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 Compound interest has been replaced by simple interest.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.