In this month’s newsletter:
- What to expect from CADE in 2022 – Perspectives from the Brazilian competition authority
- CADE published an English version of its Guidelines on “Parameters for submitting evidence in leniency agreement applications”
- Fake News Bill: 2021 in review and expectations for 2022
What to expect from CADE in 2022 – Perspectives from the Brazilian competition authority
What should we expect from the Brazilian competition authority in the coming year? 2022 marks a new beginning of sorts for the antitrust regulator, with the yet to be formalized appointment of a new General Superintendence and the start of the term of the new President of its Tribunal, Alexandre Cordeiro (who formally took office on July 12, 2021). Brazil also waits on two Commissioners’ nominations that will be central in shaping the Tribunal’s new orientation – more precisely whether it will be more or less aligned with current case law. 2022 is also the year for a general election in Brazil, that will define the next President and the composition of the Senate – both of which are of great relevance for CADE’s nominations.
In terms of enforcement, it is expected that CADE will continue to face competition policy hot topics. In a global context of increasing scrutiny over issues regarding privacy, labor markets, environment, and other less conventional antitrust debates, it is likely that similar claims will be presented to the Brazilian watchdog. President Cordeiro has already expressed his own views on the matter and indicated his interest in not following suit on the trends currently observed in Europe and the US, rather aiming to pursue more traditional antitrust investigations. As mentioned, however, whether CADE will indeed navigate on that path depends heavily on its new composition.
Regardless, important matters will be analysed over the next few months, such as the divestiture of Oi’s mobile business to the three major companies in the market – Telefonica, TIM, and Claro. The merger filing counts with several third parties opposing its clearance, as well as a regulatory dimension and innovation concerns regarding the 5G technology, all of which make it highly likely that clearance will be conditioned upon remedies.
Moreover, several investigations are expected to receive partial and final decisions in 2022. Some of these cases include the cryptocurrency investigation – in which CADE investigates alleged barriers to entry created by banks to the operation of cryptocurrency brokers, the delivery apps case – a investigation of iFood’s (a Brazilian delivery platform) exclusivity agreements with bars and restaurants –, and the investigation into Google’s scrapping practices regarding content produced by Brazilian newspapers. Also, we should see new developments regarding the killer acquisitions market research (in which CADE requested information to 19 digital players operating in the country about past acquisitions.)
The authority is equally expected to keep active in advocacy matters, notably with the publication of studies led by the Department of Economic Studies. In 2021, the Department issued several materials on that line – such as Ex post mergers evaluation: Evidence from the Brazilian airline industry, The problematic binary approach to the concept of dominance, and Update on the debate on relevant market definition – and 2022 started with a publication focused on the healthcare sector – a market that promises to continue to be the focus on intense M&A activity, notably with the recent decision by UnitedHealth to sell its business in Brazil.
It remains to be seen how CADE will approach these institutional and enforcement matters over the year, but one thing is certain: 2022 promises to be an intense year for competition in Brazil.
Cade’s Commissioner defends nullity of leniency agreement due to alleged coercion of leniency beneficiary
In January 2022, the Brazilian antitrust authority made available English version of guidelines that review CADE’s case law and analyze the standard of proof required by the agency to sign leniency agreements
On January 13, 2022, the Brazilian antitrust authority, the Administrative Council for Economic Defense (“CADE”), made available the English version of its Guidelines concerning “Parameters for submitting evidence in leniency applications”. The guidelines were first published in Portuguese in September 2021 and describe types of evidence required by CADE to sign a leniency agreement based on its precedents.
In short, article 86 of Law 12,529/2022 (the Brazilian Competition Act) provides that leniency agreements signed with CADE must result in (i) the identification of the parties involved in anticompetitive practices; and (ii) the gathering of evidence that proves the violation reported or under investigation. In this sense, the document aims at providing more clarity regarding the standard of proof commonly applied by CADE’s Tribunal when judging administrative proceedings, that thus serves as reference for leniency agreements.
Leniency agreements are negotiated by CADE’s General Superintendence (“SG/CADE”), but the Tribunal is the one that renders the judgment and states the fulfillment of the leniency agreement at the time it issues the final decision on the corresponding administrative proceeding.
