Brazil: Implementing ICN’s Recommended Practices Brazil: Implementing ICN’s Recommended Practices Mariana Tavares de Araujo Secretary of Economic Law – SDE Ministry of Justice / Brazil ICN Annual Conference Moscow, 2007

Merger Review  In the past 5 years, Brazil took a number of measures to comply with ICN’s RP:  Jurisdictions’ notification thresholds and timing  Review period  Documentation requirements  Transparency concerns  Coordination with other authorities  “Soft convergence” to recommendations has enhanced agencies’ efficiency  Still important aspects to cover that depend on amending the current legislation

Merger Review: From Soft Convergence to Full Convergence to ICN RPs  Bill with amendments to the Antitrust Law was listed as a Government Priority in January 2007  Restructure of the system  Incorporation of appropriate standards of materiality as to the level of "local nexus" required for notification  Elimination of notification thresholds not based on objectively quantifiable criteria (market share)  Pre-merger system with no deadlines  Early termination for simple cases

Cartel Prosecution: Top Priority  Brazil complies with ICN RPs for Cartel Enforcement  Elements of a solid anticartel regime are in place:  Clear definition of cartel in the law  Institutions equipped to detect, investigate and prosecute cartels in place  Firms and individuals are being punished  Upward Spiral: Leniency & Dawn Raids

Brazilian Leniency Program  Created in 2000; first application in 2003  First leniency was signed only when effective enforcement had been implemented and agency already had some positive reputation on ability to uncover anticompetitive behavior  Only the first-in receives leniency treatment (individuals and companies)  Applicant cannot be the leader of the cartel  Full or partial immunity (criminal + administrative fines)  State and federal prosecutors are invited to sign agreements with administrative authorities to protect applicant from criminal liability  Approximately 10 agreements were signed since 2003, and other 4 are currently being negotiated

Recent Improvements: Regulation 04/2006  SDE identified procedural aspects that created unnecessary burdens for parties that were addressed in such Regulation  ICN Materials and assistance from Fellow ICN members crucial for that purpose  Leniency Program: lack of clear procedure and sufficient protection for potential beneficiary during negotiating phase:  Marker System: application can be accepted on the basis of limited information; applicant is then granted time to perfect the information and evidence  Regulation provides for return of documents in case no agreement is reached  Oral Leniency: similar requirements as written agreement

Leniency Program: Success Stories eniency program  A sign that enforcement in Brazil is effective and that leniency program, although recent, is set in the right path, is that leniency applicants in other jurisdictions frequently come to us  Growing number of candidates to the program & number of search warrants served:  2003, 2004 and 2005 – 11 warrants served and 2 people arrested  2006 – 19 warrants served  2007 (January/May) – 38 warrants served and 16 people arrested

Cartel Prosecution: Expected Changes  With respect to cartel prosecution, proposed changes of the bill include the possibility of settlements / negotiated plea agreement for cartels  enormous benefits to society by persuading cartel members -- through the promise of transparent, proportional, and expedited treatment -- to cooperate early and pay the agreed sum of money  We expect that with such tool more resources will be free to crack other cartels  Amendments to the law were supported by ICN materials, which were all very important to convince government and private sector of need for change