater transparency to the analysis carried out by the authority; orientate public authorities to adopt best antitrust practices on the matter; and help players in the market understand the phases, techniques and criteria adopted by Cade in their analysis of horizontal mergers”. Although it is not binding nor obligatory, the document reflects CADE’s current vision on the matter of merger review, being that the methodology that will be used by the authority will depend on the peculiarities of the matter at hand. This Guide is undergoing public consultation and contributions regarding its content will be received until April 30th, 2016; suggestions should be sent to the email: guiah@cade.gov.br.

2016/03/17 by Grinberg e Cordovil Advogados

ESSENTIALITY AND ESSENTIAL FACILITY

During CADE’s 80th trial session, Commissioner Cristiane analyzed an issue that is highly relevant to antitrust, the matter of essential facilities, presenting the historical context of the concept and how it emerged from the analysis of infrastructure sectors. These sectors, in which duplicating a certain structure would be economically inefficient (e.g. railroads), there would be an incentive, by its holder, to raise the costs of rivals by either charging excessive prices of use or impeding access altogether. In these cases, lack of access would make it impossible to carry out certain economic activity. The Commissioner presented a subtle, albeit important distinction between essentiality and essential facility, emphasizing that although an “input” or “good” may be important to an activity, it is not necessarily essential to its operation, impeding it if absent; even if it leads to a decrease in revenue. That is, the distinction would center on the degree of “fundamentalness”, “indispensability” and, ultimately, “necessity/need” of access to the input to carry out certain economic activity; the absence of which would make this impossible.

2016/03/04 by Grinberg e Cordovil Advogados

NULLITY BY DERIVATION AFFECTS AP

CADE’s General-Superintendence (“SG/CADE”) issued an opinion suggesting the discontinuation of an administrative proceeding investigating cartel formation involving distribution and resale of automobile fuels in Cuiabá/MT, due to lack of evidence to prove the authorship and materiality of the analyzed facts. SG/Cade’s decision was handed down after evidence that was illegal by derivation (fruits of the poisonous tree) — as recognized by a judicial decision from the state of Mato Grosso’s Tribunal (“TJ/MT”) in Habeas Corpus (nº 64.684/11) — was removed from the case files. TJ/MT understood that witnesses’ testimonies collected by the criminal prosecution, evidence that would support the administrative proceeding before CADE, were invalid since they were derived from wire-taps formerly declared null and avoid. The Tribunal in Mato Grosso had understood that these telephone taps should not be considered since the judicial decisions that granted and extended this measure were lacking in adequate grounds.

2016/03/03 by Grinberg e Cordovil Advogados

GUN JUMPING

Gun Jumping is, generally speaking, the practice of acts resulting from a transaction, which should be notified to the antitrust authority, prior to its notification. The Administrative Council for Economic Defense’s (CADE) Tribunal, in a trial session on 20.01.2016, fined the applicants of the merger between Cisco and Technicolor, transaction where the latter acquired the former’s connectivity division, for gun jumping. The applicants presented an explanation by means of a carve-out agreement, whereby the Brazilian transaction would have been out of the first negotiation. The Tribunal accepted the General-Superintendence’s Opinion by which, “if a relevant market is supposedly worldwide and if the supply of products and services in Brazil is done so by means of imports, it is clear that the consumption of the transaction in other parts of the world will affect the Brazilian market”. Thereby, it became clear that the practice of acts that reveal the consumption of a transaction, in a worldwide market, should be preceded by an approval by the Brazilian antitrust authority, under penalty of a fine by gun jumping.

2016/02/10 by Grinberg e Cordovil Advogados

INTERVENTION AND VOLUNTARY APPEAL

On 01/25, CADE, in their investigation concerning a possible cartel in the fuel resale market in the Federal District of Brasília, instituted a preventative intervention in the Cascol group, one of the investigated companies that hold 91 of 315 gas stations in the region. This intervention put several measures in place to limit Cascol’s administrative powers over their gas stations. This is a milestone in Brazilian antitrust, since this is the first time a measure of this nature, which is exceptional in and of itself, is applied. The Cascol group, in response to this decision, presented a Voluntary Appeal to CADE, which was rejected by the Tribunal.

2016/02/04 by Grinberg e Cordovil Advogados

CARTEL DRIVING SCHOOLS

On February 3rd, the Administrative Council for Economic Defense’s Tribunal unanimously decided to convict companies and individuals from Santa Bárbara D’Oeste/SP for participating in a cartel. In light of the alleged seriousness of the breach, the Court imposed fines and prohibited the association from fixing or suggesting prices to be charged on services to be provided by the associated companies. According to CADE, the owners of the driving schools met at the head office of the association to discuss prices and, after a consensus was reached, they would sign terms committing to observe the prices, under penalty if they were not observed. Furthermore, the Tribunal emphasized that mechanisms (internal system) were also put in place to monitor students, which generated a record of default of payment; thereby, if the student would look for another driving school, their social security number was recorded in the system and they would be prevented from hiring services from another company. Comissioner Alexandre Cordeiro highlighted that the cartel stood out due to its organization and great effort to be kept in place.

