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Abuse of Dominance:
The Third Wave of
Brazil’s Antitrust
Enforcement?
Ana Paula Martinez*
T he first Brazilian competition law dates from 1962, but it was only in the mid-1990s when the modern era of antitrust began as the country shifted to a market-based economy. Among other reforms, in 1994 Congress enacted Law No 8,884, which governed Brazil’s administrative antitrust law and policy until 2011. From 1994 to 2003, the Brazilian antitrust authorities focused primarily on merger review, and substantial resources were devoted to the review of competitively innocuous mergers. That changed in 2003 when the Brazilian antitrust authorities adopted a hierarchy of antitrust enforcement goals and placed hardcore cartel prosecution as the top priority, making use of investigative tools such as dawn raids and a leniency programme. A more recent trend in Brazil’s competition law enforcement is related to an increasing number of abuse of dominance cases, which first and foremost reflects a system that is no longer in its infancy. This article provides an overview of the law and practice regarding abuse of dominance cases in Brazil and discusses whether recent developments amount to a new phase of competition law enforcement in Brazil.
* The author would like to thank James Modrall for his thoughtful comments regarding abuse of dominance Competition Law internationaL Vol 9 No 2 October 2013 Overview
At the administrative level,1 antitrust law and practice in Brazil is governed by the recently enacted Law No 12,529/11, which entered into force on 29 May 2012 and replaced Law No 8,884/94.2 The new competition law has consolidated investigative, prosecutorial and adjudicative functions into one independent agency: the Administrative Council for Economic Defence (CADE). CADE’s structure includes a tribunal composed of six commissioners, a president, a directorate-general for competition (DG) and an economics department. The new DG is the chief investigative body in matters related to anti-competitive practices. CADE’s tribunal is responsible for adjudicating the cases investigated by the DG – all decisions are subject to judicial review. There are also two independent offices within CADE: CADE’s legal services, which represent CADE in court and may render opinions in all cases pending before CADE; and the Federal Public Prosecutor’s Office, which may also render legal opinions in connection with all cases pending before CADE.
The basic framework for abuse of dominance in Brazil is set by Article 36 of Law No 12,529/11 (‘Article 36’). Article 36 deals with all types of anti-competitive conduct other than mergers. The definition of anti-competitive conduct and the types of conduct that are subject to prosecution in Brazil have not changed. The new law continues to prohibit acts ‘that have as [their] object or effect’: • limitation, restraint or, in any way, harm open competition or free enterprise; • control over a relevant market for a certain good or service; • an increase in profits on a discretionary basis; or • engagement in market abuse. Article 36 specifically excludes from potential violations, however, the achievement of market control by means of ‘competitive efficiency’. Under Article 2 of the law, practices that take place outside the territory of Brazil are subject to CADE’s jurisdiction, provided that they produce actual or potential effects in Brazil. 1 Brazil’s antitrust system features both administrative and criminal enforcement. At the criminal level, antitrust law and practice is governed mainly by Law No 8,137/1990 (the ‘Economic Crimes Law’), as amended by Law No 12,529/11, and Law No 8,666/1993 (the ‘Public Procurement Law’). Federal and state public prosecutors have sole enforcement responsibility, and act independently of the administrative authorities. 2 Prior to Law No 12,529/11, there were three competition agencies in Brazil: the Secretariat of Economic Monitoring of the Ministry of Finance (SEAE), the Secretariat of Economic Law of the Ministry of Justice (SDE), and CADE. The SDE was the chief investigative body in matters related to anti-competitive practices, and issued non-binding opinions in connection with merger cases. The SEAE also issued non-binding opinions related to merger cases and issued opinions in connection with anti-competitive investigations. CADE was structured solely as an administrative tribunal, which made final rulings in connection with both merger reviews and anti-competitive practices.
The Third Wave of Brazil’s anTiTrusT enforcemenT? Furthermore, the law provides that a dominant position is presumed when ‘a company or group of companies’ controls 20 per cent3 of a relevant market.4 Article 36 further provides that CADE may change the 20 per cent threshold ‘for specific sectors of the economy’, but the agency has not formally done so to date. The 20 per cent threshold is relatively low compared with the practice of other jurisdictions, especially the US and the EU. CADE has traditionally interpreted the expression ‘group of companies’ to encompass companies belonging to different economic groups that could jointly abuse power in a given market, even if no single member of the group holds market power on its own. The new CADE is yet to issue secondary legislation setting formal criteria for the analysis of alleged anti-competitive conduct, and the agency has been relying on regulations issued under the previous law, primarily CADE’s Resolution No 20/1999. Annex II of CADE’s Resolution No 20/99 generally provides for the review of unilateral conduct under the rule of reason, as such conduct can have pro-competitive effects. While the authorities should in theory consider efficiencies alleged by the parties and balance them against the potential harm to consumers, in practice, no case has yet been decided on the basis that harmful conduct was justified by pro-competitive efficiencies.
In Brazil, the Anglo-American common law concept of binding judicial precedent (ie, stare decisis) is virtually non-existent, which means that CADE’s commissioners are under no obligation to follow past decisions in future cases. Under CADE’s internal regulations, legal certainty is achieved only if CADE rules in the same way at least ten times, after which the ruling is codified via the issuance of a binding statement. To date, CADE has issued nine binding statements, all related to merger review but one (Binding Statement No 7), which provides that it is an antitrust infringement for a physicians’ cooperative holding a dominant position to prevent its affiliated physicians from being affiliated with other physicians’ cooperatives and health plans.
3 Under the original wording of Brazil’s previous competition law, the law presumed market power to exist if the parties jointly held a share of at least 30 per cent of the market. In 1995, less than one year after the 1994 statute’s entry into force, Congress amended the law to reduce the presumption to 20 per cent.
4 Annex II of CADE’s Resolution No 20/99 sets criteria for the definition of the relevant market in both product and geographic dimensions. The methodology is mostly based on substitution by consumers in response to hypothetical changes in price. The resolution incorporates the ‘SSNIP test’, aiming to identify the smallest market within which a hypothetical monopolist could impose a small but significant non-transitory increase in price – usually taken as a price increase of five to ten per cent for at least 12 months. Supply-side substitutability is also sometimes considered for market definition purposes. As for measures of concentration, reference is made to both the CRX index and the Herfindahl-Hirschman Index (HHI).
Competition Law internationaL Vol 9 No 2 October 2013 Examples of prohibited practices
Article 36(3) contains a lengthy but not exhaustive list of acts that may be considered antitrust violations, provided they have the object or effect of distorting competition. The listed practices include various types of horizontal and vertical agreements and unilateral abuses of market power. Enumerated vertical practices (that could be abusive if imposed unilaterally) include resale price maintenance and other restrictions affecting sales to third parties, price discrimination and tying. Listed unilateral practices encompass both exploitative and exclusionary practices, including refusals to deal and limitations on access to inputs or distribution channels, and predatory pricing. Annex I of CADE’s Resolution No 20/99 defines predatory pricing as ‘deliberate practice of prices below average variable cost, seeking to eliminate competitors and then charge prices and yield profits that are closer to monopolistic levels’. This definition specifically requires a possibility or likelihood of recoupment of the predatory losses. Given such stringent standards, CADE has never found abuse of dominance on the basis of predatory pricing. Margin squeeze may be a stand-alone abusive behaviour, and generally requires a differential between wholesale and retail prices that impedes the ability of a vertically integrated firm’s wholesale customers to compete with it at the retail level. CADE has been particularly concerned with margin squeeze practices in the telecommunications sector.