In this context, the Guidelines reviewed administrative proceedings dated from 1993 up to 2020 in which one or more defendants were found guilty of antitrust violations in order to provide “clearer definition of the evidential criteria for conviction, which derives from precedent decisions of the Tribunal of CADE”. The Guidelines thus analyzes the Brazilian antitrust authority’s case law regarding cartel and influence on adoption of concerted practices in order to point out the standard of proof applied in the judgment of administrative proceedings.
For instance, the review of CADE’s case law includes analysis regarding the standard of proof applied when evaluating direct and indirect evidence of anticompetitive practices, evidence of the practice’s effects in Brazil in case the investigated cartel is international, evidence that are deemed insufficient for conviction when presented in isolation and evidence used to distinguish hard-core and soft-core cartels.
The Guidelines emphasize that to prove a cartel and to provide evidence that the defendants are guilty, CADE’s Tribunal requires strong and robust evidence of the anticompetitive practice. In accordance with the document, sufficient evidence for a conviction should include, for example, diverse and corroborating elements or indicia, such as direct proof of agreements, guilty verdicts in other jurisdictions, confessions, and others.
On the other hand, the Guidelines indicate that some evidence presented in isolation (i.e., without corroboration of other direct or indirect evidence) has been considered insufficient to prove either that a violation has taken place or that the defendant has participated in it. The most usual type of evidence deemed insufficient are unilateral documents or accounts, economic evidence and parallel behavior, non-contextualized phone records, documents lacking date and/or authorship, the fact that an individual or entity is copied in an e-mail, scheduled meetings or mentions of meetings and anonymous tips.
The results of CADE’s analysis are important for future applicants to be in a safer position when negotiating a leniency agreement, and also provides a helpful overview of CADE’s caselaw in collusive practices, thus contributing to clarify the criteria adopted by the authority.
Fake News Bill: 2021 in review and expectations for 2022
Report by the House of Representatives’ Working Group moves forward in some topics, but the approval of the bill is still uncertain
One of the most discussed topics in 2021 in the Brazilian technology landscape was the Fake News Bill (Bill n. 2.360/2020). The draft, which was presented in 2020 and quickly passed by the Senate during that same year, aims to introduce new rules on freedom, accountability and transparency on the Internet – as an effort to face fake news. In 2021, when the bill was sent to the House of Representatives, a Working Group was created to analyze and draft an opinion on its provisions. The group held fifteen public hearings to discuss the proposed legislation.
By the end of last year, the Working Group presented a report and a substitute for the bill. The Rapporteur’s expectation was that the text would be voted by the House of Representatives still in 2021 and by the Senate in early 2022. However, a survey by news outlet JOTA demonstrated that according to most lawmakers and to the President of the House himself, there is skepticism that the project can be approved before July 2022, meaning it is unlikely that the rules would be applicable for the general Brazilian elections in October.
The substitute presented by the Working Group proposed several changes to the original draft. A first point worth highlighting was the expansion of the scope of the legislation to include search tools, as well as providers of social networks and instant messaging services. In addition, exceptions were created for platforms with less than 10 million registered users in the Brazil and providers which are non-profit online encyclopedias, scientific and educational repositories, open-source software development platforms, as well as closed virtual meeting platforms by video or voice.
Another aspect modified in by the new proposal was the withdrawal of the obligation of messaging services to retain communications’ metadata in case of messages massively forwarded. This proposal was highly criticized after its approval in the Senate, because it could entail mass surveillance and potentially violate users’ fundamental rights. In the new wording, judicial authorities may determine the preservation of conversations’ metadata, considering the legal requirements laid down by the legislation applicable to telephone interceptions and respecting the technical limits of the service.
Another point altered by the Working Group’s report was the inclusion of a provision that providers will have to remunerate journalistic content, according to the copyright legislation (with the exception of the links simply shared in the platform). This rule, like others put forward in the new draft, was little detailed or discussed by society, together, for example, with a proposal to amend art. 7 – which would alter Law 12.529/2011, the Competition Defense Law.
Although JOTA’s survey indicates uncertainty on whether the bill will be approved shortly or not, it will most likely remain on the agenda for debate in 2022. Given this is an election year, the regulation of online public debate will receive special attention. It is worth mentioning that efforts in this sense are not exclusive of the Legislative branch: it was recently reported that the Superior Electoral Court is studying ways to ban the use of Telegram in Brazil, given the lack of representation of the company in the country and with the aim of combatting misinformation in the 2022 elections.