Tuesday, January 17, 2012
Posted by D. Daniel Sokol
Ana Paula Martinez & Mariana Tavares de Araujo (Levy & Salomão Advogados) discuss Brazil's New Competition Law: Promising But Challenging. ABSTRACT: The Brazilian Congress approved in October 2011 a new antitrust and unfair competition law that significantly changes the landscape of competition enforcement in Brazil. Law 12.529/2011 was signed by President Dilma on November 30th and published in the Official Gazette on December 1st. It will take effect on May 29, 2012.
The modern era in competition policy in Brazil began with the antitrust law of 1994 (Law No. 8.884/1994), which coincided with the country's transition to a market-based economy. Law No. 8.884/1994 introduced the current institutional framework of the Brazilian Competition Policy System ("BCPS"), comprised of two investigative and advisory agencies, the Secretary of Economic Monitoring at the Ministry of Finance ("SEAE/MF") and the Antitrust Division of the Secretary of Economic Law at the Ministry of Justice ("SDE/MJ"), and a third component, the Council for Economic Defense ("CADE"), an administrative tribunal that issues final rulings in both merger and conduct cases. The inefficiencies of the current system became apparent fairly quickly, most of them related to its mandatory post-merger review system, the overlapping functions of the three agencies, and the lack of resources. As a result, policy makers began proposing amendments to the antitrust statute beginning in early 2000, but most were not enacted.
Notwithstanding such defects, during the past decade antitrust authorities in Brazil have made significant progress. Improvements since 2003 eliminated overlapping functions, so the SDE concentrated on anticompetitive conduct investigations, with special focus on anticartel enforcement, and the SEAE on merger analysis. Its anticartel program is now widely respected in Brazil and abroad, and merger review has been improved through infra-legal measures such as (i) the introduction of a "fast track" procedure for simple cases; (ii) consent decrees (Medida Cautelar) or agreements with the parties (Acordo para Presevar a Reversibilidade da Operação or APRO) that prevent complex transactions from being closed prior to CADE adjudicating the case; and (iii) the ability of administrative agencies to issue binding interpretations of law issued by CADE with the purpose of ensuring legal certainty regarding the notification thresholds. Further progress, however, depends on the long expected reform of the current system, recently approved by the Brazilian Congress.
The most relevant changes introduced by the new law are related to: (i) the creation of a single antitrust and unfair competition agency; (ii) pre-merger review and new filing thresholds; (iii) sanctions and other specific provisions addressing anticompetitive conduct investigation; and (iv) enhanced human resources for the new agency.