Brazilian Senate approves new competition law bill with amendments

On December 1st the Brazilian Senate has approved the bill for a new competition law.

Because the Senate has proposed amendments to the bill, it will return to the Chamber for review of acceptance of each of the amendments.

The bill was originally proposed by the government in 2005 and had previously been approved by the Chamber of Representatives in 2009.

The proposal for a new competition law was aimed to simplifying the institutional structure of the Brazilian Competition Authorities as well as implementing a pre-merger review process. Brazil currently has 3 different agencies involved in antitrust proceedings and is one of the very few jurisdictions that allow parties to conclude the merger before receiving green light from the enforcers.

One of the amendments to the bill proposed by the Senate is been subject to controversy. If accepted by the Chamber, the turnover thresholds for mandatory filing of mergers would be raised from R$400million to R$1billion, locally. Critics say Brazil would then have one of the highest thresholds in the World and therefore would face the risk of not been notified mergers that could have the potential to harm competition.

It is expected that the bill will be voted by the Chamber in the course of next year. It will not have immediate effects – the bill provides for a 12 month period for the restructuring of the authorities and preparation for the new pre-merger review system


Brief update about what happened while we've been away

There were two judgement sessions uncovered 480ª and 481ª Sessions happened November 24 and December 8 respectively.

It is worth of noticing the case Alesat Combustíveis S.A. and Repsol YPF Distribuidora S.A was approved (480ª) with a Consent Decree determining the parties not to renew the agreement with the MFB Gas Station.

There was also the 16th International Antitrust Conference that happened between November 26 and 27 at Guarujá. You can see the Program here (yes! it is in English!) and the presentations that were made there are here. Unfortunately, of course, not everything is in English but Roberto Pardolesi's presentation regarding Unilateral Conduct is! You may also enjoy the presentations made by Matteo Bay (from Lathan& Watkins), Susan Hinchliffe (Arnold&Porter), José Ramón González-Magaz (Steptoe&Johnson) and Brian Byrne (ClearyGottlieb). And maybe Google Translator help you enjoy the rest!



CADE's new 'official precedents'

On November 5th, CADE has issued two new 'official precedents', both concerning certain events that may trigger the need for a merger submission in Brazil.

CADE's 'official precedents' are enacted after the Brazilian competition agency has reached the same decision in 10 different cases, and have the purpose of indicating to the market how CADE will decide about a specific issue in future rulings.

The first one (Official Precedent n. 09) states that for the purposes of counting the deadline set forth in parag. 4 of article 54 of the local competition law, the transaction is considered to have 'occurred' after the sale/purchase option has been exercised, and not at the date such an option was formalized in a written agreement. The exception for such a rule is the situation where the instrument predicting the possibility of exercise of this option already produces rights and obligations that are capable of changing (even if merely potentially) the competitive landscape between the parties.

The second precedent (Official Precedent n. 08) states that for the purposes of counting the deadline set forth in parg. 4 of article 54 of the local competition law, the transaction is considered to have 'occurred' at the date the transaction was executed, and not after the implementation of a certain condition precedent.


Partial outcome for soccer broadcasting rights' investigation

CADE decided this week, during its 478th Ordinary Session, to partially shelve a 13 year-long investigation involving soccer broadcasting rights. The shelving benefits one of the Defendants, Organizações Globo, one of the main Midia Groups in Brazil.

The investigation, initiated in 1997, concerned exclusivivity and preference rights in connection to the television broadcasting of soccers games.

During CADE's 477th Session held in October 20, 2010, CADE's Board decided to suspend the investigation against both Organizações Globo and Clube dos Treze (the major association of soccer teams in Brazil), conditioned to the execution of two Consent Decrees. Other defendants were acquitted.

The Consent Decree with Globo states that the Group will waive its preference to acquire broadcasting rights in connection to the main Brazilian soccer championships, as of the next season. As per the Decree executed with the team's Association, it says that the rights will be subject to negotiations between owners (the teams' Associations, especially Clube dos Treze) and potential buyers. Clube dos Treze agreed to offer and negotiate separately the rights to exhibit soccer games in five different Midias: free-to-air television, general pay television, pay-per-view channels, Internet and mobile devices. It also agreed to provide objective and transparent criteria for the biddings related to broadcasting rights and to allow the acquirer of the rights to freely sublicense them.