2016/02/04 by Grinberg e Cordovil Advogados

INSURANCE/GUARANTEES TO SUE CADE

Many individuals and legal entities, when sentenced by the Administrative Council for Economic Defense (CADE), go to court with the intention to annul the applied penalty or fine. In these cases, the courts require that insurance/guarantees be provided so that, if the plaintiff is not successful in his claim, it will be possible for CADE to collect the fine. While parties try to offer real estate or other assets, CADE insists on a cash deposit. The New Brazilian Civil Procedure Code, in the second paragraph of article 835, states that now, “for the purposes of substituting the attachment order, Guarantee Insurance or Bank Warranties are considered to be equivalent to cash, as long as their value is not smaller than the amount specified in the complaint plus 30%”. Therefore, as soon as the new code is in force, guarantee insurance will be another option, ensured by law, to cover suits against CADE.

2016/02/01 by Grinberg e Cordovil Advogados

CADE’S DATABASE IS HACKED

A hacker activist group entitled Anonymous raided Cade’s – Administrative Council for Economic Defense – database on Monday evening, January 18th, as a statement against the Brazilian government. The hackers disclosed the Authority’s inside information such as logins and passwords of its employees. Classified documents or petitions were not disclosed. The curious goal of the Anonymous group was to show dissatisfaction regarding President Dilma Rousseff’s veto to a section of the Multiannual Plan (PPP, in Portuguese) related to the auditing of the public debt. According to the group, the public debt prevents the country from presenting a “balanced socioeconomic development […] and consumes almost half of the Union’s budget”. CADE’s team was able to quickly react in order to avoid further damages, however, the Authority will not provide more details on the event so that such practices are not encouraged.

2016/01/22 by Grinberg e Cordovil Advogados

CADE RELEASES GUIDE ON PLEA AGREEMENTS

The administrative Council for Economic Defense – CADE released, during their 78th trial session held on January 21st, 2016, a preliminary version of their Guide regarding Plea Agreements (TCC in Portuguese). The Guide aims to “serve as a reference for civil servants, lawyers and society in general on proceedings relating to this instrument, providing greater transparency, predictability, effectiveness and speed to negotiations” of these agreements. Although it is not binding nor is it law, the Guide demonstrates practices and parameters that have been utilized by CADE in their negotiations. However, it is worth noting that these parameters may be modified so that they are compatible with the case under analysis. This Guide is undergoing public consultation and contributions regarding its content will be received until February 19th; suggestions should be sent to the email guiatcc@cade.gov.br

2016/01/21 by Grinberg e Cordovil Advogados

COUNTING OF CADE’S TERMS IN BUSINESS DAYS

Law 12.529, of 2011, refers to deadlines for parties and the authority in different ways. For instance, the deadline to present a defense in an administrative proceeding is 30 days, as set forth in Article 70. It does not refer to business days, but consecutive days; especially since the same law, when referring to several deadlines applied to the authority – Article 72, for example, which grants 30 days for the authority to determine evidence production –, explicitly states that such deadlines are to be counted in business days. Thereby, since in certain cases business days are explicitly mentioned, when this reference is absent it is understood, due to a lack of law stating the opposite, that it refers to consecutive days. The New Civil Procedure Code, however, establishes in Article 219: “In the calculation of a deadline in days, as determined by law or by a judge, only business days shall be counted”. Thus, now there is a law which states the opposite, this being the reason why the understanding that the deadline, not expressly determined in consecutives days, should not be counted as so, is valid. In fact, the subsidiary application of the New Civil Procedure Code is the result of Article 115 of Law 12.529, of 2011.

2016/01/18 by Grinberg e Cordovil Advogados

CORRUPTION: REWARD TO THE WHISTLEBLOWER

The most recent Legislative Bill regarding rewards to whistleblowers in corruption acts is bill n. 83/2015, which was attached to bill n. 6,132/2013, and this one was later attached to bill n. 1,701/2011. The first bill prescribes that, in order to make the denunciation (and, therefore, to receive the reward), the whistleblower must provide “clear and detailed description of the facts, including information useful to the assessment of the narrated facts”, as well as “pieces of evidence and documents that can demonstrate the commitment of the illicit act, if possible”. Furthermore, it establishes many obligations to the whistleblower. Apparently recognizing the infeasibility of the requirements present on both previous bills, the one from 2015 (which repeats a bill from 2013), establishes that “the receiving of the referred amount shall be conditioned to the consistency of the denunciation and if it is helpfulhelps to unravel the crime”. However, there is a clear amount of subjectivity in this wording, mostly due to the fact it does not explain which authority must decide if the denunciation is consistent and if it helps to unravel the illicit act.

