CADE'S BOARD IS NOW COMPLETE, WITH CHALLENGES AHEAD

Three new Commissioners formally took office on May 4, 2011 at CADE. At the same date, Fernando Furlan (former Commissioner and acting-President of CADE) took office as President of the autarchy, which is the higher administrative authority in antitrust enforcement in Brazil.
With this assignments, CADE's Board is complete again.

Headed by Fernando Furlan, the Board is now composed by Olavo Chinaglia (the dean, in his second mandate), Carlos Ragazzo (in his second mandate), Ricardo Ruiz (in his first mandate, since January 2010), Alessandro Octaviani (in his first mandate, since April 2011), Elvino Mendonça (former SEAE, in his first mandate, since May 2011), and Marcos Paulo Verissimo (former BNDES, in his first mandate, since May 2011).

The new Board will decide important cases, both in merger and behavior antitrust control areas. Perdigão- Sadia transaction (creating the giant Brasil Foods) will probably be the first one. The transaction returned to the Midia after CADE's General Attorney office issued a non-binding opinion conditioning its approval to major restrictions (including relevant divestments). The stock market reacted and Brasil Foods' stocks dropped substantially at BMF-Bovespa, what caused a heated exchange of public declarations between the company 's management and the General Attorney. CADE's decision in this case will be polemic, independently of the results. One of the new Commissioners (Elvino Mendonça) and CADE's president Fulan are prevented and will not participate in the judgment. Mendonça is part of the team that signed SEAE's opinion; Furlan is related to Sadia's executives.

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 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, 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.

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, 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.