Antitrute - uploaded on Apr 02 at 11:30 am
CADE and Antitrust Law in times of crisis
Our Antitrust team has reviewed the main news and trends from the Brazilian competition agency (CADE)’s practice during the COVID-19 crisis. These are the highlights:
The President of CADE released a statement reinforcing the agency’s commitment to continue its activities, adapting to the health restrictions in place. Most of the agency’s staff is working remotely, which has made video and audio conferences a routine.
The agency further amended its Internal Regulations to make it possible to carry out online sessions, provided they comply with information security requirements, ensure transparency and publicity, and allow full participation of interested parties.
CADE’s ongoing activities during this challenging moment will be essential to allow for an efficient analysis of possible emergency transactions among companies – aimed at meeting the demand arising from the fight against COVID-19 – and to restrain potential abuses.
After the enactment of the Provisional Measure No. 928 by the Brazilian President, which included in the list of exceptional measures to fight COVID-19 “the suspension of procedural deadlines imposed on defendants in administrative proceedings for as long as the state of calamity remains,” CADE clarified that:
Impacts on Merger Control Cases
CADE intends to prioritize the analysis of merger control cases. The purpose is to maintain the 2019 average time of analysis (17 and 90 days for fast track and regular proceedings, respectively).
However, in practice the terms may be extended for several reasons, such as problems arising from remote work, difficulty in obtaining information by the companies, or delays caused by third parties in responding to questionnaires sent by CADE. Filings should be made with all information and documents necessary for their approval without additional questioning by CADE in order to avoid delays.
Finally, four developments are expected to occur during the crisis:
Caution with Cooperation between Competitors
CADE will pay special attention to companies’ activities during the Covid-19 crisis to prevent anticompetitive practices (see below information on CADE’s recently launched investigation regarding excessive pricing). In particular, contacts among competitors are expected to be under the authority’s intense scrutiny.
It is important to be very cautious in any interaction of this nature, either directly or through trade associations. Conducts such as price fixing, customer or geographic allocation and bid rigging will continue to be targeted by the authority.
Potential associations with competitors specifically aiming to deal with aspects of the crisis must be entered into in a very transparent way, with the adoption of antitrust protocols and other measures to preserve the independence of the businesses involved.
Investigation on Abusive Pricing Increase
During the crisis, it is likely that companies – especially those active in sectors considered “essential” – are questioned for price increases that may be considered abusive. On March 18, 2020, CADE launched a preliminary investigation on alleged abusive price increases by companies in the health sector such as hospitals, laboratories, drug stores, surgical masks alcohol-based hand sanitizers and Covid-19 treatment drugs distributors and manufacturers. Up to date, more than 50 requests for information have been sent.
Proposal to Amend the Brazilian Antitrust Law
On March 31, 2020, a Draft Bill (No. 1,179) was presented to the Brazilian Senate proposing the following amendments to the Antitrust Law:
As to the first item, the proposal seems very broad and might suffer adjustments to restrict its application to collaborative agreements aiming to maintain the supply and production of goods directly related to the Covid-19 crisis. The Bill is still being reviewed by Congress.
Drugs Price Freeze Proposal
On March 24, 2020, another Draft Bill (No. 881/2020) was presented in the Senate proposing to freeze prices of drugs during the state of public calamity.
CADE expressed its opposition to the project, indicating that it might trigger a reduction in the volume of products offered by smaller companies, as well as lead to market concentration and products shortage. It is uncertain whether this Bill will move forward.
We are monitoring the situation closely and will keep you informed of all relevant antitrust developments. If you have any specific interest or question, please do not hesitate to contact any of us.