In recent years, CADE has investigated and imposed sanctions against numerous exclusive arrangements. Exclusive dealings and other contractual provisions can constitute a violation of Article 36 if they lead to the foreclosure of competitors from market access. Most of the cases have involved Unimed, a physicians’ cooperative and one of the largest health insurance companies in Brazil. Unimed affiliates contract with local physicians and hospitals for the provision of health care services, and often such providers are prohibited from affiliating with any other health plan. CADE prohibited such exclusivity arrangements in cases where Unimed held a significant market share (usually around 50 per cent). CADE has imposed sanctions on Unimed in more than 70 of these cases and recently settled another 39 investigations on the condition that Unimed terminate the exclusivity clauses. A number of other cases have involved ‘radius clauses’ imposed by shopping centres on their tenants, forbidding the tenant from locating a store within a specified distance from the mall. CADE concluded that the restraint was unlawful and should be prohibited. The Third Wave of Brazil’s anTiTrusT enforcemenT? The most important exclusive dealing decision was issued by CADE in 2009. The investigation, initiated in 2004, involved a loyalty programme developed by AmBev, Brazil’s largest beer producer (with a 70 per cent market share). The programme, named ‘To Contigo’, awarded points to retailers for purchases of AmBev products, which could then be exchanged for gifts. CADE concluded – based on documents seized during an inspection at AmBev’s premises – that the programme was implemented in a way that created incentives for exclusive dealing, foreclosing competitors from accessing the market.5 CADE imposed what is still today the record fine in connection with an abuse of dominance case: BRL352m (roughly US$160m).6 AmBev challenged CADE’s decision before the judicial courts and a final decision is still pending.7 Annex I of CADE’s Resolution No 20/99 defines tying as the practice of selling one product or service as a mandatory addition to the purchase of a different product or service. Similar to the European Commission’s approach, CADE generally requires four conditions to find an infringement for tying: • dominance in the tying market; • the tying and the tied goods are two distinct products;• the tying practice is likely to have a market-distorting foreclosure effect; and• the tying practice does not generate overriding efficiencies.
Annex I of CADE’s Resolution No 20/99 includes refusals to deal as an example of anti-competitive practices. Brazil’s antitrust agency acknowledges that, as a general rule, even monopolists may choose their business partners. Under certain circumstances, however, there may be limits on this freedom for a dominant firm to deal with a rival, including in particular refusals to license intellectual property rights. CADE’s Resolution No 20/99 considers denial of access to an essential facility 5 The decision contained no extensive discussion of the distinction between fidelity and volume rebates. 6 Administrative Proceedings No 08012003805/2004-10; Defendant: Companhia de Bebidas das Américas – Ambev; Reporting-Commissioner: Fernando Furlan; adjudication date: 22 July 2009. The amount of the fine was equivalent to two per cent of the total turnover of the defendant in the year preceding the initiation of the investigations. Another alleged exclusionary case involving AmBev involved an alleged practice to raise rival’s costs by introducing a proprietary reusable bottle in the market. Much of the beer sold in Brazil is packaged in reusable bottles. The bottles have a standard size (600ml), allowing all market players to coordinate their recycling (for reuse) programmes. AmBev introduced a 630ml proprietary bottle, which was physically very similar to the 600ml bottle, allegedly causing confusion in the recycling programme of rivals and raising costs for those who also offered AmBev’s competitors’ products. In November 2010, AmBev agreed to stop commercialising the 630ml bottle through a consent decree with CADE (Administrative Proceedings No 08012.001238/2010-57, Reporting-Commissioner Carlos Ragazzo).
7 Judicial Courts, 16th Circuit, 2009.34.00.028766-7. Competition Law internationaL Vol 9 No 2 October 2013 as a particular type of refusal to deal. Under CADE’s case law, for an infringement to be found: • access to the facility must be essential to reach customers; and • replication or duplication of the facility must be impossible or not reasonably Annex I of CADE’s Resolution No 20/99 focuses exclusively on price discrimination, even though discriminatory non-price practices are also subject to Brazil’s competition law when they unreasonably distort competition. The imposition of dissimilar conditions on equivalent transactions is deemed an antitrust violation to the extent the conduct is predatory or otherwise excludes competitors from the relevant market. In a recent case, Telesp, a fixed-telecommunications-line provider in the state of São Paulo, was investigated by CADE for having allegedly discriminated against an internet provider and a long-distance provider in its terms of access to its network. Telesp settled the investigation under the condition that it agreed to provide access on a non-discriminatory basis.8 Unfair trading practices may, in theory, be punished under Brazil’s competition law. The previous law provided the charge of ‘abusive prices, or the unreasonable price increase of a product or service’ as an example of anti-competitive practice. This example was excluded from the current law because CADE has traditionally taken the view that excessive pricing would be considered an antitrust infringement only if it had exclusionary purposes. CADE has reviewed more than 60 cases dealing with alleged abusive pricing, most of them related to pharmaceuticals, and dismissed all the complaints in view of the absence of an exclusionary purpose.