2016/01/12 by Grinberg e Cordovil Advogados

CADE OPENS PROCEEDING IN “LAVA-JATO”

CADE published in December 23rd, 2015’s Official Gazette an order opening an Administrative Procedure to investigate an “alleged cartel in the market of industrial onshore engineering, construction and assembly services” referring to the “lava-jato”/carwash case. The aforementioned order received the Technical Note prepared by the General-Superintendence which alleged that robust evidence was found pertaining to infractions to the economic order. In observation of the procedural established by the antitrust authority, the investigated parties shall be notified in the following week to present defense pleas within a term of 30 (thirty) days — which shall be doubled due to parties having different counsel —, while also being able to indicate witnesses; subsequently, a new discovery phase will be carried out to examine the allegations made by CADE’s General-Superintendence.

2015/12/23 by Grinberg e Cordovil Advogados

ABUSIVE PORT CHARGES ARE CONVICTED BY CADE

On December 9th, after a complaint by the National Agency of Water Transports (ANTAQ) ,the Adminstrative Council for Econoic Defense’s Court unanimously decided to convict port operators Agência Marítima Orion, AGM Operadora Portuária, Sirius – Assesoria Comercial and D&F Logística e Representação, as well as the Workmanship Management Agency of Porto Alegre Port (OGMO), for coordinated offense to free competition. In this case, the defendants allegedly decided, in an assembly, mandatorily charging payment from new pre-qualified port operators of Porto Alegre Port Who present requests for port workforces. Such operators would thus be chargeable a pecuniary contribution for participation in financial costs amounting to BRL 250.000,00 at the time. Under CADE’s General-Superintendence it was pointed out that the fact that the OGMO be an input provider did not hinder its liability for abuse of market Power in the workforce market, and that the conduct should be classified as cartel, and not as coordinated practices for closing the market. In order to solve this issue, Reporting Commissioner Alexandre Cordeiro Macedo concluded that the conduct could not be considered a cartel “given that (…) the foreseen in item I [coordinated agreement and manipulation of economic conditions] does not comprise the creation of barriers to entry the market, due to a legislative choice”. This position was endorsed by most of the Deciding Body, with the exception of Commissioner Márcio de Oliveira, among others, who understood that it was, in fact, a cartel (i.e. “competitor behaving as guided by one will, and acting in a coordinated matter to keep others from threatening the united dominance”). Despite this matter, the Deciding Body unanimously considered the charge unjustifiable, as it was a result of abuse of dominant position aiming to create barriers to entry the market. Given this fact, CADE imposed fines varying from BRL 108.000 and 1,6 million, public retraction by all the Defendants. The OGMO was attributed greater responsibility, as its institutional intrinsic role was distorted to obtain improper competitive advantage and for effectively having market Power able to restrain the entrance of new port operators.

2015/12/22 by Grinberg e Cordovil Advogados

CORRUPTION AND BIDDINGS

The Provisional Measure nº 703, dated December 18, 2015, was announced by some as a “Christmas Gift” to contractors involved in corruption accusations. This measure does indeed allow accused contractors to tender bids again. However, it is not exactly a gift. The sensitive point is the wording change to Law 12.846, dated August 1st, 2012 (known as the anti-corruption law), specifically to article 16, 2nd paragraph, item I: “Leniency Agreements entered into by the administrative authority shall “exempt the legal entity […] from the restrictive sanctions of impediment to participate in public bids and impediment to contract with the Government, as established in Federal Law 8.666, dated June 21, 1993, and in other laws that address the matters of biddings and contracts”. Regardless of the presumption of innocence (which means that no one can be found guilty until a condemning sentence is final), in order for one to be entitled to the benefits of the Provisional Measure under analysis, it is required that a leniency agreement with a confession and recognition of all acts and facts be signed, as well as the payment of eventual fines and assumption of other obligations. Therefore, a new stimulus has been created to enter into leniency agreements, in which the contractor must cooperate with the authorities in charge of the investigation.

2015/12/16 by Grinberg e Cordovil Advogados

CADE AND INTERIM STATUTE OF LIMITATIONS

In the judgement of the Administrative Proceeding nº 08012.012081/2007-48 against companies that manage shopping malls, the Administrative Council for Economic Defense (CADE) did not analyze the merit (radius clause), since it decided for the closing of the case due to the verification of a statute of limitations period: They explain there are two kinds of statute of limitations: (i) the direct, by the authority’s inaction in proposing a lawsuit within certain time period and (ii) the interim statute of limitations, by the authority’s inaction for at least three years after the case has already been opened. Thus, the proceedings that are under CADE’s investigation can be affected by the interim statute of limitations if the authority – which exercises at the same time the functions of investigation and judgment – does not give the necessary push. The applicable legislation at the time of the events established that prescription (in this case the interim statute of limitations) could be interrupted by “any unequivocal act that results in the investigation of the facts”. Commissioner João Paulo de Resende’s leading vote declared that there were two types of actions that occurred in the case at hand: (i) the parties’ active participation in the proceeding, requiring copy of the case records, and/or the submission of power of attorney, etc.. In other words, petitions which do not demand any material analysis by the Agency or have the capacity to contribute to the closing of the case” or (ii) The Authority’s submission of orders/decisions related to the Settlement Requirement (…) that are linked to three defendants. The orders and decisions were not actually filed in the present administrative proceeding, but were merely attached to the case records. Finally, CADE understood that none of the described actions, practiced at a period longer than three years, constituted “an unequivocal act that concerns the verification of the facts”, reason why they recognized the interim statute of limitations and closed the case.

