10 Due Process of Law and the Brazilian Antitrust Agency
Paula A. Forgioni, Alessandra Forgioni
From: Antitrust Procedural Fairness
D. Daniel Sokol, Andrew T. Guzman
- Subject(s):
- Fair, reasonable, and non-discriminatory terms (FRAND) — Unfair trading conditions — Basic principles of competition law — Enforcement and procedure
(p. 165) 10 Due Process of Law and the Brazilian Antitrust Agency
Inspired by the successful seminar held at the Southern University of California in January 2017, regarding “Antitrust Enforcement in a Global Context,” this chapter aims at providing a panorama of the Brazilian antitrust legislation and practice from the standpoint of procedural fairness.
The text is divided into three parts: a summary of the legislative evolution that led to the current antitrust regulation in Brazil; the main aspects of the rules in place, provided by Law n. 12,529 of 2011; and, finally, the main part of this chapter addresses the guarantees of procedural fairness in administrative proceedings held before the Brazilian antitrust agency and the important role Brazilian courts play in this scenario.1
1. Evolution of Brazilian Antitrust Regulation
Antitrust concerns arose in Brazil far later than in the United States and Europe, notwithstanding the fact that its first antitrust legal rule is from 1938.2 Another legal text to directly regulate economic competition was Executive Order n. 7,666, issued in 1945.3 This Act can be considered the embryo of Brazilian antitrust regulation, even though it also brought certain protectionist goals for national production and consumers.
(p. 166) Executive Order n. 7,666 created Brazil’s first antitrust agency, the Administrative Commission for Economic Defense (CADE), which supervised markets, fined illegal practices—including those against national economy—and authorized mergers. The problem is that this agency has never been effectively implemented, because Executive Order n. 7,666 was revoked in that same year as a result of changes in the government.
A new Constitution was enacted in 1946 and for the first time the principle against the abuse of economic power was stated.4 However, its enforcement was not effective, mainly because abusive behavior was condemned considering only the companies’ intent and not the effects of their practices on real competition. Additionally, there was no regulation on administrative procedures to analyze antitrust cases.
In 1962, Brazil introduced another antitrust law (Law n. 4137). It created the Administrative Council for Economic Defense (also called CADE) and established its main structure. Although this Law was criticized for its lack of accuracy, it separated antitrust regulation from other laws, especially those regarding consumer protection and stock exchange market regulation. During this period, CADE’s decisions were infrequent, and parties successfully challenged them before courts, making them practically irrelevant for companies and even for the public.5 Antitrust was not a concern at all. During its almost 30 years of existence, Law n. 4137 of 1962 was marked by “enforcement waves,” without any kind of consistent competition policy.
The landscape seemed to change with Law n. 8158, of 1991. In the early nineties, the government started to open the Brazilian economy, reducing regulation as much as possible. Competition was expected to increase and an effective antitrust system would be useful to curb abuses of big newcomers. This law created the National Secretariat of Economic Law, a branch of the Ministry of Justice, whose function was to “to establish and propose measures to correct anomalies of economic sectors or companies, as well as their administrators and shareholders, that may disturb or affect price mechanisms, free competition, freedom of initiative or economic constitutional principles.” Furthermore, it gave CADE more staff, increasing its efficiency and (p. 167) the technical quality of its decisions. Many abusive behaviors were investigated, attracting the attention of the media.
Law n. 8,884, enacted in 1994, transformed CADE into a federal agency, which benefited it with a specific budget. Some technical improvements were introduced, aligning the law with European and American ones. This law also organized the “Brazilian Competition Defense System” (SBDC) composed of CADE, the Secretariat for Economic Monitoring (SEAE, a Ministry of Treasury branch), and the Secretariat of Economic Law (SDE, a Ministry of Justice branch).
During the 15 years of validity of Law n. 8,884, enforcement was outstanding. Much progress was seen in antitrust study, practice, and application in Brazil, with strong control of mergers and cartels. The Brazilian courts began to respect CADE and uphold its decisions.
In 2011, Law n. 12,529 was passed, implementing changes in administrative procedures and in CADE’s structure, creating an internal economic division (Department of Economic Studies).6 Two hundred jobs were created for “specialists in public policies and government management” in the antitrust agency, which is now divided into two main bodies: Administrative Tribunal and General Superintendence. The first is in charge of judging all antitrust cases (vertical restraints, cartels, mergers, and abuse of dominant positions), while the second investigates the practices to be brought to and analyzed by the Tribunal.
Another important change made by Law n. 12,529 regards procedures for approval of mergers and acquisitions. The new Law established that merging companies (or acquiring companies) must submit the operation to CADE for its approval before it produces any effect. Therefore, mergers and acquisitions depend on an administrative “green light” to be implemented. In addition, greater means of investigation were granted to CADE, which increased its influence. However, the antitrust agency is still under the power of Brazilian courts, which may scrutinize its decisions.
