The discussions took place at the Competition Committee of the Organization for Economic Cooperation and Development (OECD). The Committee is responsible for promoting regular exchanges of views and analysis on competition policy issues. All materials related to these discussions, including country submissions, invited experts, and presentations, are published in the Best Practice Roundtables on Competition Policy series.

Among the topics addressed at the meetings over the past few days were (i) the future of leniency programs and cartel detection and deterrence; (ii) the relationship between competition and innovation; (iii) algorithmic competition; (iv) advantages and disadvantages of the Consumer Welfare Standard; (v) competition in the circular economy; and (v) damage theories for mergers in digital markets.

In its turn, the Brazilian delegation addressed issues related to algorithmic collusion. On this topic, CADE stated before other foreign antitrust authorities that framing algorithmic competition issues under traditional theories of harm is less challenging than finding evidence of algorithmic antitrust violations or devising strategies to avoid them, especially as technology continues to evolve rapidly and algorithms have been increasingly used by companies in various markets and segments, consequently impacting the way these companies operate.

As an example, a case involving airlines was cited in which the Brazilian authority investigated possible anticompetitive conduct arising from the use of pricing algorithms. Although, at the time, CADE dismissed the investigation on the grounds that the so-called “tacit collusion” arising from the use of technologies could not be punished, in this last event, the Brazilian antitrust authority has signaled to its peers that its understanding may soon change, considering the new challenges imposed by the use of algorithms in the business environment.

The appropriate form of antitrust enforcement is being widely discussed in Europe and the United States (by experts such as Schuwalbe, Ezrachi and Stucke), but in Brazil the discussion still seems to be in the early stages. However, it would not be a surprise to see a growth in the number of opened investigations in markets that adopt such technological solution.

The event organized by OECD lasted from June 12 to 16, and the results of the main topics covered can be found here.

O conteúdo In CADE’s sight: algorithmic collusion aparece primeiro em Grinberg Cordovil Advogados.

O conteúdo CADE and Public Prosecutors to create joint database to investigate cartels aparece primeiro em Grinberg Cordovil Advogados.

From now on, the GS, subdivided into 11 General Antitrust Analysis Coordinations (“CGAAs”), will have a specific and exclusive coordination to receive and analyze complaints, as well as to investigate unilateral conducts: CGAA 11. According to an official note from CADE, the change in the GS’s organizational structure is in accordance to a recommendation made in an OECD report that analyzed Brazil’s competition policy in 2019 and suggested the creation of a specialized coordination for unilateral conduct. In the words of CADE’s new general superintendent, Alexandre Barreto, these and other changes are intended to bring greater “dialogue and efficiency” to the work of the Brazilian antitrust authority.

Previously, the analysis of unilateral conduct cases, such as tie-in sales or sham litigation, was conducted by different coordinators, depending on the economic sector affected by the investigated conduct. Several investigations of unilateral conducts from other CGAAs are being redistributed to CGAA11.

O conteúdo CADE creates a specific unit to investigate unilateral conduct aparece primeiro em Grinberg Cordovil Advogados.

The National Fertilizer Plan (“PNF”, its Portuguese acronym), instituted by Decree No. 10.991/2.022 (link), will serve as a guideline for the development of the domestic fertilizer market over the next 28 years (until 2050), and focuses on some of the main pillars of the production chain, such as the use of new technologies, sustainability, and mineral inputs. The decree also creates the National Fertilizer and Plant Nutrition Council, which will be the advisory and deliberative body responsible for coordinating and monitoring the implementation of the plan throughout its lifespan.

The PNF is created in a scenario where 85% of the fertilizers used in national agriculture come from imports, according to the National Association for Fertilizer Dissemination, and, per government, the goal is to reduce the participation of imports to about 45% by 2050, regardless of an increase in demand.

According to the Minister of Agriculture, Tereza Cristina, the plan’s goal is not to make Brazil a self-sufficient country in fertilizers, but autonomous: “We are not looking for self-sufficiency, but rather the ability to overcome challenges and maintain our greatest wealth, the booming and competitive agribusiness, which allows for food security of Brazil and the world. Our demand for plant nutrients is proportional to the greatness of our agriculture. But we will have our foreign dependence greatly reduced”.

The plan – which had been ready since the end of 2021 – is approved in a strategic moment for the government, since Russia and Belarus, both involved in the conflict against Ukraine, represent 43% of Brazil’s fertilizer imports.

O conteúdo Brazilian government institutes National Fertilizer Plan aparece primeiro em Grinberg Cordovil Advogados.

The Measure seems to have originated from the frustration of countries acting in the World Trade Organization (WTO) and its Dispute Settlement Body (DSB), such as Brazil and the European Union, which have seen claims confirmed, in at least one instance, not being concluded.

Respondent countries that have their policies found to be in violation of multilateral rules have strategically used the suspension of the Appellate Body (AB) to prevent the conclusion of cases by filing appeals that cannot be reviewed until the AB is restored (appeal in blank).