2015/12/09 by Grinberg e Cordovil Advogados

ORAL STATEMENTS: STJ AND CADE

There is a discussion in the Superior Court of Justice, among the ministers of such Court, concerning the oral statement of attorneys during trial sessions. A complaint of the Ministers has been found, according to which lawyers should not read summaries that have been previously delivered to the Ministers. The Plenary has been divided between those who think they should not interfere in the attorney’s activities (positioning that has been supported by the Brazilian Bar Association) and those who have suggested such interference. One of the Ministers has declared that attorneys who cannot memorize their oral statement do not deserve to make such statement before the Superior Court of Justice; but the major part of this group understands that notes can be consulted. Whatever the outcome, it must have consequences for the other Courts, not to mention its influence in the trials held by the Administrative Council for Economic Defense (CADE).

2015/12/08 by Grinberg e Cordovil Advogados

SHAM LITIGATION: GENERAL ABUSE

During CADE’s trial sessions it is common for the authority to reveal their positions regarding issues that are not relevant to the case at but, but that are nonetheless very important. On 11.25.2015 CADE held a trial session where they analyzed a merger filing in which a third party requested that CADE impose to the applicants a prohibition of seeking relief regarding trade protection (basically antidumping measures). CADE denied this request, but the Reporting-Commissioner declared that eventual abuses by the applicants in their requests for trade defense could result in procedures pertaining to sham litigation. This practice consists basically of filing various suits/procedures whose real object is not what is objective and subjectively declared, but to impose barriers to competitors. The revealed position, which did not pertain specifically to the matter at hand, appears in the Commissioner Cristiane Schmidt’s decision. She made it very clear that requests presented to any of the power – Judiciary, Executive and Legislative – can result in the opening of procedures for sham litigation. The position is important since notorious cases of sham litigation revolve around abuse of legal measures, whereas trade defense occurs within the Executive Power. As so, it is clear that other possibilities of sham litigation exist.

2015/11/30 by Grinberg e Cordovil Advogados

ATTORNEY’S FEES AND ANTITRUST

MLex published on 11.23.2015 an article in which it was reported that the Public Prosecutors of Minas Gerais requested to the Administrative Council for Economic Defense (CADE) that a decision be handed down soon in the procedure filed against the Brazilian Bar (Ordem dos Advogados do Brasil – OAB) relating to the alleged table of attorney’s fees which harmed competition between lawyers. In fact, the Prosecutor’s presented a new fact, stating that the text of the recently approved Ethics Code, Resolution no. 02/2015, which comes into force on April/2016, constitutes a competitive infraction. Our objective is not to give an opinion on the matter, especially because, according to art. 42, item II of the same Ethics Code, an attorney is forbidden from “debating, by any means of communication, a suit under the auspices of another attorney”. Having stated what isn’t our objective, it is possible to mention what effectively is: to mention the items of the new Ethics Code that are under fire by the Public Prosecutors of Minas Gerais (also because we do not have full knowledge on the matter, besides the article mentioned above). As so, herein follows our comments. According to the item VIII of the sole paragraph of article 2, “it is an attorney’s duty” “to refrain from” “contracting fees in degrading amounts”. On the other hand, §6 of art. 48 establishes that is “A lawyer must observe the minimum amounts established in the Tables of Attorney’s Fees instituted by the Sectional Council where services will be rendered, including those pertaining to diligences, under penalty of characterization of degrading fees”. CADE has already condemned other professional associations which imposed to their affiliates tables of prices or obligatory fees – that is, those that are not mere indication or that aim to guide. According to the Public Prosecutors of Minas Gerais, this is apparently (again, knowledge on the matter is based on an article by a specialized news source) the case of the Ethics Code which stipulated obligatory minimum prices to be fixed by Sectional Councils (of the States).