The fact is that, with Law n. 12,529, more agility and certainty were guaranteed to business operations, leading to a great improvement in CADE’s activity. Many successful investigations have been conducted, leading to (p. 168) qualified decisions, some of which gained special attention from the press as they uncovered relevant corruption schemes and cartels organized by recognized companies. Heavy fines have also been applied, as was the case with the “Cement Cartel,” whose fines reached R$ 2.9 billion (approximately US$ 925 million).7 CADE became an efficient and respected antitrust agency.
The excellence of CADE’s work in the past decade has been internationally recognized. Many prizes were awarded to the agency, including the “Agency of the Year—Americas” of the British Global Competition Review magazine in 2015 and 2016. CADE’s “Guide to Cessation Commitment Terms” was also placed first (Best Soft Law) in the category Concentrated Practices of the Antitrust Writing Awards, promoted by the renowned French magazine Concurrences.8 At the time of writing, CADE remained amongst the top ten antitrust agencies in the world, according to the Global Competition Review Rating Enforcement.9
2. Main Goals of Brazilian Antitrust Policy
Brazilian antitrust regulation protects free competition, the free market, and economic efficiency. However—and even though Brazil is the eighth largest economy of the world—it is still a developing country, with different social and economic concerns than the United States and Europe.10
The Brazilian Constitution sets forth principles and objectives that must be followed not only by the texts of laws and regulations,11 but also by the government and all market players.12 Furthermore, it grants strong rights for (p. 169) people and companies, such as due process of law, economic and contractual freedom, private property etc. Antitrust regulation, like all others, must respect these provisions, i.e., all competition legislation must be designed in accordance with the constitutional guidelines.13
Accordingly, the Brazilian Antitrust Act states that constitutional principles must be respected by CADE. In its first Article, Law n. 12,529 establishes that the whole competition defense system is “guided by the constitutional goals of free initiative, free competition, social function of property, protection of consumers and repression of abuse of economic power.”
After all, mainly inspired by European Union rules, the goal of the whole Brazilian system is to achieve a greater purpose: “to give all people a worthy existence, according to the dictates of social justice.”14 The antirust legislation must therefore serve collective interest, public order, and social welfare.15
These multiple goals confirm that antitrust law cannot be understood as a mere tool to achieve efficiency. The main goal is to create and preserve—under the constitutional principles—an environment in which players have incentives to compete, innovate, and meet consumers’ demands. In other words, to provide protection for the competitive process and prevent markets from being fossilized by players with monopolistic power.
In other words, competition law is an instrument to implement public policies.16 It must not be understood only in its function of eliminating market failures, but as a mechanism to organize the economic system, in pursuit of a national economic development process.17
(p. 170) 3. Due Process of Law in CADE’s Proceedings
There are basically two kinds of administrative proceedings under CADE’s jurisdiction: those related to abuse of dominant position, cartels, or vertical restraints and those regarding mergers and acquisitions. In both, procedural fairness/due process of law is largely guaranteed. First, as mentioned earlier, by the general principles set forth in the Constitution and, second, by the specific rules established both by Law n. 11,529 and by the new internal regulation of CADE, approved on June 13, 2017. Additionally, Law n. 9,784 of 1999 sets forth guidelines for administrative proceedings in general and other rules that guarantee people’s and companies’ procedural rights.
3.1 Due process of law as guaranteed by the constitution
The Brazilian Constitution states due process of law as a fundamental right, and provides the parameters that will form the basis of all procedural legislation. A decision by any judicial, arbitral, or administrative authority will only be considered fair and legal if the proceedings observe the constitutional requirement of due process.18
According to the Constitution, respect of the due process of law is a necessary condition to limit someone’s freedom or assets: “no one shall be deprived of freedom or of his assets without the due process of law” (Article 5, LIV). Two of the main rights stemming from such a principle are expressly addressed by the Brazilian Constitution: the adversary system and the right to full defense. Pursuant to Article 5, LV of the Constitution, “litigants, in judicial or administrative proceedings, as well as defendants in general are ensured of the adversary system and of full defense, with the means and resources inherent to it.” The absence of any of them is enough to void administrative decisions. Brazilian courts are very strict about upholding these guarantees and have already nullified CADE’s decisions due to disregard of due process.
Proceedings must respect the adversarial system, under which parties are ensured two main procedural rights: (i) awareness of all procedural acts, and (ii) the right to contest any evidence or allegation offered by the opposing party.
The right to a full defense means that a party must have access to all legal means and resources to present its case. The idea is to assure the parity of forces between the parties (especially if one of them is a governmental authority). (p. 171) The right of full defense unfolds in the right to be heard, to take part in all the acts of the proceedings, to be made aware of them, and to legally produce evidence, among others.
To comply with the constitutional provisions of an adversarial system and of right to a full defense, CADE must send notice to the parties involved in any administrative proceedings and allow access to all documents of the case (namely, to the legal and factual bases of the investigation), so they can truly defend themselves. Otherwise, the proceedings may be subsequently ruled null by Brazilian courts. Both procedural guarantees are regulated by Law n. 11,529 and by CADE’s internal rules.