Sanctions
Brazil’s competition law applies to corporations, associations of corporations and individuals. For corporations, fines range between 0.1 and 20 per cent of the company’s or group of companies’ pre-tax turnover in the economic sector affected by the conduct in the year prior to the beginning of the investigation. CADE’s Resolution No 3/2012 broadly defines 144 ‘sectors of activity’, which includes, among others, beverages and agriculture. CADE may resort to the total turnover, whenever information on revenue derived from the relevant ‘sector of activity’ is 8 Administrative Proceedings No 08012.009696/2008-78; Defendant: Telecomunicações de São Paulo SA (Telesp); Reporting-Commissioner César Mattos.
The Third Wave of Brazil’s anTiTrusT enforcemenT? unavailable. Moreover, the fine must be no less than the amount of harm resulting from the conduct. Fines imposed for recurring violations must be doubled. In practice, CADE has been imposing fines of up to five per cent of the company’s turnover in connection with abuse of dominance violations. The law further provides that directors and other executives found liable for anti-competitive behaviour may be sanctioned from one to 20 per cent of the fine imposed against the company. Under the new law, however, individual liability for executives is dependent on proof of guilt or negligence, a significant burden for CADE to meet. Historically, CADE has investigated the involvement of individuals in cartel cases, but it has rarely done so in abuse of dominance cases. Other individuals and legal entities that do not directly conduct economic activities are subject to fines ranging from BRL50,000 to BRL2bn.9 Individuals and companies may also be fined:• for refusing or delaying the provision of information or for providing misleading • for obstructing an on-site inspection; or• for failing to appear or failing to cooperate when summoned to provide oral Apart from fines, CADE may also: • order the publication of the decision in a major newspaper at the wrongdoer’s • prohibit the wrongdoer from participating in public procurement procedures and obtaining funds from public financial institutions for up to five years;10 • include the wrongdoer’s name in the Brazilian Consumer Protection List; • recommend that the tax authorities block the wrongdoer from obtaining tax • recommend to the intellectual property authorities that they grant compulsory licences of patents held by the wrongdoer; and • prohibit an individual from carrying out market activities on its behalf or As for structural remedies, under the law, CADE may order a corporate spin-off, transfer of control, sale of assets or any measure deemed necessary to end the detrimental effects associated with the wrongful conduct. To the author’s knowledge, CADE has never resorted to structural remedies in an abuse of dominance case.
9 Roughly US$22,500 to US$1bn.
10 In 2012, for the first time, CADE imposed this sanction in connection with an abuse of dominance case. See Administrative Proceedings No 08012.001099/1999-71; Defendants: Comepla Indústria e Comércio et al; Reporting Commissioner: Carlos Ragazzo; adjudication date: 23 May 2012.
11 This provision was added in response to parties that simply set up new companies and resumed activities in the same sector after CADE had prohibited them from participating in public procurement procedures and obtaining funds from public financial institutions.
Competition Law internationaL Vol 9 No 2 October 2013 The new law also includes a broad provision allowing CADE to impose any ‘sanctions necessary to terminate harmful anticompetitive effects’, which allows CADE to prohibit or require specific conduct. Given the quasi-criminal nature of the sanctions available to the antitrust authorities, CADE’s wide-ranging enforcement of such provisions may prompt judicial appeals.
Procedure
The first step of a formal investigation is taken by the DG, who may decide, spontaneously (ex officio) or upon a written and substantiated request or complaint of any interested party, to initiate a preliminary inquiry or to open an administrative proceeding against companies or individuals, or both, which may result in the imposition of sanctions.
After an administrative investigation is initiated, the DG will analyse the defence’s arguments and continue with its own investigation, which may include requests for clarification, issuance of questionnaires to third parties, hearing of witnesses and even conducting inspections and dawn raids. Inspections do not depend upon court approval and are not generally used by the DG. As for dawn raids, as a rule, the courts allow the DG to seize both electronic and hardcopy material. In 2009, a computer forensics unit was created by the Ministry of Justice for the purpose of analysing electronic information obtained in dawn raids and by other means. Over the past few years, the Brazilian authorities have served more than 300 search warrants (including on residential premises), mostly in connection with cartel investigations. Once the DG has concluded its investigation, the defendants may present final arguments, after which the DG may choose to dismiss the case, subject to an ex officio appeal to CADE’s tribunal. Upon verifying the existence of an antitrust violation, the DG sends the case files to CADE for final judgment. At CADE’s tribunal, the case is assigned to a reporting-commissioner. While the reporting-commissioner reviews the case, CADE’s Attorney-General may issue an opinion on the case, directed to legal aspects of the case (the opinion tends to be followed by CADE’s tribunal). The reporting-commissioner may also request data, clarification or documents from the defendant, any individuals or companies, public entities or agencies prior to issuing its opinion.
The case is then brought to judgment before CADE’s full panel at a public hearing, where decisions are by majority vote. CADE may decide to:• dismiss the case, if it finds no clear evidence of an antitrust violation;• impose fines or order the defendants to cease the conduct under investigation; or• do both of the above. The Third Wave of Brazil’s anTiTrusT enforcemenT? CADE’s decisions are subject to judicial enforcement if they are not complied with voluntarily. At any phase of the proceeding, CADE may enter into a cease-and-desist commitment (Termo de Comprimisso de Cessação – TCC) with the defendant whereby the defendant undertakes to cease the conduct under investigation. Should a defendant enter into a TCC, it will not necessarily result in an admission of guilt as to the practice under investigation, nor necessarily require the payment of a settlement amount. The case is put on hold if and to the extent that the TCC is complied with, and sent to CADE’s archives after a predetermined period of time set by CADE on a case-by-case basis if the conditions set out in the TCC are fully met.
At any stage of the investigation, CADE may adopt an interim order to preserve market conditions while a final decision on a case is pending (Article 87 of Law No 12,529/2011). An interim order may be adopted only if: • the facts and applicable law establish a prima facie likelihood that an infringement will be found (fumus boni iuris); and • in the absence of the order, irreparable damage may be caused to the market CADE has adopted interim orders in connection with a significant number of abuse of dominance cases.
Recent cases and developments
There are approximately 70 pending investigations for alleged abuse of dominance affecting Brazil, including allegations of sham litigation in the pharmaceutical and auto-parts markets. Many unilateral conduct investigations initiated since 2007 have been settled with CADE, including investigations into the construction, telecommunications, tobacco, banking and financial sectors. As noted, the record fine imposed for an abusive practice is BRL352m,12 imposed against AmBev in connection with an exclusive dealing case in the beer market. Regulated industries seem to rank highly on the agency’s list of priorities, especially the pharmaceutical sector, and the banking and financial services sector.
In 2012, CADE adjudicated 13 administrative proceedings related to anti- competitive conduct investigations, 11 of which were dismissed after the former investigative agency, SDE, had pressed charges, while, in two other cases, CADE found an infringement to exist. In 2012, CADE also adjudicated 83 preliminary investigations (involving a myriad of anti-competitive practices) and followed the opinion issued by the investigative agency, dismissing the cases given the lack of evidence of anti-competitive behaviour.
Competition Law internationaL Vol 9 No 2 October 2013 Of the two cases sanctioned by CADE in 2012, one related to the hydrogen peroxide international cartel,13 while the other involved discrimination in services and prices as well as tying practices in the market for the manufacture of vehicle licence plates and the market for registering vehicle licence plates.14 Regarding the latter, CADE found that Comepla, which had a monopoly granted by the state of São Paulo to register licence plates in that municipality, discriminated against customers who preferred to buy licence plates from its competitors, generating a market-distorting foreclosure effect. For some specific plates, Comepla would only register the plate if the client also agreed to buy Comepla’s plates. CADE concluded that the practice could not be objectively justified and did not generate overriding efficiencies. CADE imposed a fine equivalent to four per cent of Comepla’s turnover in the year preceding the initiation of the investigation and prohibited Comepla from participating in public bids and from receiving tax benefits for a period of five years.
In one investigation, dismissed by CADE in 2012, the agency concluded that a company with a dominant position is entitled to take reasonable steps to protect its alleged intellectual property rights. The investigation started in 2007 against Sanofi-Aventis Farmaceutica Ltda, based on a Pró Genéricos complaint.15 The claim was that the pharmaceutical company abused its market power by filing a request before the judicial courts to extend a ‘pipeline’ patent related to Plavix, a drug used to prevent blood clots after a heart attack or stroke. CADE concluded that Brazil’s intellectual property law allows two possible interpretations regarding the expiration of a ‘pipeline’ patent and that the interpretation of the law adopted by Sanofi-Aventis appeared reasonable. This decision has shed light on the criteria CADE is likely to follow to adjudicate pending sham litigation claims in the pharmaceutical sector.
More recently, in February 2013, CADE sanctioned auto-parts manufacturer SKF for setting a minimum sales price.16 In its decision, CADE found that resale price maintenance will be deemed illegal unless defendants are able to prove efficiencies. An infringement will exist regardless of the duration of the practice (in this case, distributors followed orders for only seven months) or whether distributors follow the minimum sales prices, as CADE considered the conduct to be illegal by object. CADE imposed a fine equivalent to one per cent of SKF’s total turnover in the year 13 Administrative Proceedings No 08012.004702/2004-77; Defendants: Solvay do Brasil Ltda, Peróxidos do Brasil Ltda et al; Reporting Commissioner: Carlos Ragazzo; adjudication date: 9 May 2012.
14 Administrative Proceedings No 08012.001099/1999-71; Defendants: Comepla Indústria e Comércio et al; Reporting Commissioner: Carlos Ragazzo; adjudication date: 23 May 2012.
15 See Preliminary Inquiry No 08012.013624/2007-44. Pró Genéricos is a Brazilian association of generic 16 Administrative Proceedings No 08012.001271/2001-44; Defendant: SKF do Brasil Ltda; Reporting Commissioner Cesar Mattos; adjudication date: 22 February 2013.
The Third Wave of Brazil’s anTiTrusT enforcemenT? preceding the initiation of the investigation. This position, taken by the majority of the commissioners, departs from previous decisions issued by Brazilian authorities on RPM and makes it very hard for companies holding a stake of at least 20 per cent of the market to justify the setting of minimum sales prices. CADE has also settled several important unilateral investigations recently. For example, in January 2013 and July 2012, respectively, Souza Cruz and Philip Morris agreed with CADE to end exclusivity arrangements with their dealers that prohibited the display of their competitors’ products and in-store advertisements, putting an end to a pending antitrust investigation, which was initiated in 2005.17 Philip Morris and Souza Cruz agreed to pay BRL250,00018 and BRL2.9m,19 respectively.
Another unilateral case, settled in October 2012, involved a state-owned bank, Banco do Brasil.20 The bank was being investigated from early 2010 for imposing exclusivity arrangements for the provision of payroll loans to civil servants. Banco do Brasil agreed to cease the conduct and pay an amount of BRL65m.21 Additionally, in late 2012, CADE entered into a settlement with telecommunications provider Oi in an alleged abuse of dominance case, regarding its supposedly discriminatory practices against rival internet service providers. Oi agreed to pay BRL1m22 and end the practices under investigation. In March 2013, as already noted, CADE settled 39 investigations of Unimed for requiring exclusivity from its affiliated physicians in different Brazilian cities. In late 2011, Brazilian shopping comparison websites filed a complaint against Google before Brazil’s antitrust authorities for allegedly favouring its own product listings in shopping search results.23 As of July 2013, CADE had not issued a decision on whether a formal investigation will be opened. A similar complaint was filed before the judicial courts and, in September 2012, a first instance judge dismissed antitrust claims against Google after finding that there is extensive competition in the online search market, and that Google’s power in the market cannot be ‘mistaken for a monopoly’. The decision is under appeal.
In December 2011, Brazil’s antitrust authority initiated formal proceedings against three branded pharmaceutical companies for allegedly abusing their 17 Administrative Proceedings No 08012.003921/2005-10; Defendants: Philip Morris Brasil SA, and Souza Cruz SA; Reporting Commissioner: Alessandro Octaviani.
18 Roughly US$125,000.
19 Roughly US$1.5m.
20 Administrative Proceedings No 08700.003070/2010-14; Defendant: Banco do Brasil; Reporting Commissioner 21 Roughly US$32m.
