Brazil emerges as among the world's best cartel busters

Publicado em 7 de outubro na Global Competition Review

Ron Knox
Practitioners, agency officials and other antitrust specialists have pegged Brazil and it’s three-tiered competition enforcer as perhaps the best and brightest among the world’s developing countries. Ron Knox in Vancouver

At the International Bar Association's annual convention, the Brazilian antitrust regime has been identified as perhaps the second-most important criminal jurisdiction in the world and one of the most well-respected enforcers.

“If you were a business, you would be hiring,” Marc Reysen, at Howrey LLP, told CADE President Arthur Badin yesterday. “You have a successful product.”

Although Brazil’s enviable enforcement record was brought up several times over the past three days, a panel of enforcers from the BRIC countries - Brazil, Russia, India and China - yesterday highlighted the growth of CADE and its sister agences.

A presentation put together by Badin and his staff used information culled from years of GCR’s Rating Enforcement survey to show how greatly the country’s cartel enforcement statistics have changed - and improved - during the past decade.

According to a presentation made public yesterday, CADE’s analysis of Rating Enforcement data shows that between 2003 and 2006, the country conducted 30 dawn raids, and saw 13 executives face criminal charges. What’s more, only two people were detained in cartel cases and no executives faced jail terms for their crimes.

But since then, things have changed drastically. The presentation showed that between 2007 and 2010, the enforcement regime conducted 267 dawn raids, and detained 83 people in cartel cases, according to GCR data. Plus, 237 executives faced criminal action, and 21 served jail sentences.

“The Brazilian experience is very impressive,” said Alexey Sushkevich, head of the analytical department at Russia’s Federal Antimonopoly Service, during yesterday’s panel discussion. The dawn raid numbers Brazil has been able to produce are “extraordinary,” he says.

The 21 jail sentences are also indeed impressive, says Marcelo Calliari, partner at TozziniFreire Advogados and former commissioner at CADE. When asked if it makes Brazil the second most important criminal cartel jurisdiction in the world, Calliari says Brazil now “certainly is the second-largest" after the US.

While all of those cases are under appeal, Calliari says, it’s almost unthinkable that all or most appeals against the sentences would be successful - meaning that Brazil will soon put executives convicted of price fixing behind bars. This is something other jurisdictions with criminal antitrust laws have been loath to do.

Brazilian enforcers and practitioners attribute many improvements to  enhanced cooperation with the country’s prosecutors’ office, which sources say is quickly learning how to handle antitrust cases and has been pushing cartel crackdowns forward.

But those aggressive crackdowns have come at a price. As information secured in raids and through leniency applications builds, Badin says, the enforcer has begun to struggle to sort and bring cases. At the moment only 30 case handlers deal with cartel matters.

“The fact is, after we kick in the door and pick up the files and the documents - and computers, a lot of computers - there is a bottleneck. We can’t deal with all of this,” Badin says.

Therein lies the problem, Badin and others say: The Brazilian track record over the past few years has established a system that companies and counsel respect, to the point that leniency applications have become commonplace and plentiful. But just as those improvements took place, the agencies’ paltry staffing levels remained.

In an interview with GCR, Badin says he was hopeful a new law giving CADE as many as 200 additional case handlers would have been passed by now. But the country’s recent elections have thrown its status into doubt, he says, and it is now unclear if and when a new law might come under consideration by the country’s two-tiered legislature.

If the law does come to pass in 2011, Badin says, he won’t be around to see it. After eight years in public service, he’ll step down on 5 November.
During his time in public antitrust enforcement he’s seen the country’s first dawn raid, first leniency application and exponential improvement in its cartel busting operation. He’s proud of the work the agency has done he says, but with a new government coming into power, it is time to step down and consider a return to private practice.

“I confess, I’m tired,” Badin says. But, he says, save for the potential legal amendments that were lost during the elections, “I think we have accomplished everything we wanted to accomplish.”