Brazil Introduces Double Damages for Private Antitrust Claims

Brazil Introduces Double Damages for Private Antitrust Claims
Photo: freepik.com 22.11.2022 112

New private antitrust litigation rules have gone live in Brazil, allowing for the rare award of double damages against cartel members and clarifying that defendants must demonstrate that pass-on actually occurred.

Following final review and approval by the President of Brazil, Bill 11,275/2018 (PLS 283/2016) was enacted, entering into force as Law No. 14,740, of November 16, 2022 (“Law 14,740/2022”).

Law 14,740/2022 amends Law 12,529/2011 – the Brazilian Antitrust Act (“LDC”) – with the purpose of settling controversial procedural matters concerning damages claims due to anticompetitive practices, while providing tools to facilitate the filing of this type of claim.

The new Law bolsters the “private enforcement” of competition law in Brazil, providing incentives that encourage potential claimants to seek compensation for damages resulting from antitrust violations, such as cartels. Private enforcement is regarded as an initiative complementary to public enforcement (that is, the prosecution and conviction of anticompetitive practices by the Brazilian Administrative Council for Economic Defense – “CADE”).

Law 14,740/2022 establishes that those harmed by antitrust violations provided for in article 36, paragraph 3, items I and II of the LDC (which includes practices of collusion, such as cartels) will be entitled to claim for double damages.

The new Law also addresses concerns regarding potential disincentives to the entering into of new leniency and settlement agreements with CADE – as such agreements can potentially expose signatories to damages claims. In order to address the issue, Law 14,740/2022 establishes that double damages will not apply to leniency applicants and to defendants that decide to settle with CADE, meaning that, in these cases, the parties will only be liable for the compensation of the actual damages. Similarly, the new Law determines that the parties that enter into such agreements will not be held jointly and severally liable for damage caused by other companies involved in the same practice.

In addition, the new Law settles case law regarding statute of limitations for antitrust claims. The Law provides that the limitation period will not be triggered while an investigation is active within the scope of CADE. It further establishes a limitation period of five (5) years, which is triggered by the unequivocal acknowledgement of the harm by the aggrieved party, which will be the date of publication of CADE’s decision in the administrative proceeding related to such claim.

Sources: GCR, Demarest

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