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  • 8 April 2022

Newsletter | CADE: Brazilian Federal Senate approves nominees for General Superintendence, Administrative Tribunal and CADE’s Attorney General

On April 7, 2022, the Brazilian Federal Senate approved three nominations for the Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica – CADE): Alexandre Barreto de Souza, nominated for the position of General Superintendent, Victor de Oliveira Fernandes and Gustavo Augusto Freitas de Lima, both nominated for the position of Commissioners. Juliana Domingues, nominated as CADE’s Attorney General, was already confirmed by the Senate’s Plenary on April 6.

On April 5, 2022, the Economic Committee of the Brazilian Federal Senate (Comissão de Assuntos Econômicos – CAE) conducted the confirmation hearings of Alexandre Barreto de Souza, Victor de Oliveira Fernandes and Juliana Domingues. Gustavo Augusto Freitas de Lima was heard and approved by CAE in early December 2021.

During these confirmation hearings at CAE, Senators questioned the nominees on topics related to digital markets, financial markets, oil and fuel refining, air transport, and supplementary health market.

Regarding digital markets, the Senators questioned the nominees about what could be done by CADE regarding possible tax evasion conducts and predatory pricing on digital platforms such as marketplaces. Victor Oliveira expressed that he considers this topic extremely relevant and understands that Law no. 12,529/2011 (Brazilian Competition Law) already provides CADE with sufficient authority and tools to deal with issues related to digital markets and innovation, such as the example mentioned by Senators and cases involving the use and processing of data.

Regarding the financial markets, the Senators asked the nominees about the Brazilian banking spread, which they consider to be too high. On the subject, Alexandre Barreto mentioned that CADE should not interfere directly on the price fixed by companies and, in case there are any indications of an anti-competitive conduct related to the bank`s spread, CADE will investigate the case, as it is currently investigating an alleged conduct related to the exchange market. Victor Oliveira indicated that, in his view, there was a process of concentration in the Brazilian financial sector in recent years. For him, CADE’s role would be to ensure the existence of rivalry in the financial sector and to ensure that the sector’s verticalization by incumbents does not prevent new players from accessing those markets.

Regarding the oil and fuel refining markets, the Senators questioned the nominees about the recent price increases and about the Cease and Desist Agreement (Termo de Compromisso de Cessação – TCC) executed by CADE and Petrobras. According to the Senators, this agreement – which resulted in Petrobras’ commitment to sell several oil refineries – could be one of the reasons for the increase in fuel prices. According to part of the Senators, it is not correct to analyse Petrobras’ market power only in the domestic market, but rather in the global market. Under this scenario, Petrobras should not be considered a monopolist and, therefore, the sale of refineries should not be an adequate determination by the antitrust authority. Furthermore, the Senators questioned whether there were other factors, in addition to Petrobras’ market share, capable of justifying such commitments provided by the agreement.

On the subject, Alexandre Barreto highlighted that the TCC was proposed by Petrobras – and not by CADE – in the context of an investigation conducted by the antitrust authority, regarding possible abuses of economic power in the refining sector. Barreto also highlighted that CADE had actions related to the fuel sector on other occasions and, in 2018, worked along with the Senate in the context of the truck drivers’ strike. Responding to the Senators’ request, Barreto undertook the compromise, if approved for the position, to send to the Senate a report about the agreement executed by CADE and Petrobras in the refining market.

Regarding the air transport market, the Senators questioned the nominees about the prices of airline tickets, which have been increasing. On the subject, Victor Oliveira indicated that CADE could act through competition advocacy, what CADE’s Department of Economic Studies has done recently, when it issued a study about the air transport sector.

Finally, regarding the supplementary health market, the Senators questioned the nominee Juliana Domingues about CADE’s role regarding the growing market concentration among private agents – namely, hospitals, clinics and health plan agents. Juliana stated that concentrations in this sector could result in negative effects for the consumers and that this topic deserves CADE’s attention. Also, when asked about the increase in prices during the pandemic in markets with high market concentrations – e.g., fuels, resins and fertilizers -, Juliana indicated that this price increase could affect the production chains as a whole and said that CADE has jurisdiction to verify any possible abuse, which must be analysed on a case-by-case basis. Juliana also highlighted the importance of a joint action between CADE and the regulatory agencies, ministries, other authorities, and associations.

Alexandre Barreto and Juliana Domingues will have a two-year term, with the possibility of reappointment for the same period. Victor Fernandes and Gustavo de Lima will serve a four-year term, with no reappointment.

Our firm has a team specialized in Competition and Antitrust. For clarifications on the subject, or others that may be of your interest, please contact our professionals.

José Carlos Berardo

zeca.berardo@lefosse.com

Tel.: + 55 11 3024 6244

Juliana Daniel

juliana.daniel@lefosse.com

Tel.:  + 55 11 3024 6194

 


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