Recently the Commission of Constitution, Justice and Citizenship of Brazilian House of Representatives approved Bill 11.275/2018, which proposes amendments to Brazilian Competition Law (Federal Law 12.529/2011) to clarify some issues concerning private enforcement of Competition Law, encouraging damages claims that arise from anticompetitive practices, discouraging anticompetitive practice and encouraging leniency agreement or cease and desist agreement execution.
Although Brazilian Competition Law foresees the possibility of private enforcement since the repealed Federal Law 8.884/1994, we still have some problematic issues concerning the private enforcement as, e.g., when the limitation period begins? As soon as the anticompetitive practice occurs or when the investigation begins, or even when Administrative Council of Economic Defense Tribunal decides?
By the proposed changes, the limitation term of 5 years will not begin during the investigation of the anticompetitive practice, nor during the administrative proceeding before Administrative Council of Economic Defense Tribunal.
According to Bill 11.275/2018, the limitation term will only begin when Administrative Council of Economic Defense Tribunal decides definitively concerning anticompetitive practice. This modification allows the usage of all proofs produced during the administrative proceeding and permits the injured party to analyze the feasibility of filling a lawsuit.
Besides, the referred to Bill encourages de injured party to file an indemnity claim, since the Bill does not assume that the overprice has been transferred to the production chain, but it requires proof of that transfer when alleged by the defendant.
On the other hand, the Bill imposes a tougher liability for those that commit anticompetitive practice.
The proposed version of Article 47, § 1º, guarantees to the injured party the right of an indemnity equivalent to the double of the damages suffered.
But the guilty party will be liable only for the damages suffered (and not its double amount) if he/she/it executes leniency agreement or cease and desist agreement and won’t be jointly liable with the others in this case, creating a clear incentive to its execution.
Finally, the proposed version of Article 85, § 16, imposes to the guilty party that executed a cease and desist agreement the obligation to use arbitration in case of filling a lawsuit to discuss any issue concerning the indemnity due by virtue of anticompetitive practice.
Thus, Bill 11.275/2018 will offer more predictability for the injured party in cases of anticompetitive practice, since it establishes a clear statute of limitation for private enforcement, phasing out discussions about the limitation term before Brazilian Courts.
Besides, it will strengthen private enforcement before Brazilian Courts, in such a way that the injured party may analyze all evidence of the administrative proceeding to substantiate its damage claim or even deciding not to file a lawsuit reducing the probability of an unsuccessful lawsuit.
And Bill 11.275/2018 also toughens the liability for anticompetitive practices but stimulates the execution of leniency agreement or cease and desist agreement.
The Bill is now pending of approval by the President of the Republic and represents a great improvement of private enforcement concerning anticompetitive practices. SiqueiraCastro team is monitoring the progress of that Bill and remains at your disposal for further information.
