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CADE submits for public consultation bylaw on procedures related to the access to documents from the antitrust investigations

Public Consultation

The bylaw also aims to foster the antitrust damages actions in Brazil
by published: Dec 13, 2016 11:49 AM last modified: Dec 14, 2016 05:27 PM

In 7 December 2016, The Administrative Council for Economic Defense - CADE submitted for public consultation a draft version of a new bylaw (“a Resolution”) that provides measures to foster the antitrust damages actions in Brazil while regulating the procedures in the agency to access the documents originated from Leniency Agreements, Cease and Desist Agreements and from dawn raids within CADE’s scope.

In order to foster the antitrust damages actions in the country in a complementary and harmonious way with the antitrust authority’s investigations and agreements policy, the draft resolution proposes a discount in the pecuniary contribution - in negotiations of Cease and Desist Agreements - and a discount in the administrative fine for the participants of the  investigated competitive infraction that prove judicial or extrajudicial compensations in the context of lawsuits against anticompetitive harm. The provision can generate benefits for the Brazilian consumers since it allows the effective compensation of the harms, with lower costs to the aggrieved parties.

The draft version of the bylaw also aims to align the rules related to the access of the documents in CADE with the best international practices, defining what will be considered public or classified, depending on the antitrust authority’s procedural stages. The terms of the draft resolution are based on the Brazilian Competition Law (Law nº 12.529 of November 30, 2011), CADE’s Internal Rules, on the Information Access Act (Law nº 12.527 of November 18, 2011), other related norms  and specific judicial decisions.

The draft Resolution clarifies when third parties affected by anticompetitive conducts may have access to some parts of the investigation and which type of documents will be available, thus facilitating the antitrust damages actions.  At the same time, the proposal reinforces the protection of documents that require an extra extension of confidentiality during the administrative proceeding – i.e, documents resulting from Leniency Agreements executed with CADE, in order not to jeopardize the ongoing investigations and not to discourage the agreements policy that leads to new investigations.

The draft version is available for contributions from the civil society until 6 February 2017. The suggestions must be sent to consultapublica52016@cade.gov.br.

 International discussions and legislative proposals

The interaction between public and private enforcement has been subject to recent debates in international fora and is gaining ground in Brazil.

According to Article 47 of the Brazilian Competition Law, the victims of anticompetitive conducts have the right to demand compensations from those who have caused it. Private enforcement actions constitute an important deterrence tool against anticompetitive practices. However, in Brazil most of such private lawsuits are a consequence of the public enforcement conducted by CADE and by Prosecution Services.

In this context, whereas the rules that favor private enforcement may compromise public enforcement, overly restrictive rules to access documents may also negatively affect the ability of victims of anticompetitive conducts to file antitrust damages actions, and thus may negatively affect a relevant part of the overall antitrust enforcement.

With the resolution submitted to public consultation CADE aims to provide its institutional stance regarding the subject.

Besides the resolution, CADE submitted a draft explanatory memorandum with legislative proposals of new paragraphs on the Article 47 of the Competition Law on antitrust damages actions. Those proposals concern civil aspects of the filing of those lawsuits, dealing with matters such as limitation period and non-solidary liability of Leniency Agreement signatories.

The documents of Public Consultation nº 5/2016 are available below: