Today’s post is from Mauro Grinberg, former Commissioner of CADE in Brazil and currently a partner with Grinberg e Cordovil.

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INDIVIDUALIZATION OF CONDUCT IN BRAZIL: WHAT THE COURT TELLS CADE

A very recent landmark decision by the Federal Appeal Court in Brasília (Tribunal Regional Federal da 1ª Região) brings a lot of food for thought for both antitrust practitioners and mainly the antitrust authorities. In fact, the Court told Conselho Administrativo de Defesa Econômica (CADE), the antitrust agency, that, in order to successfully convict participants in a cartel, the authority has to individualize the conduct of every participant of the conspiracy, what CADE had been leaving aside.

A message must be brought here: in Brazil, any administrative decision (including CADE´s convictions) can be taken to Court, which may confirm or overrule it.

It is important to recollect the main facts of the case: (i) in 1999, some managers and other employees of some pharmaceutical companies held a meeting which was called to review some general matters (all of them legal) and later were accused of having, during the meeting, attempted to boycott distributors who also distributed generic drugs; (ii) in 2005 CADE convicted the companies, under the understanding that this meeting was a cartel; (iii) as all parties went to Court, in 2012 the first grade Judge issued a decision annulling CADE´s imposed fine; (iv) in 2015 the second grade Court confirmed the first grade decision.

There were many arguments (some of them related to evidence), all of them accepted by the Courts; but this article aims to discuss one single argument because it will have consequences on many other developments, both in Court (over CADE’s other decisions) and in CADE; although there is a possibility of another appeal, CADE must reflect about it. The argument is related to individualization of conduct.

In fact, CADE has in the recent past understood that, if anyone is present at a meeting, no matter he or she stays silent, does not approve anything and/or does not argue over anything, this person is considered a participant in a cartel (which may have been created in that meeting or may be ongoing without the knowledge of this person). The Court´s message was clear: the conduct of each and every participant of a cartel must be individualized, so that CADE must say what this person specifically did in order to be participant in the cartel.

The explanation is related to a concept which is very familiar to civil law countries: there are two kinds of responsibility, objective and subjective; the objective responsibility is somewhat similar to the American per se rule, while the subjective responsibility is somewhat similar to the rule of reason. In a nutshell, the message from the Court to CADE was that there is no per se rule in Brazil.

We are hoping future developments (including CADE´s reaction to this decision) soon.

Mauro Grinberg is a former Commissionar of CADE and a former Attorney of the National Treasury. He is now a partner of Grinberg e Cordovil, an antitrust and trade law boutique.