Cascione’s Antitrust team was, once again, recognized and ranked by the Legal 500, one of the most distinguished publications of the legal market, as one of the best law firms in Competition & Antitrust in Brazil.
The publication highlighted the team’s “excellence in quality” and “technical and practical approach”, in addition to emphasizing the work of the partner Denise Junqueira, who is “objective and accurate” and “able to draw on her experience as an economist to advise high-profile companies in the gamut of antitrust and international trade matters”.
Additionally, for the 3rd consecutive year, partner Denise Junqueira was recognized as a “Next Generation Partner”, while senior associate Maíra Isabel Saldanha Rodrigues was ranked as “Rising Star”, nominations given to individuals who stand out in the antitrust practice. Mayara Lins Ogea, associate who joined Cascione’s Team in Oct. 2023, was also ranked as “Rising Star”.
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On October 25, 2023, the Tribunal of the Administrative Council for Economic Defense (“CADE”) found that Travel Platform 123 Milhas acquisition of rival MaxMilhas must be filed for antitrust review, even though the deal does not meet the pre-merger notification threshold. According to CADE’s Tribunal, a posteriori merger filling is necessary due to potential competition risks given the significant horizontal overlap.
On August 18, 2023, CADE’s Tribunal conditionally cleared the formation of two consortia between the companies Ultragaz, Bahiana Distribuidora, Supergasbras and Minasgás, competitors in the bulked Liquefied Petroleum Gas (LPG) sector, covering the sharing of filling plants and depots. The transaction was assessed by the Tribunal after an appeal from an interested third party.
Two Commissioners, Luis Braido and Lenisa Prado, voted to block the transaction. According to them, the transaction would potentially lessen competition between the consortium members, create barriers to entry, as well as result in higher prices and decreased service quality, innovation, and investments. On the other hand, the Tribunal’s majority decided to clear the transaction conditioned to the fulfilment of remedies aimed at addressing the potential exchange of competitively sensitive information between the shareholders and the risks of market foreclosure (e.g., by obligating the parties to grant access of the shared units to any requesting third parties, in case of idle capacity).
On October 11, 2023, CADE’s Tribunal conditionally cleared the acquisition of DPA Brasil, currently held by Fonterra and Nestlé, by Lactalis do Brasil.
During its analysis, CADE found that the horizontal merger would increase market concentration in several segments of the dairy products industry, and that brands – such as the ones owned by the parties – played a crucial role in consumers’ purchase decision and in rivals’ ability to challenge market power. To address the competitive concerns, the parties proposed a merger control agreement that included the obligation to license two DPA’s brands of the fermented milk and petit suisse segments, “Batavo” and “Batavinho”, to competitor Tirol Lacticínios. CADE’s Tribunal approved the proposed agreement and conditioned the transaction’s closing to the conclusion of such licensing agreement.
On September 27, 2023, CADE’s Tribunal approved a BRL 2.3 million agreement that settled the charges brought against a Netherlands-based investment company for allegedly implementing a transaction subject to mandatory merger control before the authority’s clearance upon the exercise of the political rights related to shares acquired in stock exchange.
The company spontaneously submitted the transaction to CADE’s merger control analysis. However, the filing occurred after the buyer had exercised its political rights by voting at the target’s annual general meeting.
CADE’s Tribunal conditionally cleared the formation of the Joint Venture “BusCo” between rivals Viação Águia Branca and JCA Holding Transportes, Logística e Mobilidade, aimed at providing interstate ground passenger transportation services through a digital platform by partnering with players in the ground transportation business.
According to CADE’s Tribunal, the transaction raised competition concerns, given that the JV BusCo would access strategic information and control competitively sensitive variables from different competitors and it could potentially use its position to coordinate rivals prices, schedules and routes. The merger control agreement established measures to guarantee the JV’s independence from its shareholders and avoid illegal exchange of competitively sensitive information. Finally, the remedies also prevent the JV from operating on current and future ground routes where the activities of its shareholders overlap, ensuring that they continue to compete with one another and with other players.
On October 11, 2023, CADE’s Tribunal approved a settlement agreement to close an investigation against Ambev for allegedly abusing its dominant position in the beer market. Ambev was being accused of imposing exclusive dealing arrangements with cold beer sales points for immediate consumption and raising barriers to entry.
