The Brazilian Competition Authority (“CADE”) is one of the most important and active competition authorities in the world, being responsible, among other functions, for prosecuting and punishing individuals and legal entities that commit antitrust violations, including international cartels, affecting the Brazilian market. The stakes for violations to the economic order are high as they involve substantial fines, restriction of rights, and apply to both legal entities and individuals in both the civil and criminal spheres.
More recently, the Brazilian Antitrust Law was amended to include provisions that promote private litigation within antitrust and increase the advantages of entering into a leniency agreement. Published on November 16th, 2022, these are the relevant alterations introduced by Law 14,470/2022:
- Those harmed as a result of antitrust violations will be entitled to pursue double compensation for damages through private claims. The double compensation applies in addition to administrative fines applied for antitrust violations.
- The statute of limitations for pursuing a damages action will become suspended at the start of an investigation, and will only start running once a final judgment of the administrative procedure is published by CADE. Upon the commencement of such period, the statute of limitation will be 5 years.
- A conviction from CADE’s Tribunal will be enough proof to allow a judge to issue a preliminary judgment in favor of the defendant.
- Those signing a leniency agreement will not be subject to the payment of double damages.
- Leniency agreement signatories will not be held jointly liable for damages alongside other defendants, being accountable only for the damages specifically caused by them.
- The burden of proof in a “pass-on defense” (i.e., when the defendant argues that the overprice caused by the anticompetitive conduct was “passed-on” to indirect customers so the plaintiff is not entitled to receive damages) lies with the defendant.
These legal changes may result in an increase in investigations of anticompetitive behavior, as these promote private damage claims and incentivize self-reporting by increasing the already existing benefits of entering into a leniency agreement in Brazil, such as pardon in the criminal sphere and the eliminating or reduction of sanctions, such as fines.
A potential increase in antitrust prosecution in Brazil might very well be reflected in other jurisdictions as local investigations in sectors that have cross-border application (e.g., technology, pharmaceutical and electronics) could inadvertently bring the spotlight to that market and behavior and may result in cooperation between international enforcement. CADE has focused intensely on combating national and international cartels and has maintained a close cooperative relationship with international agencies of its kind, such as the U.S. Department of Justice and the European Commission. In addition, leniency agreements may contain information on cross-border activities and the granting of private damage claims may serve as the basis for damage claims in other locations.
To understand how international legislative changes affect your business, don’t hesitate to contact Hogan Lovells.
Authored by Isabel Costa Carvalho, David Tyler, Rafael Szmid, and Thomas Abboadalla.
Hogan Lovells is registered and licensed as a foreign legal consultancy with the Brazilian Bar Association. In accordance with Brazilian Bar Association rules, Hogan Lovells does not practice Brazilian law and the discussion below regarding Brazilian laws, rules and/or regulations has been obtained from publicly available sources and is for informational purposes only. Therefore, our analysis is limited by the nature of our practice in Brazil and is based on publicly-available information. Our analysis is not a legal opinion and is not to be taken as legal advice or as a substitute for legal advice in Brazil.