CADE's decision for the execution of Consent Decrees was not unanimous. CADE's President Arthur Badin, whose mandate expires this week, considered the obligations foreseen in the Decrees insufficient to guarantee the competition in the offer of broadcasting rights. However, all 6 Commissioners, including the Reporting Commissioner Cesar Mattos, were convinced that the Consent Decrees were the most suitable way to end the long administrative litigation and also that rights’ purchasers would have incentives to denounce restrictive behavior directly to CADE, during the monitoring phase of the Consent Decrees.

The investigation against Organizações Globo has now been shelved, since the Group demonstrated that it has already renounced to its contractual rights (preference clauses).

CADE will monitor the behavior of Clube dos Treze during the next 5 years, after which the case against it shall be shelved (unless irregularities - such as systematic refusals to deal - are verified by CADE).


Convicted Industrial Gas Companies go to Court

Last month several Industrial Gas Manufactures and Individuals were convicted by CADE for illegal collusion with a historic fine. Since last week many of them have filed actions before the Federal Court against CADE´s decision and the fines applied. So far, manufacturer Linde Gases has gotten an injunction from the Federal Court in Brasília to stop CADE from executing the fine. This injunction is being allowed only if the Company deposits a warranty in the same amount of the fine imposed by CADE.


ADI against SDE's power to inspect

The National Confederation of the Industries (CNI) has filed an ADI (Direct Action of Inconstitutionality) before the Supreme Court (STF) this week questioning the articles 26-A and 35 of Law 8884 (Brazil's antitrust act). CNI believes that the power to inspect officies and facilities without a judicial order given by article 35 is inconstitucional. They also consider against the constitution the fact that article 26-A imposes a fine to companies and individuals that deny access to their offices and facilities. That would be afecting the garantee of non auto-incrimination.
The inspection does not demand a judicial order but has to be warned 24 hours before it begins (while the judicial dawnraid is unexpected).
The reporting Justice is Ayres Brito.


CADE approves agreement between TNL and Phorm

Brazil´s Antitrust Authority has this week approved the partnership agreement celebrated between TNL and Phorm. The operation involved internet marketing where the publicity will be directed to the customers according to the websites that are visited. The Reporting Counselor, Fernando Furlan, did not see any harm to competition concluding there were low barriers to entry of new competitors and allowed the transaction. There was a discussion involving internet privacy, but Furlan understood that the discussion was not under CADE´s jurisdiction. The decision will be sent to the Internet Government Committee, to the Telecommunications Agency and to the Department of Consumers Protection of the Ministry of Justice due to the data protection concerns.


CADE blocks acquisition of concrete assets from Cimentos Tupi by Polimix

The Brazilian competition tribunal (CADE) has rejected clearance to the acquisition of concrete services assets from Cimentos Tupy by Polimix Concreto.

According to the Reporting Commissioner Fernando Furlan, the transaction would result in high market shares in a series of municipalities and harm competition, while there would be no compensatory efficiencies to allow approval of the deal.

The remaining Commissioners unanimously agreed with Furlan, highlighting the correction of his approach regarding the calculation of market shares - summing up the shares of all companies on which the controling group of Polimix has (even minority) equity interest,

According to CADE's decision the acquired assets shall be returned to Tupi within 30 days from the publication on the Official Journal.


CADE enacts five new administrative rules

Aiming to optimize its internal procedures in merger control and behaviour cases, CADE has issued five new administrative rules on September 22. Rules# 54, 55, 56 and 57 amend CADE's internal guidelines; for companies and individuals that are parties in antitrust proceedings in Brazil, new rules#54 and 57 should receive the greater attention.

While administrative rule#54 supresses CADE's duty of officializing its decision to the public by means of the publication of a summary of each decision in the Brazilian Official Gazette, new rule#57 sets forth new rules for the imposion of fines related to the submission of misleading information.

Finally, new administrative rule#58 establishes new mechanisms for the control/review of the truthfullness and veracity of the information provided by companies in merger control filings.


Industrial gas industry once more among highlight's of CADE's Session

Two weeks after convicting companies and individuals in the industrial gas industry for collusion, CADE analysed petitions for clarification presented by the defendants and decided to review the nature of the interest applicable to the case. Compound interest has been replaced by simple interest. As a result, the total amount of the conviction decreased from R$ 2.9 billion to R$ 2.3 billion. It is still the highest total fine ever imposed by CADE.
in its website, CADE divulged the amounts to be paid by each company and by each individual. Fines imposed to companies were:
Air Products Brasil Ltda.: R$ 179,202,512.38
Air Liquide Brasil Ltda.: R$ 197,561,635.66
Linde Gases Ltda.: R$ 188,391,885.29
White Martins Gases Industriais Ltda.: R$ 1,758,545,326.50
Indústria Brasileira de Gases: R$ 6,708,631.21


CADE will keep an eye on increasing concentration on the health care industry

On yesterday's judgment session, CADE's commissioners have expressed the agency will follow attention the consolidation of health care companies.

While approving without restrictions the of two aqcuisitions involving large operators of health insurance plans, Commissioner Ricardo Ruiz noted that the industry is going through a very fast process of concentration and that competition concerns may arise in the near future.

Commissioner Carlos Ragazzo added that there is also a movement towards verticalization in the sector with integration of plan operators, hospitals and even pharmacies.


The one highlight of CADE's last Session: Industrial gas manufactures convicted for cartel

During CADE's Session in August 4, 2010, industrial gas manufacturers Linde, Air Liquide, Air Products, Indústria Brasileira de Gases and White Martins, as well as seven individuals connected to the companies, have been convicted for illegal collusion. According to CADE's decision, which was unanimous, companies and individuals have been involved in market division practices, with serious consequences to the Brazilian market and to the public health system. Upon impediment, CADE's President Arthur Badin and Commissioner Olavo Chinaglia have not participated in the judgment.

The investigation has been initiated in 2003 and culminated with the highest administrative fines ever imposed by CADE (totalizing R$ 2.9 billion – approximately US$ 1.7 billion). The case has been distinguished by several judicial and administrative incidents. Criminal investigations - still in course - included dawn raids and wires, and their fruits have been transferred to the administrative investigation, which has been strongly challenged by companies and individuals. The case against one particular individual has been shelved.

Besides fines, CADE recommended that federal authorities did not grant tax benefits or subsidies to the convicted companies, and that existing benefits were cancelled. Finally, CADE determined that the decision and other materials of the files were published in the Midia.


CADE allows trademark termination of merger under analysis

During the 473rd Section of Judgement CADE approved that all the Extra Eletro stores had their names changed either to Ponto Frio or Casas Bahia.

Extra Eletro stores are focused on eletronic household devices and computer and belong to Grupo Pão de Açúcar, major Brazilian retail and supermarket group, that has entered into a merger with Casas Bahia last December. Six months earlier, Pão de Açúcar has bought Ponto Frio. Casas Bahia and Ponto Frio were retail business for furniture and also electronic household devices and computers.

The two transactions are still under analyzis by CADE and Casas Bahia and Ponto Frio merger is under an agreement not to fully merge (in portuguese acronym, APRO) and under this agreement, trademarks Ponto Frio and Casas Bahia ought to be preserved until CADE's final judgement. However, Extra Eletro trademark, which belonged to the group involved in the transaction, was left out of the agreement and could be terminated without restrictions.

The parties made a formal request to CADE for the change, however.

CADE discussed State Action Doctrine and the limits to its competence

During the judgement of the case involving Public Transportation Services (Processo Administrativo no 08012.004989/2003-54), at Section 473 held last week, CADE has discussed the limits of its competence when analysizing public services and regulated markets.

Although no evidence of the abuse was found and the case was shelved as SDE's opinion recomended, Comissioner Cesar Mattos had changed the basis for shelving only to the lack of proof of abuse.

Because the case involved abuse of dominance in regulated markets of public services, SDE had based its opinion on the lack of CADE's Competence to analyse the abuse, once the market was fully regulated and monitored by São Paulo Municipality. Commissioner Mattos disagreed with the opinion, stating that whenever there is abuse, CADE can scrutinize and punish, even in regulated markets.

He was followed by the others Commissioners that proposed a deeper discussion of CADE's role in public services market, once it is limited to the competiton advocacy regarding the formation of bid's editals and the merger analysis of the winners may not be the best way to act.

CADE suggests investigation in the pay-TV market

Last week, during CADE's Session n. 473, the Board approved the acquisition of DTH operator ITSA – Intercontinental Telecomunicações Ltda. by Sky Brasil Serviços Ltda. and
suggested an inquiry in the pay-TV market, to be performed together with the Brazilian Telecommunications Agency (ANATEL). CADE also determined that a copy of files was sent to the Secretariat of Economic Law of The Ministry of Justice.


CADE fines Continental for unilateral practices

On August 18, the Brazilian Antitrust Agency has ruled in an investigation launched by the SDE in 2005 against Continental do Brasil Indústria Automotiva Ltda. (which has succeeded Siemens VDO Automotive Ltda.), after a complaint was filed Seva Engenharia Eletrônica S.A.

CADE has considered that Continental implemented a number of actions along Brazilian Courts and regulatory authorities with the purpose of imposing artificial barriers to entry for other competitors into the market for tachographs. The reporting commissioner was Mr. Fernando Furlan, who voted for the imposition of a fine to Continental equivalent of 1% of the company's turnover in 2004; Mr. Furlan was followed by commissioners Carvalho, Ragazzo and Ruiz.

CADE´s President Arthur Badin dissented, and voted for the shelving of the investigation, considering that the standard of proof has not been met in this case. Mr. Badin was followed by commissioners Chinaglia and Mattos.


Itaú/Unibanco banking merger gets green light from CADE

The merger between Itaú and Unibanco (AC# 08012.011303/2008-96) creating the largest private financial conglomerate in Brazil was unconditionally cleared by CADE., following favorable opinions from SEAE/SDE and from the Brazilian Central Bank.

The Reporting Commissioner Fernando Furlan considered that there is strong rivalry in the Brazilian financial market, especially from the state-owned banks who incentive efficiency and competitiveness.


473rd CADE's judgment Session is on

Cases to be judged are published here. We will keep you posted!


CADE clears the acquisition of Nossa Caixa by Banco do Brasil

On yesterday's (#472) judgement session, CADE has approved with conditions the acquisition of 71,25% of the stock capital of Banco Nossa Caixa (formerly owned by the São Paulo State) by the Banco do Brasil, a bank controlled by the Federal Government.

According to the Reporting Commissioner César Mattos, on 157 munipalities of the São Paulo State the transaction resulted in a market share superior to 40% (on some of them the concentration was100%). The only condition to the approval was the commitment to set up a free call center service for the customers located on such municipalities in order to inform them about the possibility to move their bank accounts to a competing financial institution and in case the customers chose to do so the call center will take care of the relevant documents for the migration to the bank elected by the customer.

Commisioner Olavo Chinaglia dissented from the remaining commissioners who agreed with Commissioner Mattos. Chinaglia voted for the unconditional approval of the transaction.


CADE shelves investigation against Cielo and Visa

In a decision issued during today's public hearing, CADE has decided to shelve a 2009 investigation launched by the SDE against VisaNet and Visa. SDE's concerns essentially referred to the existence of alleged 'abusive contracts' entered into by VisaNet and credit card company Visa, by means of which the former obtained the sole right to operate the Visa brand name in Brazil. A settlment was entered between CADE and the defendants on December 2009.

Today, according to reporting commissiner Olavo Chinaglia's ruling, CADE attested that VisaNet (now operating under the Cielo brand) had fulfilled all of the obligations assumed last December - specially the end of the exclusivity with Visa - and the investigation was officially shelved.

It is now very unlikely that CADE's activities will be disrupted before the end of the year

Yesterday the Senate approved the renewals of two mandates. Commissioners Olavo Zago Chinaglia and Vinicius Marques de Carvalho will have an additional 2 year-term each, and thus will integrate CADE's Board until August 2012. Both Olavo and Vinicius graduated and obtained PhDs in Law at the University of São Paulo. Olavo was a private practicioner before joining CADE, while Vinicius was already part of the Public Administration, helping to develop public policies in the Presency's Special Secretariat of Human Rights.


472nd CADE's judgment Session tomorrow

Cases to be judged are published here. We will keep you posted!

Commissioner Ragazzo renewal approved

Commissioner Carlos Emmanuel Joppert Ragazzo had his mandate at CADE renewed by the Senate last July 7th. The presidential approval was published last July, 29.

In this sense, the lack of Commissioners Olavo Zago Chinaglia and Vinícius Marques de Carvalho mandates renewal, yet to be voted, will not cause a disruption to CADE's work next month.

