FCPAméricas Blog

Antitrust Enforcement Trends in Latin America

Author: Guest Author

CollusionBy: Ana Paula Martinez, Mariana Tavares de Araujo

With so much emphasis in Latin America lately on the enforcement of anti-corruption laws like the FCPA, companies should not lose sight of the fact that antitrust enforcement in countries like Brazil, Chile, Colombia, Mexico, and Peru is now well-established as well.

For example, since Brazil’s current competition law entered into force in 2012, the enforcement body CADE has issued guilty verdicts in approximately 50 investigations of anticompetitive conduct. It has conducted “dawn raids” in 15 cases since 2010. Defendants in cartel cases have been fined, on average, 15% of their annual gross revenues. Those found to have abused their dominant positions in the market have been fined roughly 5%. A record fine of USD 1.2 billion, coupled with structural sanctions, was imposed in connection with a cartel case adjudicated in 2014.

Similarly, Chile, Colombia and Mexico have initiated, respectively, 3, 2 and approximately 70 cases through leniency agreements. Peru has reportedly received various applications for its antitrust leniency program over the past years, while it has focused on dawn raids to uncover cartels.

These enforcement frameworks are only expected to mature against collusion and dominant position abuses.

Background. Various Latin American countries adopted laws in the 1990s during the broader reform promoted by Bretton Woods organizations as part of the Washington Consensus to “stabilize, liberalize, and privatize.” Laws addressed areas like merger control, conspiracy between competitors, and abuse of dominant positions. For years, though, the bulk of enforcement activity was dedicated to a review of competitively innocuous mergers.

The landscape began to change in the early 2000s. Taking the lead, Brazil’s antitrust authorities shifted priority to the prosecution of cartels and made use of leniency agreements to encourage disclosure of violations and dawn raids to collect evidence. To facilitate this approach, the Brazilian Government developed new procedural rules and a new law was passed in 2011. It also took steps to reduce inefficiencies in the merger review system and freed up staff to take on other enforcement responsibilities.

Today in Brazil, administrative and criminal authorities work in parallel to prosecute anticompetitive conduct. CADE enforces the competition law against companies, trade associations and individuals at the administrative level while state and federal prosecutors are in charge of criminal prosecution against individuals. Together with the criminal courts, they enforce the criminal statute. CADE’s cooperation with public prosecutors is essential to providing assurances to the legal and business communities that leniency will effectively shield individuals from prison sentences and other criminal sanctions. It also gives CADE the ability to tap into the different investigative tools and resources available through the police and prosecutors, like the use of wiretaps. CADE and prosecutors frequently cooperate on investigations and have conducted joint dawn raids together in several cases. This has served as a model for other countries in the region.

Chile, Colombia, Mexico and Peru have also introduced legal and/or procedural changes during the past decade to focus on the prosecution of cartels. These authorities are embracing sophisticated detection strategies, and are applying severe sanctions and transparency methods to bolster deterrence.

All such jurisdictions have adopted leniency programs through which cartel participants (usually the first-in) are shielded from prosecution in exchange for confession and cooperation with an investigation. This has become the preferred tool with which antitrust authorities, in Latin America and around the world, investigate cartels.

These developments represent a “new norm” of antitrust enforcement in the region, making it essential for companies to recognize and avoid risks before they grow into violations.

Ana Paula Martinez is a partner with Levy & Salomão Advogados, Brazil. From 2007 to 2010, she was the head of SDE’s Antitrust Division. Before entering government, Ms. Martinez was an associate with Cleary Gottlieb in Brussels.  Global Competition Review named her on “Top 100 Women in Antitrust”, “40 under 40” (2012), and “Lawyer of the Year – Under 40” (2014), and she is licensed to practice law in Brazil and New York. She served as an advisor to UNCTAD, the World Bank and to the Government of Colombia. Ms. Martinez holds a Master of Laws from both Harvard and the University of São Paulo-USP and has a Ph.D. Degree in Criminal Law from USP. She is a member of the Certification Committee of Ethic Intelligence.

Mariana Tavares de Araujo is a partner with Levy & Salomão Advogados, Brazil. She is the former Secretary of Economic Law of the Ministry of Justice, and also held other key government positions from 2002 to 2010. GCR named her on its international list of the “Top 100 Women in Antitrust”; “Who’s Who Legal” listed her among the world’s leading competition lawyers; and she was recently nominated on “LACCA Approved 2015”. She holds a Master of Laws from Georgetown University and currently serves as an antitrust advisor to the World Bank and as an NGA to the International Competition Network.

The opinions expressed in this post are those of the author in his or her individual capacity, and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.

© 2015 FCPAméricas, LLC

Post authored by Guest

Categories: Brazil, Chile, Colombia, Enforcement, English, FCPA, México, Peru

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