2015/11/30 by Grinberg e Cordovil Advogados

CADE RELEASES A GUIDE REGARDING THEIR LENIENCY PROGAM

The Administrative Council For Economic Defense – CADE released during their 75th trial session on November 11th 2015 a preliminary version of their Guide regarding the Antitrust Leniency Program, aiming to consolidate “best practices and procedures usually adopted for the negotiation of Antitrust Leniency Agreements” and to “serve as a reference for future negotiations”. Although the Guide, which is presented in the format of questions and answers, is not to be seen as law, its importance is due to its intention of being instructive, serving as a source of information and support to potentially interested parties (companies, natural persons, lawyers, etc.), and strives to make the procedures adopted by the antitrust authority in these negotiations more transparent a certain. The content of the Guide is directly derived from Brazil’s antitrust legislation and serves to disseminate best practices adopted by the organ in a moment when institutional dialogue regarding this instrument [Leniency] is at its highest. Alongside this, a proposal to change the authority’s bylaws (Internal Regiment), modifying provisions pertaining to “Leniency Plus” and “Plea Agreements (TCC)”, was presented. CADE will make both the preliminary version of the Guide and the proposal to alter the bylaws available on their website, and suggestions may be presented until January 10th 2016.

2015/11/13 by Grinberg e Cordovil Advogados

CANADAS’S COMPETITION BUREAU APPROVES EXCLUSIVITY DEAL TO NHL BROADCAST RIGHTS UNTIL 2026

Canada’s Competition Bureau has approved a C$5.2 billion broadcast agreement that grants Rogers Communications exclusive rights to broadcast the National Hockey League across the country for 12 years, reducing the number of national broadcasters from two to one. It is the largest media rights deal in the league’s history. Given the popularity of this sport and the league, the Competition Bureau had been adopting a safe approach since 2013 – the year the contract was celebrated. In fact, during last season, the Bureau was even able to collect actual evidence, as the agreement was already in place. Based on said evidence, the Competition Bureau concluded that Rogers would not hold a position of enhanced market power due to the deal, as it was already regarded as a relevant broadcaster before the agreement, since it Rogers is a multi-platform telecommunications company offering television, internet and mobile services and since consumers use web streaming more and more to watch NHL games. Furthermore, according to advertisers, their investments would not, as the deal would not affect the audience ratings. Although the agreement has been approved, it is possible other analysis in case new evidence comes to light. It is even possible to consider a regulatory analysis by the Canadian Radio-television and Telecommunications Commission.

2015/11/06 by Grinberg e Cordovil Advogados

CADE SUGGESTS CLOSING INVESTIGATIONS DUE TO LACK OF EVIDENCE

On October 7th, 2015, Cade’s General-Superintendence (SG) issued a legal opinion suggesting the closing of the investigation, in regards to all parties of the procedure, of an alleged cartel in the market of steel-grit for the cutting of marble and granite. The proceeding, which originated from a complaint, probed alleged client division, and the fixing of prices and price readjustments in the state of São Paulo. The awaited decision, handed down 8 years after the commencement of the proceeding, stated that the evidence available in the files was insufficient to confirm the alleged practices. The forensic analyses made in the tapes delivered by the complainant in the beginning of the investigations showed inconsistencies, since he had delivered 7 tapes as evidence but only 5 were analyzed, which had different content than expected and alteration marks. Those inconsistencies led the SG to conclude that they could not be used as main evidence. Besides that, the other supporting evidence available in the files was as fragile as the analyzed records. Documents collected during the search and seizure proceedings did not prove the existence of any meeting between the competitors, presenting only studies or strategic documents that are normal in a competitive environment. Furthermore, witness testimony did not bring any other valid evidence, including the complainant’s testimony, which was vague and with inconclusive information. Correctly, after almost 10 years of investigation, SG recognized all these facts and suggested the closing of the administrative proceeding. However, this not the end of the case; which was sent to Cade’s Tribunal, who can carry out a complementary investigation or simply put the case up for trial so that the decision to close the case can be accepted or not.

2015/11/04 by Grinberg e Cordovil Advogados

THE LEGAL 500 RANKS GCA AS ONE OF THE BEST IN THE AREAS OF COMPETITION/ANTITRUST AND INTERNATIONAL TRADE.

The Legal 500 is a British publication that evaluates law firms from different countries based mainly on comments from clients worldwide. GCA was ranked as one of the best in the practice areas of competition/antitrust and international trade and customs by the 2016 edition of The Legal 500 Latin America. According to The Legal 500, in relation to competition/antitrust, GCA “has gone from strength to strength since its launch in 2010, and combines ‘excellent market knowledge with partner-led service’. Its lawyers are ‘very capable specialists’ praised for their ability to ‘add value on complex transactions’”. Partners Mauro Grinberg was cited as a ‘leading light’ and Leonor Cordovil as an ‘excellent’ professional. In regards to the international law, GCA was highlighted as having a “tenacious and client-focused team’ attracts praise for its ‘strong professionalism’ and ‘deep knowledge of the anti-dumping process’”. Partner Leonor Cordovil was identified as a ‘safe pair of hands’. To read more see the full article at: http://www.legal500.com/firms/52700/offices/56019