22 Roughly US$500,000.
23 Complaint No 08012.010483/2011-94. The complainants are part of a wider coalition, known as FairSearch, that has also promoted antitrust cases against Google in other jurisdictions.
Competition Law internationaL Vol 9 No 2 October 2013 dominant position through alleged sham litigation aimed at preventing the entry of generics.24 There are two other unilateral cases worth mentioning, both initiated in 2009 and involving the credit card payment system. In one case, credit card payment processor VisaNet (Cielo) and Visa were investigated by the then-SDE for alleged anti-competitive practices related to exclusive practices.25 In 2010, the parties settled with CADE, under a number of conditions. The other case involves whether the online credit card payment processor, Redecard, has abused its dominant position.26 The investigative agency has so far enjoined Redecard from cancelling contracts with other service providers. As of June 2013, a final decision was still pending. What to expect from the future
There are two major – and conflicting – trends that currently contribute to defining CADE’s stance in abuse of dominance cases. The first is the availability of an apparatus that increasingly enables the competition authority to employ economic analysis and evidence. The use of economics in Brazil has grown dramatically in competition matters over recent years and is expected to play a major part in every important abuse of dominance case. The creation by the new law of an Economics Department within CADE is certainly a watershed event in that respect. Nonetheless, some recent cases (eg, the above-mentioned resale price maintenance case) appear to point out a second trend that is apparently at odds with the growing sophistication in competition analysis. That trend could be defined as an enhanced scepticism toward or outright disregard of the role of efficiencies in abuse of dominance cases. The reason why the latter trend is counter-intuitive and somewhat paradoxical in light of the larger role currently played by economics in antitrust analysis is obvious: standard economic analysis would recommend caution against ‘over-enforcement’ regarding unilateral conduct. Still, it seems CADE has not been (and will continue not to be) shy about intervening. 24 Administrative Proceedings No 08012.006377/2010-25; Plaintiff: Pró Genéricos; Defendants: H Lundbeck A/S, and Lundbeck Brasil Ltda; Conduct under investigation: Abuse of data protection rights regarding Lexapro (antidepressant) to prevent generic entry. Administrative Proceedings No 08012.011508/2007-91; Plaintiff: Pró Genéricos; Defendants: Eli Lilly and Company, and Eli Lilly do Brasil Ltda; Conduct under investigation: Abuse of data protection rights regarding Gemzar (used in cancer treatment) to prevent generic entry. Administrative Proceedings No 08012.007147/2009-40; Plaintiff: Germed Farmaceutica Ltda and EMS SA; Defendants: Genzyme do Brasil Ltda, and Genzyme Corporation; Conduct under investigation: Abuse of dominance for challenging the generic drug for Renagel (treatment for chronic kidney disease) before courts.
25 Administrative Proceedings No 08012.005328/2009-31; Plaintiff: SDE ex officio; Defendants: Visa International Service Association, Visa do Brasil Empreendimentos Ltda and Companhia Brasileiro de Meios de Pagamento.
26 Administrative Proceedings No 08012.004089/2009-01; Plaintiff: ABRANET – Associação Brasileira de The Third Wave of Brazil’s anTiTrusT enforcemenT? It will be important to see how these two undercurrents play out in future developments. In the end, it can be hoped they will balance out and a CADE that is more proactive but still selective in the abuse of dominance arena will emerge.
About the author
Ana Paula Martinez is a senior partner with Levy & Salomão Advogados. Ms
Martinez served in Brazil’s federal government from 2007 to 2010, where she was
responsible for government antitrust investigations and enforcement actions. She
also served as the co-chair of the cartel sub-group of the ICN, alongside the US
DOJ, and represented Brazil before the OECD. In addition, Ms Martinez served
as an antitrust adviser to the UNCTAD and to the government of Colombia, and
is currently a non-governmental adviser to the ICN and the World Bank. Before
entering government, Ms Martinez was an associate with Cleary Gottlieb Steen &
Hamilton. Ms Martinez is admitted to practise in New York and Brazil. She holds
a Master of Laws from both Harvard Law School and the University of São Paulo
and a PhD degree from the latter.

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