This was the strategy that recently prevented the conclusion of disputes initiated by Brazil, which had already had a favorable decision from the DSB. In January 2022, India announced its intention to appeal (in blank) against the panel report that confirmed the claims made by Brazil in a sugar dispute. In December 2020, Indonesia, who had requested additional time to adopt a WTO ruling (from November 2017),  appealed against a report, which found that the country had not yet properly adjusted its measures related to the importation of poultry meat from Brazil, so that WTO rules were not violated.

Moreover, such cases can happen again if the Appellate Body is not reestablished. According to a survey carried out by the Portal da Indústria at the end of 2021, Brazil is the fifth largest user of the WTO dispute settlement mechanism, the fourth country that most complains  among all members, and the first among emerging countries. Still, Brazil is proportionally the most offensive member in its use of the DSB, being the claimant in 67% of the cases in which it is involved.

The Provisional Measure published by Brazil, regarding this, authorizes the government to suspend concessions or other obligations to other member countries (retaliation) in the following circumsstances:

• Brazil is authorized by the DSB to suspend the application of concessions or other obligations to a particular Member under WTO agreements, or
• The WTO panel report confirms, in whole or in part, the allegations made by Brazil, as a complaining party, provided that
  • There is an appeal by the WTO member, as the respondent party,
  • The appeal cannot be heard by the Appellate Body or the Appellate Body’s report cannot be adopted by the DSB, or
  • The period of sixty days has expired after Brazil’s notification to the respondent WTO Member of its intention to suspend concessions or other obligations.

Therefore, the Brazilian Government’s orientation is within WTO rules. This is to seek consultations and negotiation with eventual member countries that are the object of retaliation, but to ensure greater strength to Brazil in these discussions, in view of the possibility of suspension of concessions given to the importation of goods and services from these countries, or even suspension of intellectual property rights.

The conduct and steps to be adopted by Brazil, however, will be known as the discussions with India and Indonesia move forward.

The full text of the Provisional Measure can be found here.

O conteúdo Provisional Measure providing for punishment of WTO members while its appellate body is inoperative is published aparece primeiro em Grinberg Cordovil Advogados.

• Concerns related to acquisitions of cross-shareholdings between rivals operating in the healthcare sector, even minor ones, since the investing company may gain access to information about strategic and operational moves of the invested company.
• Relevance of rivalry analysis: the number of existing competitors, idle capacity, market shares, and the existence of specific market regulations, since these markets are highly impacted by sectorial regulation.
• Considerable increase in vertical integrations and portfolio effects, involving the healthcare market, given the increasing consolidation of players in the sector. There are constant concerns, regarding market foreclosure to the extent that some transactions might have the effect of preventing or hindering the development of activities by competitors that are not vertically integrated or part of a complementary portfolio.
• The increase of notifiable cases in recent years: when the first peaks occurred, the average recorded was 15 cases annually between 2008 to 2012. However,  the annual average doubled to 31 cases from 2018 to 2021, reaching a peak of 48 filed transactions in 2020.

Considering all of the aspects mentioned above, CADE indicates that it is closely watching the particularities and the recent changes in the sector to ensure the promotion of free competition in the healthcare sector.

The full study in Portuguese can be viewed here.

O conteúdo CADE’s new study analyzes the consolidation of economic groups and the effects of vertical integrations in the healthcare sector aparece primeiro em Grinberg Cordovil Advogados.

These measures aim to strengthen the fight against the practice of disguised price increases. This practice consists in the reduction of the weight or volume of the product by the supplier, without a proportional reduction of price, frequently without the consumer being aware of the changes.

The duty to inform the consumer regarding the characteristics, quality, quantity, composition, and other data of the product in a clear, precise, and ostensive manner in Portuguese is established in art. 31 of the Brazilian Consumer Defense Code (“CDC” – its acronym in Portuguese). As the practice of concealing or making the quantitative changes in products unclear was becoming frequent, the Ministry of Justice started to regulate the requirement of displaying information about changes in quantities of units or net weight in each package on product labels for a certain period of time, thus ensuring that the consumer is informed of the changes.

Before this point, the informative rules were given by the Ministry of Justice’s Ordinance No. 81/2002, which brought forth simpler obligations for suppliers, requiring the packaging to indicate the change for a period of only three months.  After the new ordinance goes into effect,  Ordinance No. 81/2002 will be revoked, within 180 days from its publication.

The new Ordinance, No. 392/2021, is more detailed concerning how the communication should be made and the places that the information should be available. It also extends the period in which the ad must be posted and details the extension of its application to products sold in e-commerce.