If we are alright to August, November brings us new trouble. President Badin and Commissioner Cesar Mattos mandates are to expire as well and we have not had any news.

Cesar Mattos mandate is expected to be renewed, but President Badin has already decline the new mandate and no nomination to his spot has been made so far.

Because of the election period, there is talk about a deputy president chosen among the Commissioners is expected to be set until the end of the year. To see.


Substantial increase in merger filings

According to numbers published by the SDE, the Brazilian competition authority that receives the notifications of mergers and acquisitions, the first semester of 2010 saw an increase of 50% in comparison to the same period of the preceding year (332 vs. 207).

SDE explains that during the course of 2009 it received 476 filings, a substantial decrease compared to 2008 when it registered 604 merger notifications due to the financial crisis and that the numbers for January to June of this year reflects the recovery of the economic activity.


Federal Prosecutor says CADE’s clearance of concrete deals could be challenged before Judiciary

Following yesterday’s judgment session during which two acquisitions of assets related to concrete services market were cleared without conditions (please refer to the post below), the Federal Prosecutor before CADE has stated the administrative decision could be challenged before the Federal Judicial Courts.

According to him, CADE’s decision was contrary to the opinions from the SDE and SEAE (the two other agencies involved in the Brazilian merger review system) and allows high concentration which could have a negative impact in the market.

Highlights of CADE’s 471th Judgement Session

The bulletin published at CADE’s official website (www.cade.gov.br) with highlights of the July 21st Judgment Session comments the following:

(i) the unconditional approval of the acquisition of concrete services assests from Camargo Corrêa Cimentos S.A. (CCC) by Polimix Concreto Ltda. (Concentration Act 08012.000836/2009-23). The transaction involves assets located in the cities of Tatuí and Ubatuba, in the State of São Paulo.

Polimix is one of the largest nationwide concrete services company with equity held by Group Votorantim, which is very active in the cement market

Reporting Commissioner César Mattos identified the substitution of a vertical integration (cement – concrete) in the Camargo Correa Group by other involving the Group Votorantim. Mattos highlighted that the decision could be reviewed in the future if it is verified that the verticalization increases coordinated market power and allows cartelization in the cement market. If that happens, Cade could order the deverticalization of the industry.

Chairman Arthur Badin reminded that CADE’s decision was taken assuming as true the information that there is no coordination in the relevant market in analysis. He also suggested that the clearance decision should wait for the end of the investigations conducted by the Secretaria de Direito Econômico (SDE) about suspicion of catel in the sector. However, the majority of commissioners opted for approving the transaction.

On previous transactions, Polimix and Group Votorantim have executed an agreement (Termo de Compromisso de Desempenho) with CADE to neutralize the influence of Votorantim in the management of the concrete services business of the Vieira Family, which has interest in Polimix Concreto, in Polimix Cimento and in Mizu S.A.

[it is interesting to note that the SEAE (Secretaria de Acompanhamento Economico) issued an opinion suggesting this transaction should be approved with restrictions]

(ii) the unconditional approval of the acquisition of assets from Cimpor Cimentos do Brasil Ltda. By Supermix Concreto S.A. in the city of Capivari de Baixo in the State of Santa Catarina (Concentration Act 08012.008947/2008-05). Cimpor is active mainly in the production and sale of cement and concrete services. Supermix provides concrete services and is jointly controlled by Soton Participações Ltda. and Silcar Empreendimentos Comércio e Participações Ltda. Silcar is a holding belonging to Group Votorantim.

Reporting Commisioner Carlos Ragazzo highlighted the fact that there were 16 similar transactions notified to CADE between 2003 and 2009 relating to vertical integration (through acquisition of control or acquisition of minority interest on independent concrete service companies). To him, such verticalization may constitute a risk to competition if, in some way, they are part of an attempt to undermine the strengthening of the bargain power of the independent concrete companies.

Ragazzo recommended that the CADE’s Department of Econômic Studies conducts a study about these similar transactions. The aim of the study would be to verify if the verticalization through the acquisition of the independent concrete companies has resulted in the exit of competitors, avoided entry of newcomers and if there was an impact on prices and quantities.