Some other important elements deriving from the due process are directly guaranteed by the Constitution. This is the case of the principle of transparency in all proceedings, particularly relevant in cases involving public administration. As established in Article 5, subsection LX of the Brazilian Constitution, “the law may only restrict the disclosure of procedural acts when the defense of privacy or the social interest require it.” So, the rule is that all proceedings must be public, exception being made for cases where there is justification for secrecy.19 CADE’s administrative proceedings are, in principle, accessible to the public. However, sensitive information may be subject to secrecy (for instance, industrial secrets of companies undergoing mergers, other businesses’ confidential information etc.).
Since the rule is for public decisions, CADE is required to expressly justify them. Indeed, the requirement of justification (or motivation) of all decisions issued by the agency is also related to the principles of transparency and public service efficiency, as well as to the parties’ right to a full defense (as it enables companies to file possible appeals to the courts). Therefore, parties have the right to know the reasoning adopted by CADE.
Evidence production is another important aspect of due process explicitly addressed by the Constitution. According to Article 5, subsection LVI, “evidence obtained through illicit means is unacceptable in the proceedings.” Thus, the acceptability of a piece of evidence will depend on the means through which it is obtained.20
(p. 172) Even though not expressly mentioned by the Constitution, all other procedural guarantees contained in the due process are considered as a part of it and, consequently, granted to the parties in all proceedings21 (including CADE’s). Therefore, the right to produce evidence, the right to access courts, the right to be served with and know the charges, the right to have a public trial, the right to equal treatment, and the right to appeal are all widely applied by courts and administrative tribunals as a part of due process (i.e., as constitutional rights).
Ordinary laws and international treaties of which Brazil is a signatory also guarantee the same rights. Special attention must be given to the American Convention on Human Rights (also known as Pact of San José) that is largely applied by national authorities and courts. The 8th Article of the Convention provides for a series of guarantees related to fair trial, in criminal cases,22 which have been applied in Brazil as a complement to the Constitution and to the internal procedural law. They are part of the ideal of due process that is truly enforced by our judges and agencies, not only in criminal cases.
3.2 Due process of law and CADE’s internal regulations
CADE’s Administrative Tribunal is explicitly concerned with due process of law in its proceedings.23 The agency’s decisions are subject to intense control by courts and flaws in due process are the main reason they are sometimes (p. 173) dismissed. Officers do not want their work to be disregarded, so they always bear due process in mind. The small number of decisions reviewed by courts in the last few years proves that CADE itself is applying increasingly stricter standards of due process.24
Two main regulations specifically deal with due process in proceedings adjudicated before CADE: Law n. 11,529 of 2.011 and CADE’s internal rules. Since the Brazilian antitrust system is a part of the public administration, Law n. 9,784 of 1999, responsible for the regulation of all administrative proceedings, also applies.25
All parties to proceedings held before CADE’s Tribunal are allowed legal representation by counsel, as generally provided for in Article 3, IV of Law n. 9,784.26 In the specific case of antitrust proceedings, this right is reasserted by Article 70, 4th paragraph of Law n. 12,529 and by Article 194 of CADE’s internal rules.27
However, if the party chooses a lawyer who is not a member of the Brazilian Bar Association (“OAB—Ordem dos Advogados do Brasil”), some additional concerns arise. All lawyers that wish to work in Brazil (in state courts or administrative tribunals) must have OAB authorization.28 This is (p. 174) not a restriction imposed by CADE or applicable only to antitrust, but to all Brazilian cases.
Also, parties to proceedings regarding violations to the economic order must be made aware of its existence and have access to its full records, as set forth in Article 70, main section29 and 4th paragraph of Law n. 12,529 and Articles 187, subsection 4,30 and 194 of CADE’s internal rules.
The same regulation also establishes (i) the content of the first notice to be sent to the accused party; (ii) a deadline of thirty days for the party to present its defense; (iii) that the first notice be served to the accused party by mail, telegram, publication in a high circulation newspaper or by mechanisms set forth in international cooperation; and, among others, (iv) that the first notice must contain a warning that all the following notices will be published in the Official Gazette of the Union.31
Brazilian Laws state that all CADE’s acts must be public. However, exceptionally, some actions may be covered by confidentiality, either for social interest or to protect the objectives of an inquiry. Our Information Access Act (Law n. 12,527 of 2011), provides guidelines for the disclosure of information regarding public administration acts. The main point is the “observance of disclosure as a general principle and of secrecy as an exception” (Article 3, I). Thus, anyone can access the records and information about any ongoing or past case on the Internet, on CADE’s website.
Article 49 of the Brazilian Antitrust Act establishes that CADE must grant secrecy when necessary to an investigation or when there is social interest involved. Parties may also present grounded requests to keep some information secret.32 According to Article 66, paragraph 10, confidentiality can be kept for the sake of investigation efficiency33 and to protect market interests or company activities.
