Global Competition Law is primarly a practitioner's guide presenting the most salient aspects of the major competition laws country by country, giving an overview of their structure and most charasteristic elements.
Global Competition Law also provides insight into possible future developments in the field.

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 The 2011 Act substantially altered the amount of the fines incurred by both undertakings and individuals. Those amounts are now set out in Section 37 of the 2011 Act:
- undertakings may be fined from 0.1% to 20% of their pre-tax income in the affected market in the prior financial year, on condition that the fine is not lower than the gains resulting from the infringement;
- managers directly or  …

Fines

The CADE may issue cease and desist orders related to the practice under investigation or its harmfull effects. The agreement contains the specification of the defendant's obligation as well as the setting of fines to be paid in case of failure to comply. 

Cease and desist orders

 The 2011 Act substantially altered the amount of the fines incurred by both undertakings and individuals. Those amounts are now set out in Section 37 of the 2011 Act:

- undertakings may be fined from 0.1% to 20% of their pre-tax income in the affected market in the prior financial year, on condition that the fine is not lower than the gains resulting from the infringement;

- managers directly or indirectly liable for their company's infringement may be punished with an individual fine equaling from 1 to 20% of the fine imposed on the company;

- other individuals and other public or private legal entities, as well as associations of entities or persons that do not engage in business activities, may be fined from R$50,000 (US$ 9,600) to R$2 billion (US$ 383.7 million);

In case of recurrence, these fines are doubled.

Failure to appear when summoned to provide oral testimony during investigations is punishable with a fine of R$500 to R$15,000 (US$ 96 to US$ 2,900). Any attempts to impede, hinder or prevent inspections ordered by the Tribunal, the Superintendent General or the case-handling Councilor is punishable by a fine of R$20,000 to 400,000 (US$ 3,900 to US$ 77,000). Producing false or misleading information, data or statements to the CADE or the SEAE is punishable by a fine of R$5,000 to R$5 million (US$ 960 to US$ 960,000).

Pursuant to Section 45 of the Act, the amount of the fine must be determined having regard to the seriousness of the infringement, the infringing party's good faith, the gains resulting from the infringement, the actual commission of the infringement or mere intent to do so, the damages sustained by the Brazilian economy, consumers and third parties, the anticompetitive effects on the market, the infringing party's economic status and the existence of further infringements.

Pursuant to Section 39 of the Act, failure to comply with interim measures, cease and desist orders, plea bargaining agreement or any CADE order aimed at putting an end to the detrimental behavior, is punishable by a daily fine of at least R$5,000 (US$ 960). This fine may be increased up to 50 times in consideration of the seriousness of the infringement and the infringing party's economic status. The same penalty may apply for failure to provide competition authorities with requested documents, but it can only be increased up to 20 times in that case (Section 40).

In its January 2016 Guidelines on Competition Compliance Programs, the CADE suggested that the existence of a strong compliance program, with damage control measures, that meets the requirements set out in the Guidelines, may be considered evidence of good faith on the part of the infringing company and of the reduction of the negative economic effects derived from the unlawful practice. This may incline the Tribunal to consider the compliance program as (i) evidence of good faith and a mitigating factor when stipulating the fine resulting in its reduction or as (ii) criterion to be considered when calculating the pecuniary contribution to be paid by the company, in case a settlement agreement is signed, which could take the discount percentage to the maximum allowed.

Article 38 of the Act provides for several penalties that may be imposed together with fines. The infringing party may be ordered to publish a summary of the sentence in a court-appointed newspaper for two consecutive days, during one to three consecutive weeks. Ineligibility for public financing or participation in public bids may also be imposed for a period of at least five years. Public agencies may also grant compulsory licenses for patents held by the infringing party or deny it installment payments of overdue Federal debts. Finally, the CADE may also order the company's spin-off, transfer of corporate control, sale of assets, partial discontinuance of activities, forbid the managers to engage in commerce activities for five years or any other measure required for the elimination of any anticompetitive effects.

Criminal sanctions are dealt with in Act No 8.137 of 27 December 1990. Section 4 declares that the abuse of economic power by dominating the market or totally or partially eliminating a competitor is a crime against the economic order. Likewise, constitute such crime agreements between undertakings having as their object artificial price or quantity fixing, regional market control by one undertaking or a group of undertakings, anticompetitive control of a distribution channel or of suppliers.

Such crimes are punishable with a 2 to 5-year imprisonment and/or a fine.

Only individuals may be subject to criminal sanctions, not undertakings.

Criminal sanctions

A leniency program was incorporated into Brazilian competition law in 2000, and now figures in Articles 86-87 of the 2011 Act supplemented by CADE's Leniency Guidelines of June 2016 and Articles 197-210 of its Internal Rules.

The Superintendent-General may sign agreements giving full amnesty to individuals or corporations that have “infringed the economic order” and that collaborate with the investigation, or settle to reduce their fines by 1/3 to 2/3 in the framework of a TCC agreement (Cease-and-desist agreement). Full amnesty is automatically granted when the antitrust authorities were previously unaware of the reported violation of the competition rules. It applies to both administrative and criminal sanctions.Also, since the fines imposed on the infringing parties may vary, the Act states that the nominal penalty imposed on undertakings eligible for leniency must be smaller than the smallest fine imposed on the other infringing parties. 

Leniency agreements may only be signed if the Superintendent-General does not already have enough evidence to secure the conviction of the corporation or individual at the time the agreement is proposed. Thus, even if the authority is already aware of an infringement to the competition act, a party may qualify for leniency provided the authority did not have the necessary evidence. Moreover, to be eligible for immunity, an undertaking must be the first to come up with evidence and must completely stop its involvement with the alleged infringement. The undertaking must also admit its participation in the infringement and provide full and continuous cooperation during investigations and administrative proceedings. Immunity from fines may be granted even if the applicant undertaking was the cartel ringleader. Finally, partial leniency, which does not extend to criminal prosecution, may be awarded to the following applicants who produce further evidence of the infringement.

A new feature of the 2011 Competition Act is that corporate leniency now extends to any other undertaking of the group as well as to managers and members of the staff involved in the infringement, who previously had to file individual applications for leniency.

The Guidelines detail the procedural requirements governing the three stages of the negotiation of a leniency agreement. During Phase I, the leniency applicant must secure a marker. During Phase II, the applicant will submit the evidentiary information and documents concerning the offense reported or under investigation. Finally, the signing of the agreement takes place in Phase III. The Guidelines also provide for a leniency plus program, whereby an undertaking or an individual not qualifying for a Leniency Agreement in connection with the cartel in which they have participated but which provides information on a second cartel of which the Superintendent-General is unaware, may obtain a reduction by one to two-thirds of the penalty applicable to the first cartel and full immunity for the second.

An important development in the leniency program is the signing of important cordination agreements between CADE and prosecutor offices of numerous states in Brazil making cooperation much easier between all the bodies involved in leniency programs. 

Global Competition Law

834. Fines

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Les notions juridiques connexes

834. Fines

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise