The possibility of calculating fines for violations of Law No. 12,529/11 (Competition Defense Act) based on the benefit obtained by the infringer was widely discussed by the Court of the Administrative Council of Economic Defense (Cade) between 2015 and 2019, but never prevailed among most councillors. In December 2020, the discussion was reopened by the current councillors, especially in debates related to cartels in public auction markets, and that possibility has gained strength in the Cade Court since then.
Article 37, item I, of the Competition Defense Act determines that Cade may impose on infringing companies a fine of 0.1% to 20% of the value of their gross revenues (in the last year prior to the opening of the administrative proceedings), in the business area in which the infringement occurred. According to the samearticle, the fine mustnever be less than the benefit obtained, when it is possible to set it.
Until recently, Cade's fines hadalways been calculated based on the definition of the fine rate and its application on the gross revenues of the company investigated. However, in three recent cases, this traditional methodology was replaced by the calculation based on the benefit obtained.
In the trial of the case known as "Leech Cartel", which occurred at the end of 2020, the rapporteur councillor Paula Farani decided to calculate the benefit obtained, given the absence of data on the billings of the companies investigated in the administrative process. In that calculation, the councillor adopted the premise that the cartel would have generated an overpricing of 20% on contracts that expired during the cartel practiceand used the amounts received in the bid to calculate the fines to be imposed on the companies, which would be similar to the benefit received by the companies. His vote was accompanied by the majority of the court, defeated the councillors Bandeira Maia, Luiz Hoffmann and Alexandre Barreto that was president of Cade at that time.
In February 2021, the discussion came back to the fore in a case involving private bids from Telemar and Telefónica. The rapporteur concillor Paula Farani calculated the fine of the investigated company Redex Telecomunicações Ltda. by the traditional methodology, based on the billing data available in the file, and filed the administrative process in relation to the company Araguaia Indústria Comércio e Serviços Ltda.
In a vote-view, the councillor Sergio Ravagnani diverged from the understanding of concillor Paula about Araguaia, and concluding for the condemnation of the company. For the dosimetry of the penalty, the councillor stopped estimating the benefit given to Redex for not having sufficient elements in the case. However, when dealing with Araguaia, the board member estimated the benefit granted on the basis of invoices issued by the company that would demonstrate or how much she would have received as transfers by submission of coverage offers in the bids. After that exercise, Ravagnani voted to convict Araguaia on the basis of the advantage granted, after finding that the maximum possible fine would be less than the advantage granted. His vote was corroborated by a majority of the members of the court, with the exception of the councillors Bandeira Maia, Luiz Hoffmann and the then president of Cade, Alexandre Barreto. The rapporteur councillor added her vote to follow the majority position.
In June, the imposition of a fine based on the calculation of the advantage granted prevailed again in the trial of the cartel in public bids of school materials, under the rapporteurship of counselor Paula Farani. In this case, contrary to what happened in the Leech Cartel, also under his rapporteurship, the company's billing data was available. The rapporteur advisor calculated the maximum fines for each company by imposing the 20% rate on the respective revenues. It also calculated the advantage based on the 20% overpricing assumption adopted when dealing with the Leech Cartel. After completing this exercise, the councillor voted to calculate the fine on the basis of the advantage granted only to Capricorn S.A., after it was clear that, in this case, the maximum possible fine would be less than the advantage granted. His vote was corroborated by a majority of the members of the court, again councillors Maurício Bandeira Maia, Luiz Hoffmann and Alexandre Barreto that was president of Cade at that time In these precedents, it was adopted the understanding that the amount corresponding to 20% of the gross revenues of the company in the business sector in which the infringement occurred, in the last year prior to the establishment of the administrative procedure, does not correspond to a legal ceiling of fine. It was also understood that the use of the benefit earned confers greater rationality and proportionality to the fine in relation to the severity of the illicit, since it is not limited to amounts earned in only one year, but throughout the duration of the cartel practice.
The prospects of consolidating this new form of fine calculation in the short term are still uncertain, as they will depend on the position of the new president of the Cade Court, Alexandre Cordeiro, and the councillor who will replace Bandeira Maia, whose term has already ended.