Cartel Damage Claims in Brazil

Brazil has experienced an increase in the number of recovery actions for cartel damages in recent years due to several important developments in the field of private antitrust litigation. Recent court rulings have further clarified relevant issues regarding (i) the legal nature of individual recovery actions and the moment that the statute of limitations period starts to run; (ii) the effect of a finding of infringement by the Administrative Council for Economic Defense (CADE, the Brazilian antitrust authority); (iii) the disclosure of information and access to files related to CADE’s investigations; (iv) the relevance of expert evidence for demonstrating individual damages; and (v) the fact that the pass-on defence cannot be presumed and defendants carry the burden of proving it. Furthermore, at the end of 2022, Law No. 14,470/22 came into force, which amended the Brazilian Antitrust Law (Law No. 12,529/11), aiming to provide more incentives for injured parties to seek compensation for damages resulting from antitrust infringements.

The first follow-on action for cartel damages was filed in 2006, after the Brazilian antitrust authority fined participants of a cartel in the longsteel market. This case was a turning point for private antitrust litigation, inspiring other victims and class associations to seek damages against other cartels. The enactment of the current Antitrust Law in 2011 was also a milestone for private antitrust enforcement since the new law has played an important role in promoting cartel detection through an effective leniency program and, consequently, enhanced anti-cartel enforcement.

Initiatives from the federal government (and CADE itself), congress and the private sector have significantly contributed to promoting private antitrust enforcement. Law No. 14,47022, for instance, was enacted to create further incentives for bringing cartel damage claims. The new law advances private enforcement by (i) proposing the creation of a double damages system; (ii) establishing that the passing on of the overcharge cannot be presumed, and it is up to the defendant who alleges this defense to prove it; (iii) establishing a statute of limitation of 5 years, starting from the publication of CADE’s final decision; and (iv) stipulating that CADE’s final infringement decision is able to susbtatiate the granting of preliminary injunction.

Recent rulings from Brazil’s high courts have also substantially contributed to advancing private actions for cartel damages. Concerning the triggering event of the statute of the limitation period to bring damages actions, the Superior Court of Justice (STJ) has now consistently ruled that individual recovery actions are demands of a non-contractual nature and, therefore, the statute of limitation period only starts to run from the moment the claimant has ‘unequivocal knowledge’ about the tort and its consequences (theory of actio nata). Therefore, in follow-on claims, the publication of CADE's final decision, in which the infringement was recognized, serves as demonstration of the unequivocal awareness of the violation of the law, thus, should be considered as the initial term of the statute of limitations. In the case of stand-alone claims, there is no specific regulation and, therefore, the initial term must be analyzed on a case-by-case basis. (e.g., Messer Gases v Companhia Siderúrgica Naciona and Companhia Metalúrgica Prada (2023)); Antonio Claudemir Telles v Sucrocitrico Cutrale Ltda. (2022)).

Applying the STJ’s abovementioned understanding, the Court of Appeals of the State of São Paulo has been issuing decisions ruling that CADE’s final decision on the merits triggers the statute of the limitation period for follow-on claiming damages (e.g., Iziquiel Bottaro vs. Sucocítrico Cutrale Ltda. (2023)).

Lastly, in line with the Brazilian Civil Code, STJ has also issued recent decisions stating that the existence of a criminal investigations concerning the same competitive wrongdoings of a private action prevents the limitation period from running (see Messer Gases v Companhia Siderúrgica Naciona and Companhia Metalúrgica Prada (2023); FEHOSP v Air Liquide Brasil Ltda. (2021)).

When it comes to the effect of CADE’s decisions, follow-on claimants may rely on CADE’s findings to demonstrate antitrust infringement, since Brazilian courts have reaffirmed that CADE’s ruling represents unequivocal evidence of its existence (e.g., Association of Hospitals of Minas Gerais v. Air Products Brasil Ltda (2012)). Recently, Brazil’s Supreme Court issued an important ruling reinforcing the relevance of an infringement decision from CADE. In Comal Combustíveis Automotivos v. CADE (2019), the STF decided that courts of law shall defer to CADE’s findings of fact considering the agency’s expertise and resources to find whether an investigated conduct produced anticompetitive effects on the Brazilian market. However, this ruling applies only to findings on the merits, and therefore, courts of law may still review questions related to due process of law and issues of procedural nature concerning CADE’s proceedings.

Also, in Electrolux do Brasil SA v Whirlpool SA (2016), the STJ has ordered CADE to disclose documents and information obtained during its investigations to support a follow-on damages action. This ruling led CADE to issue Normative Resolution No. 21 of 2018 regulating the disclosure and access to evidence from its investigations’ files following an intense debate regarding the balance between public and private enforcement. According to this Regulation, part of the documents gathered in the course of administrative proceedings are disclosed after CADE issues a final decision, except for pieces of evidence provided by beneficiaries of leniency agreements and consent decrees (e.g., history of unlawful conduct), and commercially sensitive information, which also remain sealed.

The Court of Appeal of São Paulo has also increasingly stressed the importance of producing expert evidence in private antitrust claims. Such complexity of this type of claim requires econometric models and calculations to demonstrate the occurrence of individual damages. Moreover, the Court of Appeal has been establishing that passing-on ought to be proven by means of specific economic evidence prepared based on data and documents that demonstrate the methods used by the injured company to set the price of the final product for sale to its costumers, and that the burden of proving the pass-on defense falls on the defendants (eg., Paez de Lima Construções Comércio vs. Votorantim Cimentos and others (2019)). The Court has already ruled on a number of occasions that the defendant must share documents with the necessary information for the execution of the technical evidence, even if it contains commercially sensitive information, insofar as the documents will be used by the appointed judicial expert only and are addressed specifically to enable the carrying out of the expert evidence (see IBG Indústria Brasileira de Gases Ltda. v Companhia Siderúrgica Nacional (CSN) (2019).

Currently, a hot topic in Brazil regarging the private enforcement of competition law concerns the application of the new Law No. 14,440/22 to the proceedings pending in Brazilian courts, as the law did not encompass a rule of intertemporal application. On this matter, Judge Ricardo Villas Bôas Cueva, from the STJ, was the first to define that the provisions on the matter of statute of limitations apply immediately, with 2 (two) exceptions: they do not apply (i) if the previously applicable prescription period has already expired, and (ii) if the action was filed before the new law came into force.

In conclusion, key recent developments have advanced cartel damage claims and are expected to continue having positive repercussions on the private antitrust litigation field, notably after the entry into force of Law No. 14,470/22.