CADE’s Tribunal discusses the utilization of individuals’ income tax returns to verify whether the fine imposed by the authority is confiscatory



Commissioner Sérgio Ravagnani, responsible for presenting the thesis, promised to resume the debates on this subject in the first Trial Session of 2021

Yesterday (December 10, 2020), the Tribunal of the Administrative Council for Economic Defense (CADE) discussed the possibility of using individuals’ income tax returns, fined by the authority, under the premise of adapting the methodology of imposing fines to the income and assets of individuals, thereby bringing forth more proportionality and justice. Commissioner Sérgio Ravagnani, responsible for bringing this thesis to the other members of the Tribunal, argued that Art. No. 45 of the Brazilian Antitrust Law is clear in stipulating that fines for antitrust violations should consider the financial and economic situation of the offender, in line with the National Tax Code. In addition, Ravagnani pointed out that CADE has been criticized by the Organization for Economic Cooperation and Development (OECD), regarding the dosimetry of fines imposed on individuals.

CADE’s President Alexandre Barreto questioned how the procedure and feasibility of applying this approach would be decided, considering there would be many cases, involving dozens of individuals, each with their respective income tax returns. He demonstrated doubts concerning how they would use these income tax returns to increase or decrease the fines. In response, Ravagnani affirmed that the criteria would be decided upon after the verification of the individual’s ability to pay, through calibration of the percentage rate. Therefore, if the individual does not have assets, the percentage rate would be minimal, since it should not be confiscatory. On the other hand, if the individual has considerable assets, the tax rate would be maximal, in order to demonstrate to the offender that it is not worthwhile to continue the practice of anticompetitive activities.