Antitrust Leniency Program Guidelines
The Administrative Council for Economic Defense (“CADE”) published on May 25, 2016 the Antitrust Leniency Program Guidelines (“Guidelines”) aim to consolidate the best practices and procedures adopted by the Brazilian antitrust agency for the negotiation of Antitrust Leniency Agreements (“Leniency Agreements”) and to align them with international standards. Based on Law No. 12.529/2011 and CADE's Internal Ruling, the non-binding Guidelines seek to instruct public servants, lawyers, academics and public in general about investigative and punitive proceedings related to anticompetitive offenses, by ensuring more transparency and legal certainty to the parties involved.
The Leniency Agreement affects administrative and criminal aspects, since it enables individuals and legal entities involved in violation to the economic order – such as cartel formation – to benefit from, in the administrative sphere, the extinction of the punitive action of the public administration or the reduction of the fine; or in the criminal sphere, the extinction of the punishment in connection with economic crimes (Law No. 8,137/1990), crimes set forth in the Public Procurement Law (No. 8,666/1993) and crime of criminal conspiracy (article 288 of the Brazilian Criminal Code).
For this purpose, it is necessary the meet the following requirements: (i) the individuals or legal entities must be the first to qualify for leniency related to the alleged violation; (ii) cease participation in the violation; (iii) at the time the individuals or legal entities come up, CADE’s General Superintendence does not havesufficient information about the violation to ensure the condemnation of the parties; (iv) the confession of the participation in the conduct (plea of guilty); (v) full and permanent cooperation with the investigation and administrative proceeding; and (vi) the cooperation should result in the identification of the other parties involved in the violation and the disclosure of documents and information about such violation.
The Guidelines have been structured based on questions and answers (Q&A) and divided into four sections: (i) general aspects of the leniency program; (ii) phases of negotiation of the Leniency Agreement (marker, submission of sufficient information about the violation and execution of the agreement); (iii) post-signing phase of the Leniency Agreement; and, finally, (iv) rules on leniency plus.
In the first section, besides defining CADE’s antitrust leniency program and presenting concepts and particularities, the Guidelines provide information about the scope of the program and about competent authorities to investigate and punish anticompetitive offenses both in administrative and criminal spheres. Furthermore, the Guidelines also present some distinctions between the Leniency Agreement and the Cease and Desist Agreement (TCC), the cooperation agreement (acordo de colaboração premiada) and the leniency agreement provided in the Brazilian Anticorruption Law (Law No. 12,846/2013).
In the second section, the Guidelines divide the negotiation of Leniency Agreements in three phases. In the first moment (marker), the first proponent reports to CADE’s General Superintendence about the occurrence of a collective antitrust violation and requests the execution of a Leniency Agreement. In the second moment, the proponent must present sufficient information about the illegal activity. In the third moment, the applicant and the General Superintendence shall conduct the procedure for execution of the Leniency Agreement.
In the third section, the Guidelines clarify that Cade may set up inquiry or administrative proceedings to determine the alleged violation, and also perform another investigative measures. Furthermore, there are detailed instructions about the acceptance of the terms and conditions of the Leniency Agreement, its confidentiality and possibilities of information sharing.
Finally, in the last section, CADE sets forth the rules for leniency plus, which is the reduction of applicable penalty to the individuals or legal entities that do not qualify for the original Leniency Agreement, but provide information about a second cartel on which Cade’s General Superintendence had no prior knowledge.
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