On November 16, 2022, Brazilian President sanctioned Law No. 14,470/2022, which amends Law No. 12,529/2011 (Antitrust Law). The amendments intend to establish legal parameters for claims for damages arising from anticompetitive conducts, while seeking to protect the incentives for the leniency and settlement programs of the Administrative Council for Economic Defense (CADE), the Brazilian competition authority. The text was published in the Official Gazette on November 17, 2022, when it entered into force.
Five main changes will be implemented:
- Establishment of milestones for the calculation of the statute of limitations: claims for antitrust damages will be time-barred in five years after the publication of the final decision rendered by CADE in administrative proceedings. These changes address intense discussions about the statute of limitations, especially about its initial term.
- Regulation of the so-called "passing-on defense": the passing-on of overcharge will not be presumed in cartel cases, and the defendants will have the burden of proving the pass-on to other links in the production chain (e.g., final consumers).
- Those harmed by cartels will be entitled to double compensation for damages. In relation to the signatories of agreements with CADE, simple damages (and not double damages) will apply, to reduce their exposure vis-à-vis the other participants of the conduct that did not cooperate with the authority.
- With the purpose of preserving leniency for applicants and signatories of Cease-and-Desist Agreements (TCC), the new law eliminates their joint and several liabilities for the damages caused by the other participants of the unlawful conduct.
- CADE’s administrative decision will be sufficient for the granting of injunctive relief in reparatory claims.
Although the new law contributes in some aspects to strengthen legal security and protect the interests of the parties that cooperate with CADE’s investigations, the debates will certainly continue to be heated, especially about the different methodologies for the calculation of damages, the possibility of granting injunctive relief in the absence of liquidity of the amount claimed as indemnity, the application of the dynamic burden of proof, solidarity, and the differences between illicit antitrust and illicit civil behavior.
The presidential veto of the provision that established that TCC signatories should agree to the submission to arbitration of any disputes relating to claims for damages should also be pointed out. Although the veto derives the risk of reducing incentives to reach new agreements, particularly concerning parties without resources to bear the costs of arbitration, there are indications that CADE may pressure defendants into agreeing to these types of clauses in future negotiations.
TozziniFreire Advogados Antitrust and Antitrust Litigation teams are available to answer any questions on this matter.
