CADE Tribunal decides on important appeals against interim measures involving shareholder disputes and digital platforms

Important CADE Tribunal rulings on interim measures set by the General Superintendence

The Tribunal at Brazil’s antitrust authority (Conselho Administrativo de Defesa Econômica – CADE) recently ruled on three significant voluntary appeals seeking to review interim measures set by CADE’s General Superintendence (GS).

The first case concerned an investigation that began after a complaint from Eldorado Brasil Celulose S.A. (Eldorado) against CA Investment (Brazil) S.A. (CA Investment), a subsidiary of Paper Excellence in Brazil. According to Eldorado, CA Investment (a minority shareholder in the former) was allegedly obstructing its operations and development. After the GS decided to impose interim measures suspending CA Investment’s political rights in regard to Eldorado, the company appealed to the Tribunal, which overturned the GS’s decision and reinstated CA Investment’s political rights, save for certain veto powers concerning Eldorado’s capacity to expand production. Notably, this case marked the first time CADE agreed to assess the merits of a shareholder’s decisions concerning financial and investment matters of its investee within the context of a private shareholder dispute. CADE considered the complainant’s theory that a shareholder could engage in anticompetitive conduct against its own investee, depending on how it participates in the management.

A second key decision concerned CADE’s Tribunal rejecting a voluntary appeal filed by Apple, and therefore upholding the GS’s interim measures. The GS had ordered Apple to suspend its rules mandating app developers use its proprietary payment processor and distribute their apps via the App Store. The Tribunal’s ruling addressed critical aspects of competition analysis in digital markets, including the definition of relevant markets and the use of market shares as tools to assess market power in cases involving platform conduct. The design of antitrust remedies for platforms, even at the preliminary stage of the investigation, was another important point. At the end of June, the GS issued an opinion recommending Apple be found guilty of anticompetitive practices, and that definitive remedies be imposed to address relevant competition concerns and the anticompetitive effects identified.

The cases involving Apple and CA Investment also demonstrate that companies affected by interim measures have turned to the judiciary to challenge CADE’s decisions. In both instances, writs of mandamus were filed.

CADE’s Tribunal also issued a third significant ruling involving a voluntary appeal by the Brazilian Union of Music Publishers (Ubem) against interim measures set by the GS in light of a complaint from the television network SBT. The measures required Ubem to refrain from collectively negotiating music copyrights in the industry or using pricing schedules in negotiations with its member publishers. The Tribunal upheld the interim measures, rejecting Ubem’s argument that they had been set without giving the association an opportunity to present arguments related to the efficiency of collective negotiations. The Tribunal concluded that the right to a defense (contraditório) only applies after a formal administrative process has been initiated; therefore, it was not necessary to offer Ubem a defense opportunity beforehand, as the GS’s investigation was still in its preparatory stages.

New settlement agreements regarding exchanges of HR information and an investigation against Wellhub (formerly Gympass) ordered to resume

CADE has signed new settlement agreements (TCCs) concerning alleged exchanges of competitively sensitive human resource information. The authority currently has at least three ongoing administrative investigations involving such practices. These TCCs signal the framework for potential sanctions in these types of cases and introduce new evidence into the proceedings. However, many companies are expected to submit defenses, and the debates promise to lead to significant scrutiny of the authority’s view of this type of conduct.

Another noteworthy development concerned the Tribunal’s ruling that corporate wellness benefit provider Wellhub (formerly Gympass) had failed to comply with a TCC it had signed. Consequently, the Tribunal declared the exclusivity contracts signed after the agreement null and void, and prohibited the company from entering into new exclusivity arrangements. The deliberations among the Tribunal commissioners were not unanimous – some voted in favor of Wellhub being fully non-compliant and raised concerns over procedural flaws (including the lack of a formal statement from the compliance trustee), while others and argued the settlement agreement should have been reviewed rather than declared fully breached (especially considering the agreement’s built-in adjustment mechanisms). This decision was notable, given CADE rarely declares in favor of total non-compliance.

Anticompetitive practices by professional councils on CADE’s radar

Nine cases that CADE recently reviewed demonstrate how the authority continues to scrutinize the conduct of professional councils and trade councils.

As well as in the Ubem case, the GS set three other interim measures targeting such entities. The first two involved the Maranhão Cardiovascular Physicians Society (Sociedade de Médicos Cardiovasculares do Maranhão – Cardiovasc/MA) and the Brazilian Dentistry Council (Conselho Federal de Odontologia – CFO), along with 24 regional dentistry councils. The third was adopted against the 7^th Regional Council of Real Estate Brokers (Conselho Regional de Corretores de Imóveis – 7ª Região – Creci/PE). Beyond usual price-fixing inquiries, the CFO and Creci/PE cases also addressed professional entities’ public posting and guidance allegedly aimed at restricting or prohibiting discounts for professional services.

In another recent decision, CADE’s Tribunal also assessed anticompetitive practices enacted via regulations issued by the Federal Councils of Veterinary Medicine (CFMV), Dentistry (CFO), and Pharmacy (CFF). According to the authority, these councils issued guidelines that made it harder or impossible for professionals with distance-learning degrees to obtain licensure. CADE’s Tribunal analyzed each case separately and found that the conduct of all three councils was anticompetitive, as it imposed artificial barriers to the entry of new professionals in the market.

Notably, in contrast to the reporting commissioners in the CFF and CFO cases, the reporting commissioner in the CFMV case, Victor Fernandes, declined to apply an effects-based analysis. In his vote, Commissioner Fernandes proposed a methodological framework for assessing professional councils’ regulatory acts. The first step involves determining whether the council had legal authority to issue the regulation. In his view, if a council acted beyond its legal mandate, this would constitute an abuse of regulatory power and may represent a violation of the Brazilian Competition Law (Law No. 12,529/2011).

Finally, CADE’s Tribunal recently sanctioned the Brazilian Physiotherapy and Occupational Therapy Council (Conselho Federal de Fisioterapia e Terapia Ocupacional – COFFITO), as well as two unions in the state of Rio de Janeiro representing gymnasium and physical education professionals (Sindicato das Academias do Rio de Janeiro – Sindacad/RJ, and Sindicato dos Profissionais de Educação Física do Rio de Janeiro – Sinpef/RJ) for anticompetitive conduct. COFFITO was found guilty of influencing a uniform pricing policy for physiotherapy and occupational therapy services, while Sindacad/RJ and Sinpef/RJ were fined for engaging in anticompetitive practices aimed at hindering the activities and growth of low-cost gyms.

For more information on these topics, please contact Mattos Filho’s Antitrust practice area.