CADE’s Leniency Programme completes 21 years and is established as a relevant means of fighting cartels

This year marks the 21st year of the Leniency Programme of the Administrative Council for Economic Defense (CADE). The leniency instrument has been introduced in the Brazilian competition legislation in 2000 by Law 10149 and has been amended and updated over the years.

According to antitrust experts, the leniency agreement is an opportunity for antitrust offenders to repair the damage, cooperate with CADE, and get benefits in the administrative and criminal fields.

Through it, a firm and/or individual involved in a cartel or another anticompetitive conduct may have their penalties within CADE’s jurisdiction reduced by one to two thirds or be granted full immunity, depending on the prior knowledge of CADE’s Office of the General Superintendent concerning the reported violation. Moreover, the recipient of the agreement must commit to cease, disclose, and admit participation in the violation and cooperate with the investigation by submitting relevant documents for the case.

According to CADE’s coordinator-general for antitrust analysis, Alden Caribé, the leniency agreement is an essential tool to dismantle cartels, since “detecting anticompetitive practices does not bring immediate results. Conversely, overcoming the cover-up efforts that thrive in cartels is certainly a demanding and costly task," he suggests.

The coordinator, responsible for CADE’s leniency negotiation unit, emphasises that the fact that the agency investigates such practices on its own motion "is formidable, although faced with technological and budgetary limitations". Hence the importance of a well-structured programme, as the instrument ensures the law’s effectiveness.

First Leniency Agreement

The first leniency agreement signed in Brazil was proposed to the agency in 2003. One of the members of a private security cartel in the state of Rio Grande do Sul disclosed to CADE the operations carried out by the group, aimed at harming competition in government procurements.

Based on the information provided, search and seizure operations were conducted in four firms and two associations. The Prosecution Services also contributed to the investigations, and several criminal investigations were initiated against the individuals involved in the practice, except for the leniency recipient.

CADE's decided to convict the participants in 2007 and levied fines of over BRL 40 million. No penalties in the administrative and criminal fields were imposed on the leniency recipient, who complied with all the agreement conditions. Since then, other 100 similar agreements have been signed by the Brazilian antitrust authority.

Contributions of the Prosecution Services

Coordinator-general Alden Caribé explained CADE always welcomes the Prosecution Services' participation in leniency agreements, as recipients may also suffer criminal punishment. However, its participation is not conditional on the agreement's validation or enforcement.

Mr Caribé also clarifies the Prosecution Services is tasked with a case’s criminal punishment and, when aware of the offence, the body is more likely to sentence offenders to jail (except for the leniency recipient). "By punishing those involved in a violation and protecting the party who disclosed it, the Prosecution Services strengthens the leniency programme as a whole, which is an indirect goal of every leniency agreement signed", he says.

Thus, at the state and federal levels, the Prosecution Services may intervene in a leniency agreement to increase its legal certainty. Moreover, the Prosecution Services assists in investigating and dismantling cartels.

Observing confidentiality

A leniency agreement application is entirely confidential, protecting the applicant's commercially sensitive information. Mr Alden Caribé states this confidential treatment aims to ensure the leniency recipient is at a better position than non-recipients, which ultimately translates into other new applications and increases the effectiveness of competition law.

The coordinator-general asserts the legislation grants confidential treatment even to information from rejected applications. Hence, Article 86 (10) of Law 12529/2011 provides that "rejected applications for leniency agreements, which are not to be disclosed in any way, do not imply the respondent is confessing the matter of fact or admitting participation in the wrongdoing".

In addition, Mr Caribé stresses CADE's confidential treatment, absolute observance of confidentiality, and coherence in its data requests promote the use of this instrument in Brazil. "Ensuring the recipient reaps the most benefits is crucial for the programme's success; as to this instrument, this is a well-established policy in our agency's culture", he adds.

Maturity

CADE's 21-year-old leniency programme reached full maturity and is highly effective. The programme, updated according to world trends, is a result of our agency's efforts towards effective communication and cooperation in the administrative, civil, and criminal justice.

In 2016, CADE released a document consolidating the best practices and procedures adopted by its Office of the General Superintendent to negotiate and execute leniency agreements. The document "Leniency Programme Guidelines", written as a Q&A and including society's inputs from a public consultation, was intended to provide transparency, accessibility, and legal certainty to the rules and procedures followed in these agreements.

Access CADE’s Leniency Programme Guidelines.

Applying for CADE's leniency programme

To apply for a leniency agreement, contact our leniency negotiation unit at the Office of the General Superintendent. Reach us by telephone at +55 61 32218563, by email at leniencia@cade.gov.br, or in person. Please specify you are requesting a leniency marker to ensure you are the first applicant regarding the violation.

For further information, access the "Leniency Program" section on our website.