Competition Law in Brazil
| Author | Gustavo Mathias Alves Pinto |
| Position | LLM at Harvard Law School |
| Pages | 07 |
Gustavo Mathias Alves Pinto, has a double degree from the Law School of the University of São Paulo and Business h to form a business combination must obtain authorizatSchool of the Getulio Vargas Foundation. He is the former Chief of Division of the Secretariat of Economic Law of the Department of Justice. Mr. Pinto is currently obtaining his LLM at Harvard Law School.
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Gustavo Mathias Alves Pinto, has a double degree from the Law School of the University of São Paulo and Business School of the Getulio Vargas Foundation. He is the former Chief of Division of the Secretariat of Economic Law of the Department of Justice. Mr. Pinto is currently obtaining his LLM at Harvard Law School.
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With the stabilization of the Brazilian currency, and the privatization and opening up of the market that began in the 1990s, it became vital to develop an antitrust policy that the new market reality: companies needed clear and stable rules. In this context, Law 8,884, was promulgated on June 11, 1994 to establish antitrust regulation in Brazil.
The 12 years since Law 8,884 came into force cannot be compared with the 116 years during which the United States has been governed by the Sherman Act.1 Nonetheless, Brazilian law has become a point of reference in Latin American antitrust law, influencing the creation of similar laws in other countries. The recent establishment of antitrust laws in El Salvador and Honduras illustrates this trend.2
The most obvious difference between the Brazilian and American antitrust systems is the length of the laws. In the United States the Sherman Act, based in the common law tradition, initially consolidated and systemized antitrust law in just two sections. However, in Brazil, the antitrust law is based on the civil law tradition and contains 93 articles. The Brazilian law is expansive because it establishes the entire structure of the Brazilian antitrust system. Law 8,884 provides both preventative and restrictive measures available to the authorities including provisions for possible penalties, among other items. These points will each be discussed in the sections below.
Within the executive branch, the agencies currently responsible for applying antitrust law are the Administrative Council of Economic Defense3 (commonly called "ACED") and the Secretariat of Economic Law4 (commonly called "SEL"). In addition, the Finance Ministry's Secretariat for Economic Monitoring5 (commonly called "SFEM") also participates in the antitrust system. The SFEM is responsible for preparing economic opinions regarding the cases analyzed. These agencies are normally referred to as the Brazilian Antitrust System.
The Secretariat of Economic Law is an agency of the Justice Department. Its authority is established by Law 8,0786 of September 11, 1990, and Law 8,884.7 The purpose of the SEL is to formulate, implement, and supervise the policies governing the protection and defense of the economy within the antitrust and consumer realms. Within the SEL, the Department of Economic Protection and Defense is responsible for implementing procedural measures, in accordance with Law 8,884, that specifically address matters pertaining to the prevention and restraint of infractions against the economic order.
To this end, the SEL initiates and conducts administrative proceedings to determine anticompetitive behaviors and potentially refers cases to the ACED for a decision. It also issues opinions regarding the competition aspects of the monopolistic acts to be analyzed by the ACED.
When there is an accusation or formal complaint, the SEL, will open an administrative proceeding or a preliminary investigation if it believes it to be necessary. These are essentially investigative and discovery proceedings in which the SEL gathers documents, researches the alleged behavior and characterizes facts. It prepares its reports on this basis, suggesting to the ACED that the matter be closed or that there be a finding of an infraction. This report may also grant approval, approval with restrictions, prohibition of a merger or acquisition, or any other form of horizontal or vertical integration between companies.
As an agency that receives complaints and opens investigations ex-officio, the SEL functions similarly to the United States Department of Justice8 and Federal Trade Commission,9 since these agencies also investigate cases and later submit them to a decision-making body.
The Secretariat for Economic Monitoring ("SFEM"), which is an agency of the Finance Ministry, was created by Provisional Measure 813 of January 1, 1995. Its responsibilities include issuing opinions about the economic aspects of business combinations and conducting administrative proceedings that investigate infractions against the economy.
The SFEM assists the SEL, by sending reports that focus mainly on the economic aspects of each case. With respect to mergers and acquisitions, the SFEM must, by law, issue an opinion; however, with respect to the analysis of anticompetitive conduct, it has the option of issuing opinions, a determination which is made, at its discretion, on a case-by-case basis.10 "The ACED's purpose is to guide, monitor, and detect abuses of economic power. It has an oversight role in preventing those abuses. As an adjudicative body, ACED decides whether companies have violated antitrust laws."
The Administrative Council of Economic Defense ("ACED") was created in 1962 and in 1994, became an independent agency tied to the Ministry of Justice. Law 8,884 increased ACED's powers, transforming it from a marginal actor into the main agency charged with promoting and maintaining an environment of free competition. Its responsibilities are enumerated in Law 8,884 of June 11, 1994. The ACED's purpose is to guide, monitor, and detect abuses of economic power. It has an oversight role in preventing those abuses. As an adjudicative body, ACED decides whether companies have violated antitrust laws. It also decides the legitimacy of corporate activities such as mergers, acquisitions, or any other forms of horizontal or vertical integration-that could restrict or eliminate competition. The ACED is formed by a plenary body comprised of a chairperson and six council members, all appointed by the president of Brazil. Appointments are two-year terms with the option of renewal and reappointment. They can only be removed under extraordinary circumstances outlined in Article 5. This gives the members of the ACED autonomy, which is fundamental in assuring that their actions are impartial and nonpolitical.
A fundamental difference between the Brazilian and American antitrust systems is the fact that the ACED is an administrative hearing body. While its decisions are final at the administrative level, they can be...
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