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CADE sets new policy for agreements in cartel investigations


Changes include confession of practice and requirement for cooperation with investigations
published: Mar 08, 2013 10:00 AM last modified: Apr 14, 2016 11:26 AM

The Administrative Council for Economic Defense - CADE approved on Thursday (07/03), new rules for the negotiation program of Cease and Desist Agreements (“TCC” for its acronym in Portuguese). The changes aim at improving the agreements: considering that the TCCs are important tools to obtain evidence that can be decisive in investigations of anticompetitive behavior, they may, as a result, be decisive for the effective resolution of cases.

TCCs are settlements negotiated between CADE and investigated parties for alleged violations against the economic order. These settlements are concluded by the signature of a Cease and Desist Agreement (“TCC” for its acronym in Portuguese), through which CADE requires the end of practices under investigation and according to which it may also raise funds to be redirected to society through projects managed by the Brazilian Diffused Rights Fund (“FDD” for its acronym in Portuguese).

"With this new trading policy, we expect to increase the number of both TCCs and leniency agreements in the coming years, in order to make policy against cartels even more effective" says the President of CADE , Vinicius Marques de Carvalho.

Changes - With the new policy, the parties need to confess their participation in a collusion to be able to sign such agreements. The signature of the TCC is also conditional on the cooperation of parties in the investigation.

Also, according to the new rules, there are four predefined percentage discounts for contribution to the FDD, varying according to the degree of collaboration and the order of signature of the agreement. The first one would have a saving of 30% to 50% of the applicable fine, the second 25% to 40%, from the third forward the discount may reach up to 25%, and after closure of the case investigation, the reduction would be of up to 15%.

The TCC may also be proposed by the General Superintendent, who, after negotiation with the parties, will forward the final draft of the agreement to the Tribunal for trial. Before, the agreement could only be proposed directly by the Tribunal. The new format allows the antitrust agency to hold a proactive role in the proposition of agreements that are relevant to the investigation.

This kind of negotiation policy is already practised in other competition systems such as the ones in force in the United States and in the European Union. To prepare the proposal, CADE analyzed models of over ten antitrust authorities worldwide. The new policy’s goal is to encourage the signing of such agreements, as they are tools to obtain evidence to cartel investigations.

Public Consultation - A resolution reforming the TCC policy was subjected to public consultation and it amends the provisions of CADE internal regulations. The proposal received contributions from 11 international and national institutions between December 2012 and January this year (2013). The suggestions helped to improve the wording and to clarify the procedures.