(p. 175) Nevertheless, investigated companies are always allowed access to all evidence produced by CADE; only third parties can be prevented from viewing the files of a case. But, even when the case is confidential, interested third parties can demand access to the records by proving their connection to the subject under investigation.
Parties to administrative proceedings have the right to contact the agency, as provided by Article 7, VIII of Law n. 8,906 of 1994.34 Part of CADE’s general practice is to allow meetings with the representatives of the parties, creating a link that permits communication between the agency and the companies under investigation.35
In Brazil, every investigative search involving the restriction or violation of fundamental rights must be previously authorized by a judge, including CADE’s search of evidence at a company headquarters or someone’s house.36
Furthermore, the Constitution establishes that any violation or threat to someone’s right can be brought to courts (Article 5, XXXV). Therefore, decisions issued by CADE can be challenged before state judges—and the claims (p. 176) can cover both the undue application of antitrust law and due process violations by the agency.
This possibility of judicial review is supposed to work as a control system (checks and balances) for CADE’s activities, forcing the agency to follow due process of law during proceedings under its jurisdiction.37 Normally, courts tend to uphold CADE’s decisions on their merits (which is only natural, since they are of a technical nature), but the same cannot be said about due process violations. Interaction between CADE and Brazilian courts has been increasingly harmonious, in all stages of the proceedings.
Indeed, recent studies show that this system of checks and balances is effectively helping to maintain the respect of due process in CADE’s administrative proceedings. Since the antitrust agency itself is increasingly concerned with upholding procedural guarantees, the number of its decisions reviewed by courts on the basis of due process claims is modest.
In this sense, the Brazilian Institute of Studies of Competition, Consumption and International Commerce (in the Portuguese acronym, IBRAC) presented, in October of 2016, during the 22nd International Seminar on Competition’s Defense, the results of thorough research on the Brazilian Judiciary’s role in competition law.38 Confirming our premise, IBRAC verified that, among all cases where a decision issued by CADE was challenged before the courts, only 18% presented a reform based on due process claims.39
Some of these judicial decisions are very reassuring to companies undergoing an investigation or being prosecuted by CADE, as they know that courts will back them if there is a procedural misconduct by the agency.
For instance, in Administrative Proceeding n. 53500.003888/2001,40 CADE rendered a decision imposing sanctions for violations of the economic order by two companies in the telecommunications sector. The conviction was grounded on opinions issued by the Brazilian Telecommunications (p. 177) Agency. However, documents that formed the basis of these opinions were not presented to the accused parties and, in consequence, not submitted to the adversarial system. An appeal was filed claiming that these due process failures violated the Brazilian Constitution. Even though the omitted documents were not even mentioned by CADE in its reasoning, the court granted the appeal and annulled the decision,41 showing the value attributed to due process of law.42
In another case, the National Secretariat of Economic Law of the Ministry of Justice recommended the conviction of an investigated party for the practice of running a cartel, without allowing the production of oral evidence requested by said party. A petition of writ of mandamus was filed claiming that the Secretariat’s decision violated the defendant’s due process of law rights. The petition aimed to prevent the case proceeding to trial without the hearing of the witnesses listed by the accused party. The court awarded the writ of mandamus,43 stressing that, even though the administrative authority has discretionary power to decide on the need to produce evidence, the right (p. 178) of the accused party to a full defense and to due process is protected by the Constitution (especially by subsections LIV and LV of Article 5) and must be respected.44
These precedents, among others quoted by IBRAC’s study, confirm that due process of law has been guaranteed in CADE’s administrative proceedings, either by the agency itself or by the judicial courts that review its decisions.45
To challenge a decision rendered by CADE, the party must deposit a bond for the entire amount of the fine.46 In other words, Brazil has a “pay to challenge” system, which tries to inhibit judicial appeals. Depending on the amount of the fine, this mechanism can be considered a violation of due process, as it may compromise access to courts, which is an important constitutional principle.47 Considering that judicial bonds in the amount of the fines are required to challenge CADE’s decisions, appealing to a court may freeze the company’s resources, needed for its activity. Fines provided for in the Brazilian Antitrust Act can be very high.48 For this reason, there are some court orders that allow fined companies to challenge CADE’s decisions without posting bond.49
(p. 179) 4. Conclusion
The Brazilian Constitution, Laws, and regulations guarantee that CADE respects due process of law in all its proceedings. The agency has taken this duty seriously.
Transparency is one of the main concerns in this regard. Most of the proceedings are available on the Internet and can be downloaded by anyone. There are a few rare and justified exceptions to this principle of publicity and, even in these cases, any and all documents will be made available for the parties to the proceedings (and to interested third parties who justify their need to view such documents). The right to be heard is also respected and we may say that the investigated companies’ participation during the proceedings is the rule.
All CADE’s decisions may be challenged before Brazilian courts either on the merits or because of due process violations. The revision exercised by the Judiciary is very strict, especially in relation to procedural guarantees. Consequently, CADE itself has become more and more concerned with these matters. Decisions issued by the agency are being increasingly upheld, even if sometimes (rarely) courts nullify them because of violations of due process.
