Instituto Aço Brasil signs agreement concerning abuse of the right to petition an investigation

The  Tribunal of the Administrative Council for Economic Defense – CADE  approved, on 01 February 2017,  a Cease and Desist Agreement (TCC in its acronym in Portuguese) proposed by the Instituto Aço Brasil – IABr. The TCC closes an administrative proceeding regarding IABr’s abuse of the right to petition, with the purpose of harming competitors that also import steel bars – anticompetitive conduct internationally known as sham litigation (Administrative Proceeding nº 08012.001594/2011-18).

The case started  in 2011 when a complaint was submitted to CADE by the Associação Brasileira das Empresas Importadoras e Fabricantes de Aço – Abrifa, in which the organization accused IABr of filing several lawsuits in order to prevent companies established in the Brazilian market from importing steel bars.

IABr would have filed preliminary injunctions for anticipated production of evidence, questioning the compliance of the imported goods according to the Brazilian standard rules of security.  Due to all the injunctions, loads of imported steel bars would have been retained in ports facilities until the inspection of the imported goods, causing significant costs to the importers and preventing the circulation of goods in the country.    

By means of the agreement signed with CADE (Request 08700.008345/2016-00), IABr undertakes, among other obligations, to renounce all the current lawsuits related to the case matters and to register a renouncement statement within 30 days from the signature of the TCC.

In addition of the measures adopted to cease the anticompetitive practices, the TCC also foresees the payment of BRL 271,300.00 as a pecuniary contribution  by IABr – the amount will be collected by the Fund for the Defense of Diffused Rights (FDD in its acronym in Portuguese).

According to the reporting commissioner, Mr. Paulo Burnier, the case shows the importance of CADE’s TCC policy, besides the traditional procedures used in cartel deterrence. “In addition to the reduction of the administrative proceeding and to the collection of a pecuniary contribution to the FDD, based on the expected fine if the conduct is condemned, the solution allows to cease the conduct under investigation. In this specific case, it resulted in the withdrawal of all 28 ongoing lawsuits, which is the most important in the matter of unilateral conduct”.

The pecuniary contribution will be paid in four biannual payment instalments, duly adjusted by Brazil’s prime rate (SELIC in its acronym in Portuguese).