Maria Eugênia Novis, Ursula Pereira Pinto and Beatriz Navarro Santos On a judgment session on February 24, 2016, the Administrative Council for Economic Defense (CADE) Tribunal ordered Solvay to pay a fine of R$17.4 million for the alleged participation in a cartel in the sodium perborate market, with Degussa, which entered into a leniency agreement with the antitrust authority. According to Degussa, Solvay would have ceased to sell the product in Brazil by virtue of a customer swap agreement between Brazil and the United Kingdom. This amount represents approximately 0.7% of Solvay′s gross revenues in Brazil in the year prior to the institution of the administrative proceedings (2008).

Maria Eugênia Novis, Ursula Pereira Pinto and Beatriz Navarro Santos

On a judgment session on February 24, 2016, the Administrative Council for Economic Defense (CADE) Tribunal ordered Solvay to pay a fine of R$17.4 million for the alleged participation in a cartel in the sodium perborate market, with Degussa, which entered into a leniency agreement with the antitrust authority. According to Degussa, Solvay would have ceased to sell the product in Brazil by virtue of a customer swap agreement between Brazil and the United Kingdom. This amount represents approximately 0.7% of Solvay′s gross revenues in Brazil in the year prior to the institution of the administrative proceedings (2008).

CADE innovated in this case by using a methodology for calculating the fine based on an estimate of the advantage obtained or envisaged by Solvay during the period of duration of the alleged cartel. 

Until then, the fines for cartel practices applied by the antitrust authority did not keep any direct relation with the gains from such a practice.  This despite the wording of Article 37 of the Competition Law (Law No. 12,529/2011) providing that the fine should range from 0.1% to 20% of the gross revenues of the company, the group or the conglomerate in the year prior to the institution of the administrative proceedings, in the business sector affected by the unlawful conduct. The law also establishes that the fine shall not be less than the benefit obtained by the company when it is possible to estimate it.

In its calculation, CADE considered mainly the volume of sodium perborate imported into Brazil by Degussa, assuming that Solvay had obtained an advantage at least equal to that value with sales in the UK. Thus, it concluded that the benefit would be approximately R$ 5.8 million. CADE also understood that, for the fine to be dissuasive, it must extrapolate the advantages obtained or envisaged by the violator, for which reason it fixed the fine at three times that amount, that is, R$ 17.4 million.

In percentage terms, the fine was not as stringent as those traditionally applied by CADE in cases of similar violations, which have varied between 12% and 15% of the company′s revenues. However, the assumptions made ​​in this case establish a dangerous precedent, which may lead to even more stringent decisions in future cases.