2015/11/03 by Grinberg e Cordovil Advogados

CADE WILL PUBLISH GUIDELINES FOR CEASE AND DECEASE AGREEMENTS

The 21st International Competition Seminar, organized by IBRAC took place on October 16th and 17th, 2015. One of the main subjects discussed was the fact that CADE is drafting guidelines for negotiations and signing of Cease and Decease Agreements (TCC). Diogo Andrade, Deputy General-Superintendent, stated that the changes in the negotiation policies for agreements, which took place in March, 2013 were a great advance for CADE. However, the antitrust authority intends to improve it even more by publishing guidelines for its servants and for the public. The internal guidelines aim to reduce transaction costs by improving and standardizing the internal procedures during negotiations. The public guidelines will be focused on transparency for companies and individuals interested in celebrating Cease and Decease Agreements. As it has been seen in other jurisdictions, particularly in the US, the incentives for celebrating a Cease and Decease Agreement should be based on two fundamental premises: transparency and predictability. For this reason, according to the Deputy General-Superintendent, the guidelines will have two key topics: (i) transparency and predictability; and (ii) uniformity and standardization. The first will address the company’s concerns, such as how its collaboration will be measured and the methodology for calculating the financial contribution, as well as more complex issues such as the joint use of Leniency Plus and Cease and Decease Agreements. The second key topic aims to create a standard model based on CADE’s jurisprudence and experience. Note that CADE is increasingly concerned about the issuance of guidelines for both its servers and for the public, given the well-known need that their procedures and negotiations are clear, predictable and standardized, so as to give greater security to citizens and the agency.

2015/10/30 by Grinberg e Cordovil Advogados

FINES APPLIED BY CADE MAY INCREASE

Fines applied by the Administrative Council of Economic Defense (CADE) to companies and individuals involved in antitrust violations must be higher than the profits gained with the illegal practice, whenever it is possible to estimate said profit. Based on this legal provision, Counselor Cristina Junqueira, who recently became part of CADE’s Court, has indicated her intention to apply harsher punishments. In a recent Trial Session, the Counselor stated that the fines applied by CADE serve two purposes: (a) remedying the damages caused by the illegal practice and (b) discouraging players to commit new antitrust infractions. She pointed out that to achieve those objectives, CADE’s fine must reflect what the Law states. This matter was again addressed by the Counselor in the 21st International Competition Seminar, held last October, 16th. Counselor Cristiane asserted that CADE has been too conservative regarding fines and that this subject must be treated as priority by the authority. According to her, the fines applied so far have not considered the profits and advantages gained by the companies by means of the antitrust violation. At this seminar, Counselor Cristiane presented a hypothetical case of a cartel that lasted six years. Her understanding was that, even if it was not possible to estimate the damages caused by the violators, the maximum penalty (which is 20% of the revenue of the economic group in the year before the administrative proceeding was opened) would be lower than the damages caused throughout those years, as the penalty would only consider the revenues of one year. This is s subject of great relevance to antitrust law, and its evolution before CADE must be closely watched. Anyway, the Counselor is merely reinforcing a very well-known saying: the “crime” must not pay.

2015/10/30 by Grinberg e Cordovil Advogados

CARTEL AGREEMENT IN THORACIC SURGERY MARKET

On September 16th, 2015, the Administrative Council of Economic Defense (CADE) imposed to the Cooperativa dos Cirurgiões Cardiovasculares e Torácicos do Estado da Bahia – Cardiotórax a fine of R$ 106,410.00 (one hundred and six thousand, four hundred and ten Reais) for entering into cartel agreements in the market of thoracic surgery. In a complaint filed by the Public Prosecutor Office of the State of Bahia, on November 30th, 2005, Cardiotórax was accused of implementing a cartel agreement by demanding to intervene in any proceeding in this kind of surgery, as well as by exclusively establishing the price and method of collecting the medical fees. Also, the defendant had allegedly standardized the values of the services of cardiovascular surgeries, submitting its own price list to the health plan operators, with values exceeding in 700% (seven hundred per cent) the ones presented by the Brazilian Hierarchical Classification of Medical Procedures (“CBHPM”), and had charged the patients directly, regardless of health plan. At that, CADE’s Tribunal unanimously understood that, beyond the fact that the defendant had monopolized the doctors in Bahia, it had also applied a mandatory list of fees. Notwithstanding this initial unanimous decision, in the same full session some Commissioners disagreed on the calculation of the fine, such as João Paulo de Resende. According to him, the amount imposed by the Reporting Commissioner did not reflect the actual income of the doctors; thus not being able to actually hinder anticompetitive practices by the Cooperative – for him, the fine had to be set at R$ 872,562.00 (eight hundred, seventy-two thousand and five hundred and sixty-two Reais). Even so, the majority of the deciding body rejected these arguments submitted by the Commissioner and followed the initial vote of the Reporting Commissioner, also in terms of the value of the fine. Accordingly, Commissioner Márcio de Oliveira Júnior voted for upholding the amount of the fine and argued that, so as to even lawfully consider the actual income of the doctors, they should have been party to the proceeding from the very first moment.