In accordance with the Brazilian Bar Association rules, foreign counsel is allowed in hearings with CADE, provided that they are accompanied by a Brazilian lawyer.
The “pay to challenge” system may be the final barrier to overcome in relation to procedural guarantees in administrative proceedings under CADE’s jurisdiction, because of the obstacle created in the access to judicial revision. Thus, we already have court orders to guarantee the challenge of CADE decisions without the need to post bond.
References
- Gustavo Badaró, Processo Penal (3rd edn, São Paulo: Revista dos Tribunais 2015).
- Moniz Bandeira, Cartéis e desnacionalização: a experiência brasileira—1964–1974 (Rio de Janeiro: Civilização Brasileira 1975).
- José Francisco de Camargo, Política econômica—Bases metodológicas—Subsídios para uma política de desenvolvimento econômico (São Paulo: Atlas 1967).
- Vinícius Marques de Carvalho and Carlos Emmanuel Joppert Ragazzo (coord.), Defesa da concorrência no Brasil: 50 anos (Brasília: Conselho Administrativo de Defesa Econômica—CADE 2013).
(p. 180) Antônio Carlos de Araújo Cintra, Ada Pellegrini Grinover, and Cândido Rangel Dinamarco, Teoria Geral do Processo (22nd edn, São Paulo: Malheiros 2006).
- Paula A. Forgioni, Os fundamentos do antitruste (9th edn, São Paulo: Revista dos Tribunais 2016).
- Eleanor M. Fox, “Economic Development, Poverty, and Antitrust: The Other Path” (2007) 13 Southwestern Journal of Law and Trade in the Americas (2007) 211–25.
- Douglas H. Ginsburg and Taylor M. Owings, “Due Process in Competition Proceedings” (2015) 11(1) Competition Law International 39.
- Eros Grau, O direito posto e o direito pressuposto (5th edn, São Paulo: Malheiros 2003).
- José de Alexandre Tavares Guerreiro, “Formas de abuso de poder econômico” (1987) 66 Revista de Direito Mercantil.
- Adolfo Weber, Política econômica, translated by José Álvarez de Cienfuegos y Cobos, vol. 1 (Barcelona: Bosch 1940).
Footnotes:
1 The authors would like to thank the students Lucas Pinheiro and Giulia Belmonte for their assistance in the drafting of this chapter.
2 Paula A. Forgioni, Os fundamentos do antitruste, São Paulo: Revista dos Tribunais (9th edn, 2016 (hereafter Forgioni 2016).
3 Before that, antitrust regulation was spread amongst several laws and, therefore, weakened by the lack of a systematic treatment and a strong agency.
4 Brazilian Constitution, Article 148. “The law will repress any form of abuse of economic power, including individual or social unions or groups of corporations, whatever their nature, designed to monopolize national markets, eliminate competition, and arbitrarily increase profits.”
5 Forgioni 2016 (n 2). Some authors believe this reduction of the antitrust agency’s power to be an intentional result of the economic policies adopted by the government at the time, which encouraged mergers, acquisitions, and the creation of large companies and national conglomerates. Moniz Bandeira, Cartéis e desnacionalização: a experiência brasileira—1964–1974, Rio de Janeiro: Civilização Brasileira (1975).
6 Law n. 12,529 also changed the calculation method of fines for violations of the economic order. Under Law n. 8,884, the fines ranged from 1% to 30% “of the gross sales in […] the last fiscal year, excluding taxes,” as provided by subsection I of Article 23. Now, subsection I of Article 37 of Law n. 12,529 states that fines can vary from “0,1% to 20% of the gross sales of the company, group or conglomerate, in the last fiscal year before the establishment of the administrative proceeding, in the field of the business activity in which the violation occurred, which will never be less than the advantage obtained, when the estimation thereof is possible.” Nevertheless, in most cases, it is extremely difficult to estimate the profits arising from a specific violation.
7 Vinícius Marques de Carvalho and Carlos Emmanuel Joppert Ragazzo (coord.), Defesa da concorrência no Brasil: 50 anos, Brasília: Conselho Administrativo de Defesa Econômica—CADE, p. 15 e 93 (2013) (hereafter Carvalho and Ragazzo 2013).
8 Further listing of CADE’s many awards can be found at Administrative Council for Economic Defense, “Awards & Reviews” <http://www.cade.gov.br/premiacoes> accessed August 25, 2017.
9 Administrative Council for Economic Defense, “CADE remains among the best antitrust agencies of the world” (August 21, 2017) <http://en.cade.gov.br/press-releases/cade-remains-among-the-best-antitrust-agencies-of-the-world> accessed August 24, 2017.
10 Eleanor M. Fox, “Economic Development, Poverty, and Antitrust: The Other Path,” Southwestern Journal of Law and Trade in the Americas, 13, p. 114 (2007) (hereafter Fox 2007).