Among the terms of the settlement agreement, Ambev agreed to limit exclusivity agreements to (i) 6% of the sales points and 12% of the sales volume in each Brazilian state; (ii) 8% of the sales points and 20% of the sales volume in capitals or cities in which the population exceed one million inhabitants; and (iii) 15% of the sales points in the wealthiest regions of São Paulo, Rio de Janeiro and Brasília cities. The agreement also prohibits Ambev to impose penalties in case of early termination of the agreement by the other party and to include preference clauses over future point of sales in Ambev’s favor.
Cade’s Tribunal unconditionally approved a JV formation between leading agricultural players to develop and operate a tech solution platform aimed at standardizing sustainability records and metrics in the food and agriculture supply chain.
During its analysis, CADE’s Tribunal identified two main antitrust concerns arising from the transaction: (i) potential competition foreclosure in different levels of the food-agriculture global supply chain by denying rivals access to the platform or by creating specific sustainability standards; and (ii) potential exchange and/or access of competitively sensitive information related to competitors, customers, and suppliers.
However, CADE found that, among other reasons, such concerns were already mitigated by the commitments established in the JV agreement and in an Antitrust Protocol devised by the parties, which included (a) prohibition on the use of the platform to exchange commercially and competitively sensitive information between competitors, (b) non-discriminatory treatment between platform users, including commitments on allowing platform access for all potential interested parties on fair and transparent terms, and (c) creation of a compliance program. Moreover, the parties also committed to the implementation of governance rules that guarantee the JV’s independence and separates the JV’s corporate structure from its shareholders.
Over the last judgment sessions, CADE’s Tribunal has increasingly discussed the reasonableness of imposing non-pecuniary sanctions to individuals found liable for anticompetitive infringements.
In recent cases, the majority of CADE’s Commissioners have decided to adopt a more cautious approach as regards prohibiting individuals from continuing to trade on its own behalf or as a representative of a legal entity for a period of five years, given the potential onerous effects to society and the potential of hindering free enterprise principles. Therefore, the Tribunal majority agreed that such sanction should be exceptionally applied, considering cases in which a rigid stance is needed to ensure the deterrence of the anticompetitive practice – e.g., in cases of recidivism.
CADE launched a cartel-sentencing guidelines to establish the criteria for imposing pecuniary sanctions for cartel practices, which includes a detailed analysis of CADE’s case law from 2012 to 2022. In the document, CADE establishes the recommended percentage rates to be applied to the turnover-based initial measure depending on the gravity or the seriousness of the infringement: (i) 17% for bid-rigging; (ii) 15% to hardcore cartels – i.e., “agreements or exchange of information on prices, allocation of territory, market share or clients, that present monitoring/punishment mechanisms (institutionalized) and (intention of) perpetuity”; and (iii) 8% to other concerted practices including diffuse cartels (e.g., occasional or not systematic exchange of information, unilateral disclosure of information, price suggestion by an entity, etc.).
In August, 2023, the Brazilian Foreign Trade Chamber dismissed the filed appeals, and ratified the Executive Committee of the Brazilian Foreign Trade Chamber’s (“GECEX”) decision to impose antidumping duties, for up to five years, to the imports of empty hard gelatin capsules (commonly classified under the NCM code 9602.00.10) originated from Mexico and USA. The duties range from US$ 0,12 up to US$ 2,13 for 1000 capsules.
Through Resolution No. 506, of 08/16/2023, GECEX applied anti-dumping duty, for a period of up to 5 years, to Brazilian imports of acetic esters (commonly classified in subitems 2915.31.00 and 2915.39.31 of the Mercosur Common Nomenclature – NCM) originating in Mexico and the United States. The rate applied varies between US$ 110.88 and US$ 647.94 per ton.
Through Resolution No. 507, on 16.08.2023, GECEX applied anti-dumping duty, for a period of up to 5 years, to Brazilian imports of n-butanol (commonly classified in subitem 2905.13.00 of the NCM) originating in the United States. The ad valorem rate is applied to the customs value of the merchandise and the percentages vary between 9,8 and 28,4%.
In recent months, the Foreign Trade Secretariat (SECEX) opened the following proceedings:
Denise Junqueira
djunqueira@cascione.com.br
Brazilian Competition Case Law, Trade & Trends | October 2023
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