Below, we summarize the main obligations instituted by Ordinance No. 392/2021:

1. Quantitative change information must be displayed for a minimum of six months: the first and most important change brought forth by Ordinance No. 392/2021 was the extension of the period – from three to six months – for displaying information regarding quantitative changes on the packaging. According to the Ministry of Justice, the “objective of the change is to minimize the risk of the product being offered to the consumer in two versions simultaneously – one of them without the proper declaration.

2. Content of the quantitative alteration information to be included on the product label remains the same: as in the previous Ordinance, No. 392/2021, it determines that the supplier must state the quantitative alteration on the label of the product offered for sale:

i) the change in the quantity of the product;

ii) the quantity that was in the package before the change;

iii) the quantity after the change; and

iv) the quantity of decrease or increase in absolute and percentage terms.

3. Definition of the location where the information must be displayed on the packaging and specific rules for artwork: the new Ordinance makes the rules clearer on how the information must be displayed on the packaging:

i) Quantitative change information must be placed on a highly visible location of the modified packaging label, being clearly legible and prohibited from being concealed or difficult to see, such as in places where the packaging seals or twists.

ii) The characters must follow the following formatting requirements:

• Uppercase wording;
• bold;
• contrasting color from the background of the label;
• minimum height of 2mm, except for packages with a main panel area equal to or less than 100cm², whose minimum character height is then 1mm.

iii) In the case of not having enough space, the supplier may only inform the occurrence of the change in the product’s quantity. In this case, the complete information can appear on the secondary packaging, if there is any.

iv) Detailed information about the change must also be made available by other means to ensure that the consumer is properly informed. The Ordinance suggests information via SAC or QR codes that refer to the information made available virtually, as an example, among other means and technologies.

Failure to comply with the Ordinance subjects the supplier to the penalties provided in the CDC and Decree No. 2.181/1997, which regulate the application of these penalties, such as fines, seizure of products, manufacturing bans, revocation of the establishment’s license or activities, amongst others.

It is important to emphasize that the consumer defense agencies are aware of these changes. Recently, the Department of Consumer Protection and Defense of the National Consumer Secretariat (“DPDC/Senacon”, its acronym in Portuguese) has opened preliminary investigations to verify evidence of non-compliance with these regulations.

The fines for violations of consumer protection rules are high, and at least until 2013 (i.e.: in a little over a decade of the old ordinance), the Ministry of Justice had already applied approximately 94 fines for noncompliance, totaling about R$ 35 million in punishments to suppliers, at that time. The amount of the fine is estimated by the economic size of the company, the seriousness of the infraction, and the benefit, according to the CDC.

It is worth highlighting that the Superior Court of Justice also expressed itself on this subject in a Special Appeal in an important case in 2013,[1] recognizing the  violation as a hypothesis of objective liability of the supplier (lato sensu) for inaccurate product quantity and violation of the consumer’s right to this information. On another occasion, in 2015, it also confirmed the decision of DPDC, in which it understood that the information about the change in quantity available on the packaging of a product, although present, was not complete, accurate, and clear, during an administrative proceeding. According to the Superior Court of Justice, the way the information was provided was “extremely discreet” and did not meet the duty of ostentatious information.

The Ordinance will take effect on March 29, 2022 (180 days after publication).

[1] Superior Court of Justice. Special Appeal No. 1.364.915- MG (2013/0021637-0), Rel. Min. Humberto Martins, DJe 24/05/2013.

O conteúdo The Ministry of Justice published Ordinance No. 392/2021, presenting new rules on informing quantitative changes of packaged products, including for e-commerce aparece primeiro em Grinberg Cordovil Advogados.

On August 6, the Brazilian antitrust authority (“CADE”) launched a study on digital platform markets that presents information, data and knowledge to the public, which was obtained through the analyses of cases brought to the attention of the antitrust authority.

The study begins by stating that digital platforms are generally intermediaries that connect two or more groups of users and benefit from direct and indirect network effects. In addition, CADE presents an overview of the digital platform markets, its relationship with the Brazilian General Data Protection Law, portability, and the importance of maintaining net neutrality.

The document highlights that CADE analyzed 143 mergers between 1995 and 2020, 36% of which referred to online advertising and 20% to online retail. The authority points out that these transactions did not generate major concerns overall, as most were analyzed by the fast track procedure (with a shorter period of analysis) and cleared without any restrictions.

CADE also presents a summary of the anticompetitive conduct cases investigated by the authority in these markets between 1995 and 2020. Sixteen investigations were launched, and most of the conducts involved exclusivity agreements and abuse of dominant position.

Finally, the study concludes that the Brazilian Antitrust Law (Law No. 12,529/2011) is still able to effectively regulate digital platform markets. Therefore, the decisions analyzed contribute to the understanding that competition law and other applicable laws are highly adaptable, and that it is possible to apply them to a wide variety of business practices.

The final version of CADE’s Notebook on digital platforms markets can be accessed at the following link.

O conteúdo CADE study on digital platform markets is launched aparece primeiro em Grinberg Cordovil Advogados.