11 Brazilian Constitution, Article 3. “Article 3. The fundamental objectives of the Federative Republic of Brazil are: I—to build a free, just and solidary society; II—to guarantee national development; III—to eradicate poverty and substandard living conditions and to reduce social and regional inequalities; IV—to promote the well-being of all, without prejudice as to origin, race, sex, colour, age and any other forms of discrimination.”
12 Brazilian Constitution, Article 170. “Article 170. The economic order, founded on the appreciation of the value of human work and on free enterprise, is intended to ensure everyone a life with dignity, in accordance with the dictates of social justice, with due regard for the following principles: I—national sovereignty; II—private property; III—the social function of property; IV—free competition; V—consumer protection; VI—environment protection, which may include differentiated treatment in accordance with the environmental impact of goods and services and of their respective production and delivery processes; VII—reduction of regional and social differences; VIII—pursuit of full employment; IX—preferential treatment for small enterprises organized under Brazilian laws and having their head-office and management in Brazil. Sole paragraph. Free exercise of any economic activity is ensured to everyone, regardless of authorization from government agencies, except in the cases set forth by law.”
13 In the words of Eleanor M. Fox: “law making should come from within, not without” (Fox 2007 (n 2)).
14 José de Alexandre Tavares Guerreiro, Formas de abuso de poder econômico, São Paulo: Revista de Direito Mercantil, p. 45 (1987) (hereafter Guerreiro 1987).
15 Forgioni 2016, p. 93 (n 2).
16 As provided by Adolfo Weber, Política econômica, translated by Jose Álvarez de Cienfuegos y Cobos, Barcelona: Bosch, vol. 1, p. 18 (1940) (hereafter Weber 1940) and Jan Tinbergen (Téchniques modernes de la politique économique, p. 14, quoted by José Francisco de Camargo, Política econômica—Bases metodológicas—Subsídios para uma política de desenvolvimento econômico, p. 25 (1967) (hereafter Camargo 1967). Public policies are defined by Grau as “all state acts, covering all forms of public interventions on social life” and “in a broader way, encompass all the state acts regarding the social field (social policies).” Weber 1940, p. 26.
17 Forgioni 2016, pp. 194–5 (n 2).
18 See, for example, case SEC n. 9.412/EX, reported by Minister Felix Fischer and decided by the Especial Court of the Superior Court of Justice on April 19, 2017.
19 Complementing the Constitution, Law n. 12,527, of 2011, dictates that each public agency must provide a transparent management and protect confidential information. Transparency is a strong principle of Brazilian administrative law. It covers all public administration acts (particularly the way state agencies provide information of public interest). Transparency is regarded as essential to allow public opinion to inspect courts’ decisions. “People are the judges’ judges.” Antônio Carlos de Araújo Cintra, Ada Pellegrini Grinover, and Cândido Rangel Dinamarco, Teoria Geral do Processo, São Paulo: Malheiros, pp. 75–7 (22nd edn, 2006) (hereafter Cintra 2006).
20 Evidence must be produced by lawful means, in the adversary system (i.e, the parties must be aware of every piece of evidence brought to the proceedings and also be able to challenge it). Furthermore, the judge must consider all evidence presented by the parties.
21 Gustavo Badaró, Processo Penal, São Paulo: Revista dos Tribunais, pp. 78–9 (3rd edn, 2015) (hereafter Badaró 2015).
22 The following guarantees are all provided by the American Convention on Human Rights and considered part of the due process principle established in the Brazilian Constitution:
(i) according to Article 8.1 of the Convention, the decision-maker must be impartial, independent, competent and previously established by law. Independence is understood as the absence of any kind of external political interference on the final judgment. In its turn, impartiality has a subjective aspect (the equidistance of the judge in relation to the proceedings and the parties) and an objective aspect (social confidence in the judicial activity’s impartiality. Ibid. pp. 38–43; Cintra 2006, pp. 58–9 (n 19);
(ii) still according to Article 8.1, parties have the right to a decision rendered without inordinate delay (“within a reasonable time”). An excessive time course can mean total or partial loss of the right discussed in the proceedings, risking the utility of the final decision. Thus, the right of the party is denied if the proceeding is too long (Ginsburg and Owings 2015, pp. 47–8) and, as set forth by the Constitution, the “law will not exclude any harm or threat to rights from the Judiciary’s appreciation” (Article 5, XXXV); and (iii) Article 8.2 “h” guarantees review by an independent tribunal in case of an adverse decision. The right to appeal to a higher court is considered fundamental to the fairness of the trial and to security (in the Brazilian Constitution, the right to appeal is deducted from the specification of each tribunal’s attributions and competences; for example, reviewing sentences that violate international conventions or federal law is one of the Federal Supreme Court’s assignments, according to Article 105, subsections I and II of our Constitution).