[it is interesting to note that the SEAE issued an opinion suggesting this transaction should be blocked]


CADE, SEAE, SDE and ANEEL signed a covenant to improve investigations in the energy sector

During the CADE's 471st Section of Judgement today National Agency of Electric Energy (Agência Nacional de Energia Elétrica - ANEEL), CADE, SEAE and SDE has set a Covenant in order to act with grater integration in order to eliminate any conflict btween the policies, to better set the roles of the parties, besides padronizing the understanding of the bodies regarding some issues.

The Covenant innovates by stating that the Reporting Commissioner responsible for a proceeding involving the energy sector can request a member of ANEEL to work together on the case, providing technical information.

As soon as we obtain the text of the convenat we will post a link here - in Portuguese, unfortunatelly.


471st CADE's Judgment Session

471st CADE's Judgment Session will take place Wednesday, July, 21st.
Lists of case being judged can be found at http://www.cade.gov.br/Documentos/pauta.aspx?pc=150.

We expect to have the case over the sham litigation decided as well as some interesting merger cases. We will keep you posted!


New Antitrust Investigation against ECAD (the Copyrights Collecting Office) in Brazil

The Secretariat of Economic Law of the Ministry of Justice – SDE initiated today a formal investigation against the Central Office for Collection and Distribution of Performing Rights (ECAD) (a privately owned civil society responsible for the collection and distribution of copyrights arising out of public exhibition of national and foreign songs under monopoly regime) and several associations that manage it: Brazilian Unit of Composers (UBC), Brazilian Society of Administration and Protection of Intellectual Rights (SOCINPRO), Brazilian Music Association and Arts (ABRAMUS), Maestros, Arrangers and Musicians Association (AMAR), Brazilian Society of Music Writers, Composers and Authors (SBACEM) and Independent Society of Music Authors and Composers (SICAM).

The investigation followed a Representation by the Brazilian Association of Pay-TV (ABTA). ECAD and the Associations are accused of (i) setting or offering - in collusion with competitors - prices and conditions for the sale of a certain product or service, (ii) obtaining or otherwise procuring the adoption of uniform or concerted business, (iii) limiting or restraining market access by new companies practices among competitors, (iv) posing difficulties for the establishment, operation or development of a competitor company or supplier, purchaser or financier of a certain product or service, and (v) imposing abusive prices, or unreasonably increase the price of a product or service.

Two other investigations against ECAD were previously dismissed by the Brazilian Antitrust Authority, but this time the object is different.

Antitrust investigations against collecting societies are spreading worldwide.

(Thanks to Ana Carolina Zoricic for her help with this post)


Commissioner Ragazzo mandate renewed by the Senate

Commissioner Carlos Emmanuel Joppert Ragazzo had his mandate at CADE renewed by the Senate last July 7th. His mandate commenced August, 2008 and was to expire next month.

The proposed renewal is still pending of presidential approval. That is soon expected, under panalty of disrupting CADE's work.

CADE's minimum attendance is of five members (of seven in total) and besides Commissioner Ragazzo, Commissioners Olavo Zago Chinaglia and Vinícius Marques de Carvalho also had their mandates renewal proposed, but Senate has not yet had it voted.

If Chignalia and Carvalho's mandate is not renewed until August 08, when Carvalho's mandate expire, and president approval on Ragazzo's renewal does not come to that date, CADE will be short of 3 Commissioners, interrupting CADE's work due to lack of quorum.


Highlights of CADE’s 470th Judgment Session

According to the bulletin published today at CADE’s official website (www.cade.gov.br), highlights of the Judgment session were:

(i) the approval of the transaction among Ipiranga Produtos de Petróleo SA, Chevron Latin América Marketing LLC and Chevron Amazonas LLC (Concentration Act n. 08012.009025/2008-15). The parties agreed to a Consent Decree disposing about conditions in connection the transaction. Ipiranga (part of Ultra Group) acquired the whole business of distribution and resale of liquid fuels and distribution of natural gas for use in vehicles that belonged to Texaco (part of Chevron Group), and

(ii) the continuation of the judgment of the case involving Seva and Continental’s Division VDO (acquired by Continental a few years ago from Siemens). CADE’s President Arthur Badin interrupted the judgment. He will review the case and bring his vote in the next session, after 4 votes for conviction and 2 for the acquaintance. Seva represented against VDO for sham litigation and invitation to collude in the tachographs.

It is also worth mentioning, although not included at CADE’s Bulletin, the analysis of a settlement proposal in connection to a cartel investigation in the air cargo industry. We will comment on it in an specific post, later on today.


