CADE discusses non-compliance of ancillary penalties in the last Judgment Session


During the 186th Ordinary Judgment Session of the Court of the Administrative Council for Economic Defense (“CADE”) on Wednesday (10/20), the Commissioners discussed the progress of administrative proceeding no. 08012.009611/2008-51 and the possibility of sanctioning the Defendant for disrespecting an ancillary penalty imposed on it and its corporate structure.

The decision to condemn the Defendant for participation in a cartel of public bids conducted by Banco do Brasil was issued on December 10, 2014 and determined the prohibition of the company’s participation in bids carried out by federal, state, municipal, and the Federal District public administrations, whether direct or indirect, for 5 years. In accordance with this, the Defendant and its corporate structure would be registered in the Unified Registration System of Suppliers (SICAF) of the Ministry of Economy, as impeded from bid participation during the period of 2015 to 2020.

Nevertheless, three complaints were filed before CADE in 2017, 2019, and 2020, stating that Banco do Brasil had directly contracted the Defendant in 2015 and 2020, before the end of the registration period. Additionally, the case brings forth the possibility of cross-participation of the Defendant in biddings through a subsidiary.

Therefore, the problem is in the fact of whether the prohibition to participate in bids includes or does not include direct contracts with a mixed-economy company – thereby, an entity indirectly linked to the Public Administration – since the decision in question only mentions the impediment in bids and not specifically direct contracts.

In an oral argument, the Federal Public Ministry argued the importance of the statement from CADE’s Court in maintaining compliance with decisions. In doing so, it based its speeches on the legislation that submits mixed-economy companies to the Public Administration and argued that the rules make the impediment to contract explicit, in addition to bidding, with the aim of protecting the Public Administration. It also highlighted TCU Ruling 1753/2021, as an example that companies prohibited from participating in bids with the Union cannot be contracted at any level of Public Administration.

In her vote, Reporting Commissioner Lenisa Prado concluded that there was a breach of CADE’s decision by the Defendant and its corporate structure, following the understanding of former Commissioner Abraham Benzaquen’s vote in the proceeding no. 08012.001826/2003-10. Moreover, a daily fine of R$ 250,000 was applied to the Defendant for the days in which goods were delivered for non-compliance with the obligation not to do so, explaining that the fine was defined at the maximum limit of the law, due to the seriousness and continuity of the infraction. However, the trial of the case is suspended, due to a request for a review made by Commissioner Paula Azevedo.