23 Due process of law is also protected in proceedings held before CADE by the branch of the Federal Public Ministry appointed to work with the agency (as provided by Article 20 of Law n. 12,529: “The Attorney General, after consultation with the Higher Board, shall appoint a member of the Federal Prosecution so that it can, in such capacity, issue opinions on administrative proceedings to impose administrative sanctions for violations to the economic order, ex officio or upon request of the Reporting Commissioner”). The report of activities of the Federal Public Ministry representative before CADE for the years 2015–2016 explicitly states that, in issuing opinions that will support administrative proceedings, they are concerned “with protecting constitutional guarantees of due process of law, of right to a full defense and of an adversary system, besides the directives of free competition, free initiative and consumers well-being, basic principles of the Brazilian Economic Constitution” (report available at: <http://www.cade.gov.br/noticias/mpf-junto-ao-cade-tem-novo-representante/relatorio-de-atividades-do-mpf-cade-versao-final.pdf>, accessed October 2, 2017).
24 Lawyers constantly try to raise due process concerns in their complaints about CADE’s decisions before courts, since Brazilian judges are very strict regarding this matter.
25 As provided for in Article 115 of Law n. 11,259: “The provisions of Law No. 5869, as of January 11th, 1973—Code of Civil Procedure, 7347, of July 24th, 1985, 8078, of September 11th, 1990, and 9784, of January 29th, 1999 shall be applicable to the administrative and judicial proceedings set forth in this Law.”
26 “Article 3. Defendants have the right to be assisted, optionally, by a lawyer, except when representation is mandatory.”
27 “Defendants may participate in the administrative proceedings by managers or by attorneys, with free access to the records of CADE.”
28 As set forth in OAB’s Provision n. 91 of 2000: “A foreign law professional, regularly admitted in his or her country to practice law, can only provide legal services in Brazil after authorized by the Brazilian Bar, following the rules set forth in this Act.” Furthermore, Law n. 8,906 of 1994, establishes in Article 8, 2nd paragraph that “the foreigner or the national citizen who does not hold a Brazilian law degree, must perform the test of the graduation title, obtained in a foreign institution, duly validated, besides filling the rest of the requirements listed in this article.”
29 “Article 70. In the decision starting the administrative proceedings, respondent shall be notified to, within thirty (30) days, present defense and specify the evidence to be produced.”
30 “Article 187. The order determining the commencement of the administrative proceeding shall contain the following elements: [ … ] IV—determination of notification of the respondent to present a defense within the legal term and to specify the evidence it intends to produce, providing the full identification of up to three (3) witnesses.”
32 Article 49. CADE “shall ensure, in regard to the proceedings provided in items II, III, IV and VI of Article 48 of this Law, the confidential treatment of documents, information and procedural acts necessary for the elucidation of the facts or required in the interests of society. Sole paragraph. The parties may request confidential treatment of documents or information, as defined in internal regulations.”
33 “The preparatory procedure, as well as administrative investigation may be treated as confidential in the interest of the investigations, at the criterion of CADE’s General Superintendence.”
34 Article 7 of Law n. 8,906 contains a list of rights that are guaranteed to any attorney. Subsection VIII states that all attorneys can speak directly to magistrates in their offices, regardless of having a prior appointment or any other condition, observing the order of arrival.
35 Article 57 of CADE’s internal rules states the possibility of meetings between the parties or their attorneys and the members of the Administrative Tribunal for Economic Defense. The possibility of merging parties to consult with CADE before submitting their operation for approval is explicitly allowed by Article 154 of CADE’s internal rules.
36 Research recently concluded by the Brazilian Institute of Studies of Competition, Consumption and International Commerce (referred to later in the chapter) has analyzed all public decisions issued by state courts in relation to requests for search and seizure filed by CADE from 1994 to 2016. Out of 19 requests, only one was denied, which shows that the courts are ready to support the antitrust agency in their search for confirmation of violations to the economic order. After all, “[t]he monitoring [ … ] of activities and commercial practices that allow equal conditions of competition among economic agents is legitimate and should not be curtailed, especially because subsection IV of Article 170 of the Federal Constitution expressly highlights free competition as one of the principles that govern the economic activity of the country” (extract of the reasoning adopted by reporting judge Marli Ferreira in the decision of the Civil Appeal n. 0004196-28.2013.4.03.6114/SP, issued by the 4th Panel of the Regional Federal Court of the 3rd Region on October 3, 2014). However, in the one case in which the search and seizure was denied, the court stressed the violence of this procedural measure and the need of justification for it to be allowed: “Such measures [searches and seizures], by virtue of the subjective rights they sacrifice, as the constitutional safeguard of intimacy, the protection of free initiative and the right to regularly operate companies, can only be authorized in the limit of what is strictly necessary and objectively useful; In this case, CADE [ … ] intends a generic search, in the hope of finding elements of proof that the agency itself cannot specify, without any restriction of order or time. This is not possible, because it would sacrifice subjective rights, without the necessary demonstration of the indispensability of the seizures” (extract of the decision issued by the 2nd Panel of the Regional Federal Court of the 5th Region on case n. 0004710-80.2013.4.05.8100 on March 1, 2016, reporting judge Paulo Roberto de Oliveira Lima; an appeal filed by CADE against this decision is still pending analysis).