2015/10/27 by Grinberg e Cordovil Advogados

CADE APPROVES ASSOCIATION AMONG BANKS

On September 9th, the Administrative Council of Economic Defense (CADE) published a decision approving the transaction involving Bradesco, Itaú Unibanco, Santander Brasil, BTG Pactual, BB Banco de Investimento (linked to Banco do Brasil), Citibank, Deutsche Bank, HSBC Brasil, BNY Mellon, Votorantim Asset Management, BNP Paribas Brasil, Caixa Econômica Federal and BM&FBovespa – institutions that are part of the Brazilian Association of Finance and Capital Market Entities (ANBIMA). Said association among these Brazilian and foreign banks will result in a platform called NewCo, which will be used for information exchange among its participants regarding investment funds and portfolios related to these banks. According to the applicants, there will be no sensitive information involved, as NewCo will only manage information and data that are currently exchanged among players, ANBIMA and the Securities and Trade Commission (CVM). In brief, the role of this new association will be to implement uniform means of communication among the abovementioned players, so as to make these contacts more efficient. CADE’s General-Superintendence recognized that the transaction would not result in vertical integration or horizontal overlapping. However, the authority stated that since NewCo is an association formed by competitiors, some precautions were necessary to avoid its use in an anticompetitive manner. Thus, the GS/CADE demanded that corporate governance rules be established to avoid collusion among the involved parties.

2015/10/21 by Grinberg e Cordovil Advogados

CHAMBERS AND PARTNERS RANKS GCA AMONG THE BEST IN THE COMPETITION/ANTITRUST AND INTERNATIONAL TRADE/WTO AREAS

GCA was ranked among the best law firms in the competition/antitrust and international trade/WTO areas by the English publication Chambers and Partners in the 2016 edition. According to Chambers and Partners, in the competition/antitrust area, GCA is a “Highly regarded domestic firm with a significant foothold in the competition and antitrust arena. Advises on large domestic and cross-border cartel investigations. Notable expertise in leniency agreements and merger control matters. Clients frequently praise the team’s hands-on approach”. Chambers and Partners highlights the opinion of one GCA’s clients that “Grinberg, Cordovil Advogados has a very specialized team. Their lawyers are very pro-business, dedicated and committed”. Regarding partner Leonor Cordovil, the publication accentuates that “She is an outstanding professional” and that “She is a leading name in the field and always manages to be available with unfailing dedication”. Regarding Mauro Grinberg, Chambers and Partners remarks that he frequently advises clients on cross-border issues and is singled out by sources for his pragmatic approach. In international trade/WTO, according to Chambers and Partners, the team is known as a “Well-regarded boutique advising on competition and international trade matters. Significant experience advising big name clients from the chemical, energy and steel sectors on anti-dumping investigations, customs law and temporary tariff adjustments before the Brazilian trade authorities”. Chambers and Partners emphasizes one of GCA’s client’s opinion that “GCA is marked by its great experience and technical accuracy in commercial defence”. Furthermore, “They have the advantage of being a young, extremely dynamic and specialized boutique focused on economic law. Additionally, they have excellent working relationships with the relevant authorities in Brasília including DECOM”. Leonor Cordovil is recognized by peers as “an expert in trade and antitrust matters with a solid international practice”. Chambers and Partners highlights that partner Ricardo Casanova Motta “provides valuable support to Cordovil and is praised by clients for his solid legal foundations and dedication to their causes”. See the full articles at: http://www.chambersandpartners.com/41/26/editorial/9/1#RankedLawyers_Tab and http://www.chambersandpartners.com/41/455/editorial/9/1#241846_editorial

