CADE presents its 2016 activities report

On the judgment session held on 18 January 2017, the acting president of the Administrative Council for Economic Defense – CADE, Gilvandro Araújo, presented CADE’s activities report in 2016.

In this period, CADE negotiated 61 Cease and Desist Agreements (TCC in its acronym in Portuguese) in proceedings regarding investigations of violations of the economic order. Among them, 54 TCCs were approved by CADE’s Administrative Tribunal.

The Cease and Desist Agreements are signed between CADE and the company or individual investigated for the alleged infraction, establishing the termination of the anticompetitive practice and the end of its harmful effects to competition and consumers. The TCCs are also an important mechanism to obtain evidence, which would be decisive for the conduction of investigations in administrative proceedings and the effective resolution of the cases.   

Since 2013, when the new rules for the negotiation of such agreements were adopted, CADE has been intensifying  its efforts to improve the policy regarding the Cease and Desist Agreements. CADE’s engagement is illustrated in the increasing number of agreements approved over the years.

In 2012, CADE signed five Cease and Desist Agreements. In the following year, the number increased to 53 – given that 42 of them were signed with Unimed in the same judgment session intended to close cases of exclusivity requirements in the provision of medical services. In 2014, 36 TCCs were approved and in 2015, the number increased to 58.

By means of this legal instrument, CADE also determines the payment of a pecuniary contribution. The total amount of contributions established by CADE in the TCCs signed in 2016 sums up to BRL 798, 9 million.

It is worth noting the seven TCCs signed to conclude the oldest ongoing proceeding in the antitrust authority: the investigation concerning a cartel in the national market of frozen concentrated orange juice. The investigation was initiated in 1999 and has been a subject of judicial inquiries for several times. The pecuniary contributions collected regarding those TCCs sums up more than BRL 300 million.

Furthermore, it is also worth mentioning the five TCCs signed regarding the case that investigates a cartel in the foreign offshore exchange market, involving the Brazilian currency (Real) and foreign currencies, as well as the manipulation of benchmark rates in the exchange market. The fines applied sum up to BRL 183, 5 million.

Record FDD’s collection

In 2016, CADE collected BRL 700,3 million to the Fund for the Defense of Diffuse Rights (FDD in its acronym in Portuguese) of the Ministry of Justice. This is the highest amount collected by the fund. 93% of the resources collected to the fund are related to pecuniary contributions obtained by means of TCCs. The amount also comprises fines collected, judicial agreements and Merger Control Agreements (ACC in its acronym in Portuguese).

In 2015, CADE collected BRL 524 million to the FDD. In 2014, the amount collected sum up BRL 169 million.

Leniency Agreement

In 2016, there were also records related to the Leniency Agreements signed with CADE’s General Superintendence. Eleven agreements were signed – more than the 10 in the previous year. Five of them are related to investigations of cartel regarding the  so-called Car Wash Operation.

 The number of Leniency Agreements signed with CADE was increased by 510% in comparison with 2015.

The number of Leniency Plus Agreements has also increased in 2016. CADE signed six agreements in the last year. In 2015, CADE signed its three first Leniency Plus Agreements. By means of those agreement a company provides evidence of a cartel still unknown by CADE, in order to obtain benefits of fine reduction in another proceeding already existent of a cartel investigation.

Furthermore, the antitrust authority highlights that, in 90% of the Leniency Agreements  negotiated in 2016, the companies pointed out as participants of the conduct proposed later the signature of a TCC.

Proceedings

In 2015, CADE evaluated 390 merger agreements. Of this total, 360 were approved without restrictions, six were approved with remedies, 19 were not recognized and five were filed. In 2016, 384 mergers were notified to CADE.  

Regarding  the repression of anticompetitive conducts, CADE’s Tribunal has judged 31 proceedings – 19 of them were condemned. The fines applied in the cases sum up to BRL 196,6 million.

Institutional Initiatives

After public consultations, CADE issued four new Resolutions in 2016.

The first one, published in September, defines the period of 30 days to the conclusion of the analysis of fast-track mergers. For the other cases, the deadline remains of 240 days, extended for additional 90, as provided in the Law 12,529/2011. The second Resolution also came into force in September 2016 and redefines the role of CADE’s Public Prosecutor.

The third one was published in October and disciplines the hypotheses of notification of associative contracts foreseen in the item IV of the article 90 of the Law 12,529/2011, it also repeal CADE Resolution n° 10. The fourth Resolution, which came into force in November, modifies the text of the “Resolution” 3/2012. The rule reports the list of corporate fields of activities for the application of the article 37 of the Law 12.529/2011 that determines the penalties applied to those who are responsible for anticompetitive practices.

On December, CADE submitted for public consultation a draft version of a resolution that introduces mechanisms of development for the reparation of commercial damages in Brazil. At the same time, the rule regulated the proceedings at CADE for the access to documents resulting from Leniency Agreements, of TCCs and of  search and seizure operations within the scope of CADE.

Furthermore,  it is worth mention the signature of the memorandum of understanding among CADE and the Anti-Cartel Unit of the Federal Attorney of the Public Federal Ministry in São Paulo (MPF/SP in its acronym in Portuguese). The document provides that the institutions can actuate jointly in negotiations of TCCs and Collaboration Agreements.

Last year, CADE also released guidelines on matters related to the antitrust policy aiming to provide a better interpretation of the current rules and stablish directives that serve as a reference to all the interested groups.

The Guidelines on Competition Compliance Programs was released in January and presents directives about this kind of instrument in the competition area. The document approach how a compliance program can be implemented by the companies and the advantages of its adoption.

In May, CADE launched the Guidelines on Cease and Desist Agreement – TCC for cartel cases. It reflects the practice and the parameters already used by the agency in the negotiation of agreements.  

Also on May, it was published the Guidelines on CADE’s Antitrust Leniency Program – consolidated with the best practices and proceedings usually adopted by the General Superintendence in the negotiation and celebration of leniency agreements.

The Guidelines for the Analysis of Previous Consummation of Merger Transactions was released in July and clarifies the methodology used by the Brazilian competition authority to the verification of operations related to agents that are in the same level of a production chain.

Click here to access the 2016 CADE’s activities 2016.