37 Courts exercise strict control over these matters. For instance, the Nestlé and Garoto merger decision was challenged before the courts and the violation of procedural guarantees was recognized. The Judiciary reasserted CADE’s obligation to respect procedural fairness: “If CADE intends to be an administrative court, it shall respect legal and procedural good practices that must orient the judgment. CADE is not allowed to decide what is needed or useful, without indicating the fundamentals and reasons of the decision” (decision rendered by the 4th Federal District Court of Brasília on March 19, 2007, case n. 2005.34.00.015042-8).
38 This research analyzed all decisions not subject to secrecy issued since 1994 by the State Appeals Courts of São Paulo, Minas Gerais, Rio Grande do Sul, Santa Catarina, Paraná, Distrito Federal, Rio de Janeiro, and Espírito Santo, as well as by all the five Regional Federal Courts, the Superior Court of Justice, and the Federal Supreme Court.
39 53% of the cases analyzed did not involve due process claims and in the other 29% CADE’s decisions were upheld.
40 Available for consultation at CADE’s website: <http://en.cade.gov.br/case_search>.
41 Civil Appeal n. 2005.34.00.030540-3/DF, decision issued on August 24, 2016 by the 5th Panel of the Regional Federal Court of the 1st Region, reported by judge Souza Prudente. Some excerpts of this decision are expressive of the concern of Brazilian courts with due process of law in the scope of administrative proceedings. For example: “To apply an administrative penalty [ … ] without observing the fundamental rights to procedural fairness, full defense and an adversary system, and without making the interested party unequivocally aware of the penalty imposed to them and of the reasoning which lead to it, makes it impossible for an appeal to be filed and, consequently, voids the administrative act for violation of the due process of law.” Furthermore, reporting judge Souza Prudente stated: “[ … ] the fact that the documents were not mentioned by CADE’s decision does not mean that they did not serve as basis for this same decision [ … ]. Furthermore, [ … ] we cannot reject the idea that the content of these documents could serve to absolve the accused parties. It is opportune to register that an administrative penalty can only be applied [ … ] if the accused party has access to all the evidence that sustains the accusation, so they can exercise their fundamental rights to due process, a full defense and an adversary system, which has not occurred in the case [ … ]”.
42 Some excerpts of this decision are expressive of the concern of Brazilian courts with due process of law in the scope of administrative proceedings. For example: “To apply an administrative penalty [ … ] without observing the fundamental rights to procedural fairness, full defense and an adversary system, and without making the interested party unequivocally aware of the penalty imposed to them and of the reasoning which lead to it, makes it impossible for an appeal to be filed and, consequently, voids the administrative act for violation of the due process of law.” Furthermore, reporting judge Souza Prudente stated: “[ … ] the fact that the documents were not mentioned by CADE’s decision does not mean that they did not serve as basis for this same decision [ … ]. Furthermore, [ … ] we cannot reject the idea that the content of these documents could serve to absolve the accused parties. It is opportune to register that an administrative penalty can only be applied [ … ] if the accused party has access to all the evidence that sustains the accusation, so they can exercise their fundamental rights to due process, a full defense and an adversary system, which has not occurred in the case [ … ].”
43 Case n. 2006.34.00.023211-0, decision issued on April 9, 2012 by the 5th Panel of the Regional Federal Court of the 1st Region, reported by judge Souza Prudente.
44 Following on precedents of the Regional Federal Court of the 1st Region, the reporting judge asserted that “to observe the principle of an adversary process does not mean only to make the party aware of the developments of the case, but also to provide them with the reasoning that has motivated the sanction and to allow them to respond and to produce evidence in contrary [ … ].”
45 This does not mean that the courts will allow parties to use unfounded claims of due process violations to escape rightful convictions by CADE. Technicalities with no practical effects do not justify the annulment of a decision rendered by the agency. Brazilian courts have made clear that “for a procedural act to be nullified, the interested party must demonstrate that it has sustained an actual loss; the mere allegation of absence of some formality is not enough, especially when the purpose of the act is reached” (decision of the Civil Appeal n. 2003.34.00.019038-3, rendered by the 5th Panel of the Federal Regional Tribunal of the 1st Region on May 11, 2016, reported by judge Souza Prudente; pending appeal).
46 As set forth by Article 98 of the Brazilian Antitrust Act: “The establishment of embargoes or the filing of any other action seeking cancelation of the executive title shall not suspend enforcement, if a bond on the value of the Tribunal fines is not posted, in order to ensure compliance with the final decision on the case, including with respect to daily fines.”
49 For example, in the Interlocutory Appeal n. 5027095-77.2014.4.04.0000, the court exceptionally suspended the obligation of the appealing party to post bond because (i) the amount of the fine due would harm the party’s economic activities; (ii) the Judiciary Power had already issued a decision, in a correlated case, asserting that the conduct of the party did not constitute an offense against the economic order; and (iii) the party offered a real estate property as collateral (decision rendered by the 4th Panel of the Federal Regional Court of the 4th Region on March 3, 2015, reported by judge Cândido Alfredo Silva Leal Junior).
