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CADE signs leniency agreement in the scope of “Operation Car Wash”

Leniency

The evidence obtained through the Leniency Agreement, as well as other evidence eventually collected by SG/CADE, may be used by the MPF/PR in criminal proceedings.
published: Mar 20, 2015 10:00 AM last modified: Apr 11, 2016 03:47 PM

The General Superintendence of the Administrative Council for Economic Defense – SG/CADE signed, this Thursday (03/19), a Leniency Agreement with Setal Engenharia e Construções, SOG Óleo e Gás, and current and former employees of companies within the group. The agreement was also signed by the Federal Public Prosecutor’s Office at the state of Paraná – MPF/PR (“Operação Lava Jato – Operation Car Wash task force”).

Within the terms of the agreement, the companies and individuals confess their participation, provide information, and present documents in collaboration with the investigation of the alleged cartel in public procurements of Petrobras’ onshore industrial assembly constructions.

The Leniency Agreement is accompanied by a “History of Conduct”, in which CADE’s General Superintendence describes in detail the anticompetitive practice as reported by the leniency beneficiaries and substantiated by the documents submitted.

The parties waived the confidentiality of the agreement and its annexes. Thus, CADE’s General Superintendence, in agreement with the MPF/PR, discloses a public version of the “History of Conduct”. Some documents and information, including the names of the employees of the competitors that, according to the parties, participated in the alleged cartel, are currently placed under restricted access, in the interest of the investigation.

CADE’s General Superintendence is conducting a confidential investigative proceeding regarding the cartel conduct in question. The information by way of the Leniency Agreement will aid the investigation, in tandem with other investigatory measures and evidence collected by SG/CADE. This includes information from the criminal inquiries and proceedings undertaken by the Federal Police and the MPF/PR in the Federal Justice of the state of Paraná. Similarly, CADE may use evidence seized as a result of dawn raids carried out by those bodies, and shared with CADE through judicial authorization. 

At the end of the investigative proceeding, the General Superintendence will decide on the opening of an administrative proceeding, in which the evidence of the infringement and the formally accused individuals and companies should be pointed out. In such phase, the accused parties will be notified to present their defense. Following this, the General Superintendence will issue an opinion recommending the conviction or the filing of the proceeding in regards to each accused party. The conclusions will be submitted to CADE’s Tribunal, responsible for the final decision.

The evidence obtained through the Leniency Agreement, as well as other evidence eventually collected by SG/CADE, may be used by the MPF/PR in criminal proceedings.

The Leniency Agreement was signed according to articles 86 and 87 of Law 12.529/2011 (Competition Law) and, similarly to the administrative proceedings underway, are related exclusively to cartel conduct, the investigation of which is the competence of CADE. 

Cartels – Article 36 of Law 12.529/2011 states that cartels are agreements with competitors to manipulate or adjust prices, supply, market division and other variables relevant to competition. In cartels in public procurements, the competing companies that offer the service or product acquired by the body or public company agree on conditions that may result in higher prices, fewer options for provision of goods or services, fewer incentives to innovation and other negative effects that harm the public treasury and are usually transferred to consumers.

Leniency agreements in CADE – According to Law 12.529/2011, the leniency agreement aims at obtaining information and documents which prove a cartel and identify its participants. The agreement can be signed in cases in which CADE does not yet have enough evidence to ensure a condemnation of the involved parties at the time the agreement is proposed.

Leniency is signed only with the first applicant company (or its economic group). The leniency applicant must cease its involvement in the conduct, confess the infringement and cooperate fully and permanently with the investigations, identifying the other involved parties and presenting relevant evidence and information. Leniency benefits the signatory by extinguishing or reducing from one to two thirds CADE’s punitive action. The agreement is jointly signed with the Public Prosecutor’s Office and benefits the signatory with full or partial criminal immunity.

The leniency agreement is a tool used by competition authorities in many countries to disclose cartels. Since 2003, more than 40 leniency agreements have been signed with CADE.