2015/10/04 by Grinberg e Cordovil Advogados

CHALLENGED LAWFULNESS OF FINE

On September 15th, 2015, the Federal Court of Brasília decided to cancel the fine of R$ 1.7 billion, imposed by the Administrative Council for Economic Defense (“CADE”), in 2010, to White Martins, for criminal cartel activity in the sector of industrial and hospital gases. This is one of the biggest cases in terms of fines value, in the history of the antitrust agency, as the fines exceeded R$ 2.3 billion. The Court found that the application of the fine, pursuant to the terms of Cade’s final decision, were illegal, since it had allegedly been imposed after telephone calls interceptions solely based on an anonymous complaint and, once excluded these evidences, there would be no other elements that could justify a conviction. In fact, the Superior Court of Justice (“STJ”) already ruled against the application of a penalty solely derived from these types of procedures. In this cartel at issue, the gases companies allegedly entered into deals to fraud bids, by means of dividing costumers among themselves within several markets, such as health, food, beverages and metallurgy, which was reported, back in 2003, by an anonymous complaint to CADE. During the course of this proceeding, judicial orders determined that call interceptions and search and seizure orders be conducted against the investigated parties, in which headquarters certain rules indicating how these costumer divisions would be operated. (Administrative Proceeding No. 08012.009888/2003-70, White Martins gases Industriais Ltda.; Air Liquide Brasil Ltda.; AGA S.A. and others). At that time, CADE concluded that the fines imposed to White Martins should be even higher than the fines applied to the other companies involved, for reasons of the company’s relapse: it had already been condemned, in 2002, for purchasing an raw materials from its competitors in an amount higher than necessary to manufacture, preventing other competitors from having access to essential inputs (i.e., hoarding behavior). Despite this, both White Martins and the other companies involved, such as Air Liquide (a fine value of R$ 197 million), Air Products (R$ 179 million), Indústria Brasileira de Gases (IBG) (R$ 6.7 million) and Linde Gases (R$ 188 million), denied the practice of cartel and appealed against the fines before the Brazilian Courts. Besides these companies, executive officers were also convicted with fines values varying from 67 thousand Reais to R$ 3.5 million. As this decision can be appealed, CADE, acting through its President, Vinícius Carvalho, affirms that the agency will challenge the referred decision, pointing out that a cartel had taken place in this sector, as it had been suitable and promptly proved within the aforementioned administrative decision. Furthermore, the Council also argued that the administrative conviction was not applied based on the sole content of the call interceptions, but, apart from that, it had been due to other documents obtained by means of search and seizure orders; thus not allowing that a potential illegality of the collected evidences was declared whatsoever.

2015/09/22 by Grinberg e Cordovil Advogados

GUIDELINES FOR THE ANALYSIS OF THE PREMATURE CONSUMMATION OF ACTS OF ECONOMIC CONCENTRATION.

With the implementation of Law 12.527 in 2011, Brazil joined the list of countries which apply the premerger notification rule. In other words, now the competitive conditions between the merging companies and their infrastructure must not be altered until the final approval by the Brazilian Antitrust Authority – CADE. This means the premature consummation of mergers now characterizes the anti-competitive practice known as gun jumping. The conduct is punishable by fine (between R$ 60,000.00 and R$ 60,000,000.00), declaration of invalidity of the operation, and can also lead to the opening of an administrative proceeding against the merging parties before CADE. With the intention of promoting greater legal certainty for market players, in May of this year the Agency published a document entitled “Guidelines for the analysis of the premature consummation of acts of economic concentration”. At the same time the Guidelines admit the sharing of information is a natural element to the negotiations of merging parties; it also warns its abuse will be understood as gun jumping. For this reason, the parties must be particularly careful when exchanging competitively sensitive information by avoiding the sharing of data concerning company expenditures, production capacities, expansion plans, prices and discounts, main clients, wages and staff, etc. Furthermore, the same care needs to be applied to maintaining an intact competitive environment until CADE concludes its analysis of the operation. This means contractual arrangements that may result in premature consolidation of the merging parties should not be used, such as: previous non-compete clauses, having the contract’s term start before its signing (when this entails the integration of the parties), in anticipated payment or payment in full clauses, among others. The Guidelines suggest a list of measures to reduce the risks of gun jumping, such as the creation of an “Antitrust Protocol” (document that reflects the procedures adopted by the parties until CADE’s final decision), the establishment of “Clean Teams” (neutral teams indicated for complex operations) and the use of “Parlor Rooms” (monitored settings for discussions related to the operation). In addition, the document defines the practice and gives examples of actions that could be characterized as gun jumping as well as details of possible punishments that can be imposed on offenders. Although the suggestions contained in the Guidelines are not binding, its compliance is highly recommended to private agents.

2015/09/18 by Grinberg e Cordovil Advogados

FEDERAL PROSECUTOR’S OFFICE AND SOCCER: PAYMENT TO FOOTBALL SOCCER

News published by the press reports that the Federal Prosecutor’s Office has presented to the Administrative Counsel of Economic Defense (CADE) a request for investigation as to how the compensation is made, by Rede Globo, to soccer clubs in the Brazilian Championship. Until 2011, the division of fees was calculated by the teams themselves, through a group ofthem called The 13 Club (Clube dos 13). For this point on, some major teams started to negotiate directly with TV networks, resulting in higher payments. The claim by the Federal Prosecutor’s Office was due to complaints by smaller teams that felt harmed. It is important to follow this discussion closely, since CADE’s trend, as the competition watchdog, is not to intervene in the market. According to the prevailing understanding, each team’s popularity should attract thelarger sponsorship, resulting in higher revenue quotas.

2015/09/16 by Grinberg e Cordovil Advogados

Al. Santos, 787, 8th floor

São Paulo - Postal Code: 01419-001, Brasil

gca@gcalaw.com.br

+55 11 3371 5050

Al. Santos, 787, 8th floor

São Paulo - Postal Code: 01419-001, Brasil

gca@gcalaw.com.br

+55 11 3371 5050

Grinberg e Cordovil Advogados