CADE issues decision on ABN/Interprint/Incard deal

The transaction concerned the market for smart cards, and was filed to merger review in Brazil in February 2008. By means of the deal, American Banknote S.A. (ABN) had acquired the totality of Interprint Ltda.'s capital stock, and, indirectly, the totality of Tecnofarma Indústria Gráfica Ltda. and half of Incard do Brasil Ltda.'s capital stock.

Although prior recommendations enacted by the Secretariat of Economic Monitoring (linked to the Ministry of Finance) and the Office of CADE's Attorney General had previsously opined for the clearance of the share acquisition, CADE, as per the terms of the vote issued by the reporting commissioner (Mr. Fernando Furlan), opted to clear the transaction subject to the signature of an “Agreement for Specific Performance” by the parties.

According to such an agreement, ABN has agreed to divest certain assets from Incard and Interprint related to the markets for pre-paid and inductive cards, as CADE considered that the overlaps in certain product markets affected by the transaction could lead to antitrust concerns.

The exact scope of the obligations assumed by ABN is not public at this point.


470th CADE's Judgment Session

470th CADE's Judgment Session will take place tomorrow morning.
Lists of case being judged can be found at http://www.cade.gov.br/Documentos/pauta.aspx?pc=149 .

We will keep you posted on the interesting cases.

New Investigation

SDE has done a search and seizure operation in Minas Gerais and São Paulo, investigating the existence of a cartel between suppliers of school lunches to nearly 30 city halls in those States. Besides the antitrust violation, a scheme of misuse of public funds and corruption is also investigated.


Brazilian Government Published the New Goals in connection to cartel persecution

In June 11, 2010, the Brazilian Government officially announced several goals to be achieved by the authorities of the SDE, the Federal Police, the Public Prosecution Offices in both federal and state spheres, the Public Security Secretariats, among others, in order to improve the repression to cartels in the country. The goals are the result of debates promoted during the 2nd edition of the meeting of the National Strategy of Cartel Repression ("Estratégia Nacional de Combate a Cartéis" - ENACC), held in Brasilia.

Due to the substantial increase of construction and infrastructure projects, in connection to the World Cup (2014) and the Olympic Games (2016) to take place in Brazil, the repression to bid rigging has been elected as a priority for the years to come.

As a result, a document called "Declaration of Independently Presented Bid or Proposal" (see attached Administrative Rule n. 51/2009, Annex II) will be mandatory for all contracts related to the major sportive events mentioned above, including when a bidding procedure is not required. Such declaration is already necessary since September 2009 in connection to bidding procedures conducted by entities of Federal Administration, according to a Instruction of Secretariat of Logistics and Information Technology of the Ministry of Planning.

Another important measure that has come out of the meeting between the authorities is the recommendation directed to the Brazilian Exchange Commission, in order for it to require from publicly traded companies (i) the publication of a material fact in case an administrative investigation of offense to the economic order is initiated and (ii) the adoption of a compliance program.

The accomplishment with these goals (and others) will be monitored by the authorities represented in the meeting, especially the members of the ENACC's Permanent Council (created in June 11, 2010 and integrated by the Secretariat of Economic Law of the Ministry of Justice, the Federal Police, the Public Prosecution Office, among others.

CADE, SDE and INPI set a Covenant to work more closely

During the Internation Seminar of Intelectual Property and Competition Policy that took place in Rio de Janeiro between June 7 and 8, 2010, Brazilian Institute for Intelectual Property (Instituto Nacional da Propriedade Industrial - INPI), Administrative Council of Economic Defense (Conselho Administrativo de Defesa Econômica - CADE) and the Secretariat Of Economic Law (Secretaria de Direito Econômico -SDE) of the Ministry of Justice has set a Covenant in order to act with grater integration.

The partnership is set for the next two (2) years and will allow CADE and INPI to aknowledge one another's investigations and Proceedings, being able to issue opinion regarding theirs expertise - respectively Competition and Intelectual Property - when requested.

INPI's General Attorney, Mauro Maia, has stated that the preocupation is that companies intend to extend the patent period through litigation, aiming to maintain an improper monopoly. With the covenant, both authorities will then have the proper information to deal with those sham litigation cases.

INPI has made contact with CADE for the agreement after noticing a series of suits promoted by pharmaceutical companies.