Settlements In Cartel Investigations: A Natural Evolution

Without much ado, after being converted from a provisional measure into a law, Law no. 11,482/07 was published on May 31, 2007, bringing relevant and immediate implications to companies and individuals being investigated for cartel conduct. Although this law approves a slight amendment to Terms of Commitment to Cease Conduct (Termo de Compromisso de Cessação de Prática - "TCC"), Brazil's version of consent orders - maintaining high expectations in relation to the general reformulation of the Antitrust Law (Law no. 8,884/94) -, the change may be fundamental, to the extent it makes the Brazilian Antitrust System (Sistema Brasileiro de Defesa da Concorrência - "SBDC") more efficient for those affected by it.

Until approval of the above mentioned law, the Secretariat of Economic Law Enforcement (Secretaria de Direito Econômico - "SDE") and the Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica - "CADE") were authorized to enter into TCCs during the course of a large part of the activities investigated by the SBDC. Similar to the Term of Conduct Adjustments (Termos de Ajustamento de Conduta) entered into by the Public Prosecutor's Office, in which the party under investigation undertakes to cease certain conduct, the prior TCC brought benefits to both parties involved: to the companies and the individuals under investigation, the administrative process is suspended without financial consequences and the conduct is not even characterized as illegal; and for the authorities, the allegedly anticompetitive conduct is ceased without the need to continue spending significant public funds on the investigation.

This instrument, however, until this moment, has been little used in the scope of investigations pending before the SBDC, perhaps due to the fact that a large portion of the cases seeks to determine the existence of a cartel and, until the enactment of Law no. 11,482/07, a TCC was not applicable to such cases.

Based on the argument that it was necessary to give Brazilian authorities instruments that could make the battle against cartels more effective, Law no. 8,884/94 underwent substantial changes in 2000, such as: introducing the possibility of entering into Leniency Agreements; allowing the SDE - after obtaining a court order - to make search and seizures in companies; and prohibiting agreements suspending cartel investigations. At the time, it was thought that allowing such agreements, after a cartel...