On August 19, 2015, the Administrative Council for Economic Defense ("CADE") submitted to the public for comments the preliminary version of the Guidelines for Competition Compliance Programs (“Guide”)1.
The most important aspect of the Guide is that Cade signals that the adoption of effective compliance programs may result in a reduction in the fines imposed on companies that engage in anticompetitive conduct.
The Guide provides that when applying the penalties contemplated by the Brazilian Competition Law (Federal Law no. 12529/2011), CADE’s Tribunal may consider variables such as the good faith of the party in breach, which may be demonstrated by the adoption of an effective compliance program.
On the other hand, if an empty or ‘sham’ program is adopted only to simulate a purported interest in complying with competition law, CADE can aggravate the fines applied, based on the bad faith of such company.
With this measure, CADE seeks to encourage companies to adopt a set of internal procedures to expeditiously prevent and detect risks of breach of antitrust rules.
In this sense, the Guidelines for Competition Compliance Programs seek to guide private agents regarding the different elements that make up an effective compliance program, as well the various economic and reputational advantages of its adoption.
As such, it is noted that the adoption of an effective compliance program can prevent companies from incurring costs and contingent liabilities with investigations, fines, negative publicity, business interruption, unenforceability of contracts or unlawful clauses, redress, prohibition of access to state aid or participation in public bidding processes etc.
CADE also indicates that it will respect the peculiarities of each economic agent when considering compliance programs as a mitigating factor, taking into account the company size, market position, sector of activities etc.
The main objective of the Guide is to present recommendations for companies that seek to prevent their participation in cartels and abusive unilateral conducts. In addition, the Guide also contains recommendations for the activities of associations and Standards Setting Organizations (“SSOs”).
Notwithstanding such focus, the Guide also describes some precautions to be observed in the execution of associative contracts and joint ventures, as well as highlights the possibility of an antitrust compliance program to be integrated with precautionary measures in other related areas, such as the recent Brazilian Clean Company Act (Federal Law n. 12.846/2013).
The draft of the Guidelines for Competition Compliance Programs will be available on CADE’s website for the public to submit suggestions on its contents, by email to firstname.lastname@example.org until October 18. Once approved by CADE’s Tribunal, the Guide will represent an important initiative of the authority to 'educate the public about the forms of breach of the economic order' under section 9, XIV of Federal Law no. 12529/2011.
Observations in this update about Brazilian law are by Tauil & Chequer Advogados. They are not intended to provide legal advice to any entity; any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.
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1 The preliminary version of the Antitrust Compliance Program Guide in English is available on the following website http://www.cade.gov.br/upload/Guidelines%20for%20Competition%20Compliance%20Programs.pdf.