New Law structuring the Brazilian private antitrust enforcement system enacted

On 16 November 2022, Law 14470/2022 was enacted, implementing new provisions for repressing antitrust violations. It entered into force on 17 November 2022 upon its publication in the Official Gazette (DOU), altering the Brazilian Competition Law.

Ten years after Law 12529/2011—the Brazilian Competition Law—entered into force, the publication of Law 14470/2022, with the resulting changes, encourages and facilitates the launching of private actions for competition damages by victims of antitrust violations.

The enactment of Law 14470/2022 ushers in a new era in the Brazilian private antitrust enforcement system, detailing essential matters for its development, such as the rules related to the limitation period and when it is supposed to start running. In addition, it addresses the burden of proof and double compensation for losses and damages, increasing legal certainty and providing better and more appropriate incentives.

Regarding specific changes, the new law modifies the Competition Law by introducing Articles 46-A and 47-A and four paragraphs in Article 47. 

The second paragraph of the new Article 46-A defines that the limitation period starts to run from the moment of actual knowledge of the offence, which happens when CADE issues its final decision in the administrative proceeding. That is already the prevailing understanding in the tribunals considering that it is the moment victims become aware of the violation and, therefore, of the possibility of legal compensation.

Additionally, following and based on the U.S. private enforcement system (jurisdiction world leader in private antitrust enforcement)—which established triple damages for cartel violations—the new Brazilian law establishes double damages in Article 47 of Competition Law. That is double compensation for the damage suffered by a third party due to antitrust violations. Therefore, to boost the encouragement for the signature of agreements with CADE, Paragraphs 2 and 3 exempt those who have signed a Leniency or a Cease and Desist Agreement from double damages.

Another important aspect is the reverse burden of proof in the case of a passing-on defence, a common argument presented by defendants stating that the resulting advantage from the violation was passed on to the production chain. Thus, claiming direct victims would not have suffered any losses, therefore having no right to compensation. This pass-on defence imposes on the victims the burden of proof that this pass-on did not happen, despite the enormous informational asymmetry.

Finally, the new law increases the dissuasive effect of antitrust enforcement, creating better integration between legal sanctions—a public matter—and civil liability—a private matter. That happens because, in addition to imposing double damages, this law allows judges to use the decisions issued by CADE as the basis for granting an injunction. Therefore, allowing judges to decide compensation cases preliminarily for the defence of individual or homogeneous individual interests and confirming the deference of the Judiciary to decisions of the antitrust authority.

The General Superintendent of CADE, Alexandre Barreto, stated that ‘Law 14470/2022 is the peak of a concerted effort between CADE and the Brazilian Congress, and represents a new era for the private antitrust enforcement in Brazil, in line with the best international practices.’

Alexandre Cordeiro, president of CADE, declared that ‘the enactment of Law 14470/2022, as part of the development of the Brazilian Competition Defense System, makes the Competition Law more effective, both against violations and to ensure the rights of affected third parties.’ Mr Cordeiro highlights that the CADE maintains a rigorous stance regarding investigations but is also concerned about the proper functioning of the agreement program—which signed 35 agreements in 2022, surpassing BRL 636 million in financial contributions.

Given this concern, CADE issued a favourable opinion on the veto of Paragraph 16 of Article 85 of the Brazilian Competition Law, which determined that Cease and Desist Agreements provide for eventual compensation to be mandatorily submitted to arbitration if it is in the interest of the harmed party. Mr Cordeiro highlights the relevance of arbitration in the country as a tool to solve conflicts. Nonetheless, he understands that a mandatory legal measure impedes CADE from analysing the convenience of the clause, case by case. 'The new law is very positive for competition defence and the country's interests,' added the President of CADE.