Brazil’s Antitrust Authority dismisses administrative cartel cases due to insufficient evidence

Standard of Proof in Cartel Cases

The Tribunal at Brazil’s Antitrust Authority (CADE) has dismissed two administrative proceedings investigating cartel activities since the beginning of 2024. The proceedings – one involving the water meter market and one involving a group of construction companies participating in a bidding process – were dismissed due to insufficient evidence against some of the defendants. The results of these cases highlight a need to carefully analyze indirect and unilateral evidence, even in cases originating from a Leniency Agreement or a Settlement Agreement (TCC).

Some key points discussed in the rulings include:

• Leniency Agreements and TCCs do not automatically lead to convictions of other investigated parties – corroboration and sufficient evidence are required to eliminate reasonable doubt about the defendants’ alleged involvement in the conduct.
• Confirmation of the Tribunal’s existing view that an evidentiary set consisting solely of unilateral evidence (i.e., evidence involving only one participant in the alleged collusion) – as opposed to bilateral or multilateral evidence – is insufficient for establishing a conviction.
• An indication that a set of evidence consisting solely of indirect evidence(e., evidence indicating signs of collusion but not conclusively proving it) is viewed as weak, especially when such evidence is sparse or ambiguous.
• The suggestion that secretive, unilaterally produced documents or tablesof unknown authorship are not enough to prove misconduct between multiple parties.
• Proving a legitimate business relationship between defendants can provide an alternative narrative to collusion, depending on the case’s specifics and the evidence in the case records.

These recent judgments represent an important indication of the standard of proof CADE applies to cartel investigations, especially given the new lineup at CADE’s Tribunal.

CADE analyzes Buser inquiry: debates between competition defense and sector regulations

CADE’s Tribunal received an inquiry (consulta) from Buser (a Brazilian bus ticket sales platform), questioning whether complying with a new regulatory proposal from the National Land Transport Authority (ANTT) – Resolution No. 6,033/2023 – could be considered a direct breach of the Brazilian Competition Law, due to the regulation’s supposedly anti-competitive nature.

CADE’s Tribunal, following the vote of Commissioner Victor Fernandes, unanimously decided that the inquiry was inadmissible as it was an inappropriate procedural avenue for reviewing the regulations of regulatory bodies. The intended purpose of this procedural instrument is to address specific conduct and situations that may pose competitive risks.

CADE emphasized the need to ensure harmony between sector regulations and competition defense, noting that economic agents can only be liable for breaches of the economic order when they are able to behave autonomously in relation to the regulations.

Finally, CADE’s Tribunal acknowledged the importance of discussing this topic within the realm of competition advocacy in order to encourage more dynamic and competitive markets. However, Commissioner Gustavo Augusto Freitas de Lima’s proposal to forward a copy of the decision to the ANTT for competition advocacy purposes was defeated.

Formation of purchasing groups

During a plenary judgment session in April, CADE’s Tribunal analyzed an inquiry submitted by Cassol and Todimo regarding the formation of a purchasing group involving two construction materials companies. The companies, which operate in different municipalities, proposed creating a ‘purchasing committee’ to negotiate general purchasing conditions with their main suppliers across Brazil, all while acting independently in relation to the execution of contracts, product purchasing, pricing, and logistics management.

Reporting Commissioner Carlos Jacques Vieira Gomes analyzed the inquiry from three perspectives:

• The exercise of monopsony power;
• The exchange of sensitive information between the companies; and
• The characterization of the agreement as an associative contract.

The commissioner concluded that the companies did not have sufficient purchasing volume to control suppliers and that the civil construction retail market is highly fragmented, with numerous players. These facts, combined with the structure of the partnership (involving a low degree of intervention and cooperation between the companies), were sufficient to rule out a common business initiative and risk-sharing – therefore ruling out the existence of an associative agreement that would be subject to CADE’s review.

Although Commissioner Gustavo Augusto agreed with the reporting commissioner’s vote, confirming that the transaction did not raise competition concerns, he expressed his opinion that purchase agreements between competitors should be submitted to CADE – either via an inquiry or the merger control regime (as an associative agreement).

The decision provides a systematized rationale for analyzing purchase agreements between competitors, suggesting companies should assess three elements highlighted in the decision when planning to enter into similar agreements in the future – purchasing power, exchanges of information, and whether their agreement qualifies as a notifiable associative agreement. In regard to this latter point, although the Tribunal’s majority decision initially pointed toward no need for notification, differences among the commissioners on this issue mean the discussion remains somewhat subjective.

For more information on this topic, please contact Mattos Filho’s Antitrust practice area.