The Administrative Council for Economic Defense (Cade – the Brazilian antitrust authority) discussed the retroactive application of the Resolution 24/19, which provides the methodology for calculation of fines for gun jumping violation (the early consummation of transactions, prior to Cade’s approval), which can reach the maximum of R$ 60 million.
The discussion took place in the context of a gun jumping investigation (APAC) referring to the consummation of a transaction prior to the approval of Cade, which occurred before the entry into force of the resolution that brought specific parameters for the calculation of the fine in cases of gun jumping – taking into account, for example, the duration and severity of the wrongdoing, the intention of the parties, and also considering the value of the transaction and the revenue of the parties.
Prior to the resolution, fines for gun jumping followed the general parameters set out in the Cade's Internal Regiment.
According to the Commissioner Rapporteur assigned to the APAC, a retroactive application of Resolution 24/19 would be possible if it could benefit the wrongdoers (i.e. the parties to the investigated transaction). However, the Commissioner Rapporteur concluded that the methodology of Resolution 24/19 could aggravate the parties’ situation instead, and decided to apply the rules provided for in Cade’s Internal Regiment, which was in force at the time of the wrongdoing.
The Commissioner Rapporteur assessed gun jumping precedents in which the Internal Regiment rules were applied, to identify those with characteristics similar to those of the investigated case (e.g. type of operation – global or national –, size of the companies involved, effects in Brazil and competition aspects) and ordered a pecuniary contribution, to be paid by the wrongdoer, that was equal to the amount reached in the most similar case, duly updated per the Selic rate.
The Commissioner’s decision was unanimously followed by the Cade’s Tribunal.
Before the Resolution 24/19 was in effect, the highest fine imposed by Cade in a gun jumping case was R$ 30 million, and each of the other fines imposed amounted to less than R$ 3 million.
In the first case in which the fine calculation methodology provided for in Resolution 24/19 was applied, a R$ 57 million fine was imposed, not reaching the statutory maximum limit only because of a discount granted by the Commissioner Rapporteur of the case. The maximum limit of R$ 60 million for fines was recently reached in a case settled by Cade and the parties involved in the investigated transaction, where details about the calculation were not disclosed.
Cade’s decision went beyond establishing the possibility of not applying the methodology for calculation of fines set out in Resolution 24/19 for transactions consummated before July 2019 (when the Resolution entered into force) without Cade’s approval: it also made room, in such cases, for the settlement negotiations to consider sanctions imposed in precedents with characteristics similar to the case under negotiation, giving society greater certainty and predictability.