CCJC publishes opinion for approval of Bill No. 11,275/2018, which encourages claims for damages caused by anticompetitive practices in Brazil.

Today, the Brazilian Commission of Constitution, Justice and Citizenship (“CCJC”) of the House of Representatives approved Bill  11,275/2018. The text will be sent for final approval by President Jair Bolsonaro.

Bill 11,275/2018 proposes amendments to Law 12,529/2011 – the Brazilian Competition Law (“BCL”) – specifically with the purpose of settling controversial procedural issues concerning damages claims, which arise from anticompetitive practices, in addition to providing for tools to facilitate the filing of this type of claim. The Bill (“Bill”) bolsters private enforcement of competition legislation in Brazil, providing incentives for potential private claimants to seek compensation for damages in the event that they experience alleged harmed as a result of illicit practices such as cartels. Private enforcement is seen as a complementary initiative to public enforcement (that is, to the prosecution and conviction by the Administrative Council for Economic Defense – CADE) in the fight against cartels.

The Bill provides that victims of violations under art. 36, paragraph 3, items I and II of the BCL (which encompasses uniform or concerted practices among competitors, such as cartels) will be entitled to claim for double damages.

It also addresses concerns regarding potential disincentives to the execution of new leniency and settlement agreements with CADE – as such agreements result in exposing signatories to possible civil actions. In order to address the issue, the Bill establishes that double damages will not apply to leniency applicants and to defendants that decide to settle with CADE, meaning that, in these cases, the parties will only be liable for the compensation of the actual damages. Similarly, the Bill determines that the beneficiaries of such agreements will not be held jointly and severally liable for damages associated with other companies involved in the same concerted practice.

In addition, the Bill establishes the statute of limitations for the filing of civil actions  by the aggrieved parties. It provides that no statute of limitations will run while an investigation is in progress at CADE and establishes a limitation period of five (5) years as of the “unequivocal acknowledgement of the wrongdoing” by the aggrieved party, which will be the date of publication of CADE’s decision that has ruled on the practice (cartel) in question.

According to the Bill, there will be no presumption of transfer of overpricing in the production chain affected by a cartel, which means that the evidence of the overpricing across the chain will need to be produced by the claimant. It also establishes that CADE’s final decision can be used by courts as grounds to grant injunctive reliefs, therefore allowing judges to render  decisions that bring forward (totally or partially) the merits in lawsuits of this nature.

Finally, the Bill seeks to establish more efficient dispute resolution, through alternative methods of conflict resolution. It provides, for example, that the settlement agreements to be entered into with CADE must include an arbitration clause to ensure that any disputes related to damages  be submitted to arbitration, should this be in the claimant’s interests.

The Bill is now pending presidential approval. If not subject to vetoes, it will enter into force as described above. Notwithstanding the potential vetoes to be applied, Bill 11,275/2018 certainly represents a great advance in competition defense in Brazil.

Demarest’s multidisciplinary team is closely monitoring all developments regarding this Bill, and remains focused on defending the interests of agents aggrieved by anticompetitive practices. For further information or clarification on this and other related topics, please contact our team.