Cade proposes new settlement policy to strengthen cartel fighting

The Administrative Council for Economic Defense – Cade has initiated the period for public comments last Friday, 14 December 2012, on the proposal for a new policy of settlements in investigations of anticompetitive conducts. 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 it may also raise funds that will return to society through projects managed by the Brazilian Diffused Rights Fund (“FDD” for its acronym in Portuguese).

For settlements in cartel cases, the proposal establishes that the signature of those agreements are subject to the party’s collaboration with the investigations, if the process is still in the investigation stage, in exchange for a discount in the contribution to FDD. Through this, Cade may obtain evidence that will enable the enlightenment of the investigated case and the participation of others involved in the process. Under the new proposed policy, one will have to confess involvement in the cartel to enter any agreement. The current model does not dictate this obligation.

According to the proposed model, there may be four predefined percentage discounts for contribution to the FDD, varying according to the degree of collaboration and 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%.

This kind of negotiation policy is already practiced in other jurisdictions such as the United States and 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.

Since 2007, when the law allowed the celebration of TCCs in cartel cases, nine terms were signed. In the same period, 26 leniency agreements were signed - allowing the reduction or elimination of a penalty when a participant denounces the illegal cartel.

"With this new negotiation policy, those numbers are expected to increase in the coming years, of both, TCC and leniencies, which will make the cartel fight policy even more effective," says the president of Cade, Vinicius Marques de Carvalho.

The proposal is open for public comments until 14 January 2013 and it is available only in Portuguese. Contributions should be sent to Cade in writing to the e-mail address consulta022012@cade.gov.br or to regular mail address: SEPN 515 SET D, LOT 4, ED. CARLOS Taurisano, zip: 70770-504 - Brasilia / DF, Brasil.