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OECD Peer Reviews of Competition Law and Policy BRAZIL 2019

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OECD Peer Reviews of Competition Law and Policy BRAZIL 2019 OECD Peer Reviews of Competition Law and Policy BRAZIL 2019 Please cite this publication as: OECD (2019), OECD Peer Reviews of Competition Law and Policy: Brazil www.oecd.org/daf/competition/oecd-peer-reviews-of-competition-law-and- policy-brazil-2019.htm This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD or of the governments of its member countries or those of the European Union. This document and any map included herein are without prejudice to the status or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city, or area. © OECD 2019 │ 3 Foreword This OECD report served as basis for the peer review of Brazil carried out by the OECD Competition Committee on 27 November 2018. The peer review was requested by Brazil as part of the process to become Associate to the OECD Competition Committee. The lead reviewers were Ms. Alejandra Palacios, Mexico, Ms. Jill Walker, New Zealand, Ms. Bitten Thorgaard Sørensen, Denmark and Tembinkosi Bonakele, South Africa. The Delegation from Brazil in charge of answering questions during the peer review session was formed by: Mr. Alexandre Barreto, CADE’s President, Mr. Paulo Burnier, CADE Commissioner, Ms. Paula Farani, CADE Commissioner, Mr. Guilherme Mendes Resende, CADE Chief Economist, Mr. Diogo Thomsom de Andrade, CADE Deputy Superintendent and Mr. João Manoel Pinho de Mello, Secretary of the Ministry of Finance’s Secretariat for the Promotion of Productivity and Competition Advocacy (SEPRAC). This is the third report on competition policy in Brazil prepared by the OECD as part of a peer review process. The report focuses on the extent to which the laws, institutions, policies and enforcement practices in Brazil are in line with the OECD competition policy instruments. The report concludes that Brazil’s competition regime is equipped with strong powers and enforcement tools. The main groups of recommendations in the report concern the following: At an institutional level, the separation between the Tribunal (the decision-making body) and the General Superintendent (GS, the investigative authority) should be strengthened to ensure that the Tribunal does not take the role of a second investigative body. OECD PEER REVIEWS OF COMPETITION LAW AND POLICY BRAZIL © OECD 2019 4 │ There have been relatively few abuse of dominance investigations by CADE since the introduction of the new Competition Law and even fewer decisions of the Tribunal. As part of the actions aimed at strengthening its enforcement interventions against abuse of dominance cases, CADE should consider establishing separate units within the GS for investigating this kind of cases. Moreover, CADE should give higher priority to abuse of dominance investigations and rely less on settlement negotiations to conclude cases in order to generate a body of case law in this area. CADE should review its settlements regime. CADE should negotiate settlements during the investigation at the GS and before the case is discussed at the Tribunal to ensure there are administrative efficiencies and resource savings. The level of discount granted should reflect the administrative efficiencies generated by the settlement procedure. More generally, the discounts available in cartel settlements should reflect the levels observed in other jurisdictions. CADE should only accept settlement agreements in straightforward cases that raise no novel or complex legal issues. CADE should clarify the methodology for calculating fines. For instance, by setting an approach that relies on readily identifiable data and avoids having to engage in complex calculations regarding the profit derived by a company from its competition law infringement. The report was prepared by the consultant Hilary Jennings, with inputs from Pedro Caro de Sousa, Antonio Capobianco, James Mancini, Iratxe Gurpegui and Sabine Zigelski from the OECD Competition Division. Iratxe Gurpegui co-ordinated the process and the session at the Competition Committee, under the supervision of Antonio Capobianco (Deputy Head of the Competition Division). The report was translated into Portuguese by Christine Park. Ms Sofia Pavlidou and Ms Tanya Dyhin provided assistance and formatted the report. The peer review process was extensively supported by Noemy Melo Colin, Fabio Lopes de Sousa from CADE´s International Unit and Christine Park, CADE´s external consultant. OECD PEER REVIEWS OF COMPETITION LAW AND POLICY BRAZIL © OECD 2019 │ 5 Table of contents Executive Summary ................................................................................... 9 1. Introduction .......................................................................................... 15 2. Context .................................................................................................. 17 2.1. History of competition law and policy in Brazil ............................. 17 2.2. The 2011 Reform of Brazil’s Competition Law .............................. 19 3. Institutional design and arrangements .............................................. 23 3.1. Competition policy institutions ....................................................... 23 4. Substantive issues: Content and application of the competition law ............................................................................................................. 43 4.1. Conduct cases .................................................................................. 44 4.2. Mergers ............................................................................................ 83 5. Enforcement procedures ..................................................................... 97 5.1. Overview of the process in conduct cases ....................................... 97 5.2. Separation of investigation and decision-making .......................... 102 5.3. Investigative powers ...................................................................... 103 6. Sanctions and remedies ..................................................................... 109 6.1. Sanctions ....................................................................................... 109 7. Private actions .................................................................................... 121 7.1. The framework for private enforcement........................................ 121 7.2. Private enforcement in practice ..................................................... 123 7.3. Challenges in obtaining evidence .................................................. 124 7.4. Challenges arising from the limitation period ............................... 127 7.5. The co-ordination of administrative penalties and private damages ................................................................................................ 128 8. Competition advocacy ....................................................................... 131 OECD PEER REVIEWS OF COMPETITION LAW AND POLICY BRAZIL © OECD 2019 6 │ 8.1. The institutional set-up for competition advocacy ........................ 131 8.2. Competition assessment in legislative and administrative processes ............................................................................................... 134 8.3. Advocacy in public procurement markets ..................................... 138 8.4. Market studies ............................................................................... 139 8.5. Guidelines ...................................................................................... 142 8.6. Interaction with the academia and the general public ................... 143 8.7. Relationship with sector regulators and other public bodies ......... 144 9. International co-operation ................................................................ 151 9.1. Co-operation tools available to Brazil ........................................... 151 9.2. International co-operation in practice ............................................ 156 10. Conclusions and recommendations ................................................ 159 10.1. Institutional and administrative issues......................................... 160 10.2. Competition enforcement ............................................................ 165 10.3. Merger control ............................................................................. 168 10.4. Civil penalties and sanctions ....................................................... 170 10.5. Criminal penalties........................................................................ 173 10.6. Other sanctions ............................................................................ 174 10.7. General policy issues ................................................................... 175 10.8. Improve the regulatory framework for international co-operation .......................................................................................... 178 Bibliography ........................................................................................... 179 Tables Table 1. CADE’s targets ............................................................................ 38 Table 2. Brazil’s anti-cartel effort: 2010-2018 .......................................... 49 Table 3. Cease-and-desist agreements in cartel cases ................................ 68 Table 4. Abuse of dominance cases (figures) 2012-2018 .......................... 78 Table 5. Fines 2013-2017
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