What are the boundaries separating the imposition of price tables from a cartel? Defining these blurred lines sets the judgment rule to be applied in each case: while cartels leave no room to challenge their anticompetitive effects, other coordinated behaviors may have an ambiguous welfare balance at best. In the case of a monopsony, for example, imposing collective negotiations may be the remedy with the best welfare effects. However, in borderline cases between these two types of behavior, choosing the most appropriate methodology for judgment is not trivial.
All these issues were discussed in the latest Ordinary Session of the CADE on September 11, 2024. On that occasion, CADE judged another case of price tables imposed and published by the Regional Council of Real Estate Brokers of Goiás – Creci/GO.[2] In evaluating the case, Commissioner Diogo Thomson decided to present a typology of price table cases – thus creating, in his words, a hermeneutic algorithm to judge them.
The starting point of his analysis revisits the distinction between the evidentiary standards of American case-law – per se and rule of reason – and the types of illegality in European law – by object or by effects. These pairs are often used interchangeably, but, as Counselor Diogo Thomson pointed out, their methodologies are not identical. Although the per se rule may resemble illicit by object, European case-law recognizes cases where it is possible to remove the presumption of illegality attached to the conduct. The main distinction, therefore, lies in the space for defense and demonstration that the presumption of illegality can be relativized.
In Commissioner Diogo Thomson’s interpretation, Brazilian law would adopt the European division between illicit by object and illicit by effects. Thus, some behaviors would have a relative presumption of illegality, while others’ unlawfulness would depend on the demonstration of anticompetitive effects. Nevertheless, especially in cartel investigations, the case-law has evolved to construct a maximum presumption of illegality, leaving no room for a more in-depth examination of the economic and legal context of the conduct. In practice, there is a jurisprudential understanding that cartels must be judged according to the per se rule.
Choosing the most appropriate methodology for judging price tables is a decision between these different levels of presumption of illegality. The test proposed by Commissioner Diogo Thomson would serve as a guide to identifying the presumption to be chosen.
After analyzing CADE’s jurisprudence, Commissioner Diogo Thomson initially identified a series of convictions in cases involving price tables adopted for final consumers. In these cases, the adoption of price tables was identified “as illicit by object,” with “adherence to an absolute presumption of illegality similar to the American per se rule, given its use for establishing and controlling prices.”
However, in other cases, the use of tables was considered legal. Most of them involved the supplementary healthcare market; the bargaining power asymmetry between doctors and health plans could justify tables as a compensatory power measure. Regulation is another factor that can remove the illegality of price tables – cases, for example, of maximum price tables for medications. Nonetheless, extending these immunities may constitute an economic order violation.
Considering these precedents, Commissioner Diogo Thomson suggested that price tables be evaluated as illicit by object, with two levels of presumption of illegality:
- Absolute presumption of illegality for tables adopted for final consumers, which bear clear similarities to hardcore cartels; and
- Relative presumption of illegality for other cases, allowing defenses that go beyond the absence of authorship and materiality, such as (i) the obligation to adopt the table; (ii) minimum or maximum prices; (iii) the level of influence on the behavior of members; (iv) use as a form of compensation; and (v) a link to immunity arising from public regulation.
In this context, Commissioner Diogo Thomson then proposed a hermeneutic algorithm for judging price tables, containing the following steps:
- Determination as illicit by object: the tables have a presumption of illegality.
- Analysis of possible immunities and distortions of its use: is there specific legislation mandating the tables? Does the use respect the purposes established by the norm? If both answers are affirmative, the analysis ends here. Otherwise, the following steps are observed.
- Characterization of the target of the table and adoption of absolute presumption: if the target is the final consumer, there is an absolute presumption of illegality – the defendants can only defend themselves by denying their authorship or the materiality of the practice.
- Characterization of the target of the table and adoption of relative presumption: in other scenarios, the presumption is relative, and there is room for analyzing the economic and legal conditions under which the table is adopted.
- Effective analysis of economic and legal conditions: evaluation of the relationship between market power/dominant position of the involved agents.
- Evaluation of adjacent elements/specifics to the evidentiary set: assessment of mechanisms of coercion, threat, and boycott; analysis of relationships between market links or between different entities/agents/professionals. This test was systematized in the scheme below, illustrating the different presumptions outlined above:
What, then, are the limits separating cartels from price tables? In line with the hermeneutic algorithm proposed by Counselor Diogo Thomson, the most relevant distinction would be the target of the table. A table directly related to final consumers is equated to a cartel, while other tables offer more avenues for the accused to defend themselves.
2 Administrative Procedure No. 08700.000284/2022-72.
