BRAZIL: An Introduction to Competition/Antitrust
2024 marks thirteen years since the Brazilian Competition Act was enacted, and significant progress has been made since then. From an institutional point of view, CADE (Brazil’s competition authority) has succeeded in maintaining its status as a globally respected competition agency.
The Brazilian public’s awareness of competition law issues has grown significantly because of CADE’s activity on high-profile matters as well as its advocacy efforts. The appointment of CADE Tribunal and Superintendence members has garnered more attention from the business and political communities, and the strategic value of competition law enforcement is noticeably stronger.
Merger Control
Even with limited resources, CADE has dedicated significant efforts to its merger control programme and has been generally successful in observing deadlines and clearing cases quickly, particularly those that raise no concerns on the merits. Fast-track deals have been consistently reviewed within 30 calendar days, and cross-border cases in which clearance in Brazil could become a bottleneck are very few and far between. Complex cases naturally undergo a more thorough and lengthy review. CADE has adopted strong remedies to clear some of them and has even outright blocked others, but always within the 330-day maximum statutory deadline.
In 2023, CADE reviewed 612 deals, a 9% decrease over 2022, and just one transaction above 2021 figures. Out of the 612 cases, 559 (or 91%) were reviewed under the fast-track procedure, presumably having less harmful potential for competition. Only 11 (2%) of deals reached CADE’s Tribunal for a decision in 2023, out of which only six ultimately received some type of restriction and one was blocked. Similarly, in 2022, 14 cases reached CADE’s Tribunal, and six were approved with restrictions. In 2021, CADE’s Tribunal reviewed 13 cases, imposing restrictions on six of them. This means that, while CADE has reviewed a significant number of transactions, the number of deals that raised competition concerns and thus required remedies has generally remained stable. This has led to debates on the need to update the merger thresholds, which are based on turnover and were last updated in May 2012. This debate also touches on international concern over changing reportability criteria to ensure adequate competition review of tech acquisitions, particularly of innovative companies with little to no turnover.
Overall, the balance sheet for merger-related work performed by CADE is positive, both from an efficiency and quality standpoint. There are, however, institutional aspects of the Brazilian merger control rules that still pose challenges to businesses. Notably, the role of interested third parties – which, admittedly, is a very important one – can sometimes be exacerbated if an excessively lax test is used to admit complaints. The possibility of third parties appealing clearance decisions before the Tribunal, for example, may cause delays that are both avoidable and unnecessary.
Conduct Investigations
Statistics show an increasing attention to unilateral conduct, with CADE having initiated 37 new investigations in 2023. CADE’s former Superintendent-General, currently its Tribunal Chairman, has declared dominance cases a priority for the authority, a trend that has been followed by the Superintendent-General currently in office through the creation of a division dedicated solely to this matter. While this is not necessarily due to the increasing global interest in investigating digital markets, digital services have also been the target of some of these new investigations. In 2022, CADE launched local investigations into the practices of Google’s Android (following the similar investigation by the European Commission, which resulted in fines), as well as into the Google-Facebook ad deal, known as Jedi Blue, investigated in other jurisdictions. Likewise, Apple is also facing an antitrust investigation for alleged abuse of dominant market position associated with its app monetisation and payment method rules.
Though statistics show an increase in the number of leniency applications in the past two years, the downturn in cartel investigations that has been observed worldwide has also affected Brazil. CADE is currently working to finish its legacy cases from leniency agreements entered into in the 2010s, including investigations related to Operation Car Wash, which has accounted for the bulk of CADE’s work on cartel matters since at least 2014. CADE’s cartel settlement programme has remained quite active, and authorities have signalled that the bar should be raised in terms of the contributions and payments required to settle.
In 2021, CADE opened a ground-breaking investigation into information exchanges allegedly taking place among healthcare companies’ human resources departments. In this first-of-its-kind investigation, the authority intends to investigate if the information allegedly exchanged between the defendants could have resulted in anti-competitive effects for employees, a theory of harm which CADE has not previously endorsed, but which leans towards international concern with antitrust in labour markets (such as the USA’s targeting of no-poach agreements).
CADE has also liaised with its foreign counterparts for conduct investigation whenever necessary and has remained active in multilateral forums (the International Competition Network, OECD, etc). Likewise, CADE has strengthened its links with domestic authorities that may also have jurisdiction over the same facts investigated locally: CADE has executed co-operation agreements with several authorities responsible for criminal enforcement (state prosecutors) and has also strengthened connections with administrative bodies responsible for anti-bribery and anti-corruption enforcement.
Another topic that has gained traction recently in Brazil is litigation for damages. In 2022, legislators enacted Law No 14.470/2022, which includes new provisions to encourage and facilitate private damages lawsuits in connection with antitrust violations. The new law allows harmed parties to file for double damages against companies that undertook illegal collusive behaviour, but not against those that entered into leniency agreements or settled, whose conduct is only subject to regular damages. The new law also excludes parties co-operating with CADE under leniency or settlement agreements from joint liability with other wrongdoers. This balance was set to maintain incentives for companies to file for leniency and settlement agreements, while at the same time fostering activity in private enforcement. The effects of the new law on litigation activity are yet to be seen.
A Look Ahead
Brazil’s new federal administration set the regulation of digital markets as a priority. This was in connection with the spreading of fake news and misinformation and their effects on democracy in particular, but it may also affect competition concerns. In November 2022, Congressman João Maia proposed a bill inspired by the European Digital Markets Act, aiming to submit digital platforms to ex-ante regulation by the National Telecommunications Agency, while also preserving CADE’s legal mandate to review digital mergers and conduct. Considering this scenario and CADE’s recent trend of initiating unilateral conduct investigations, digital markets are likely to remain a pre-eminent item on the competition regulation agenda for some time.
Additionally, CADE is expected to issue guidelines on non-horizontal mergers, following public consultation on the topic in 2023. The demand for more concrete parameters for the assessment of vertical and conglomerate mergers has been at the forefront of discussions about merger enforcement globally.
CADE also created a technical group to develop guidelines on unilateral conduct cases, following an international trend for creating or reviewing guidelines on these topics, but the work is still at a preliminary stage, and no draft has yet been submitted for public consultation.