Availability of civil claims
Scope for civil claims in Brazil
The right to bring a civil action to recover damages resulting from a breach of competition law in Brazil is guaranteed under statute. Article 47 of Law no. 12.529/2011 (the Brazilian Antitrust Law) expressly states that:
“The injured parties […], shall be entitled to file action in order to, in the protection of their individual or homogeneous individual interests, obtain the cessation of practices which constitute infringement of the economic order, as well as the receipt of indemnification for the damages sustained, regardless of the inquiry or administrative proceeding, which shall not be stayed by virtue of the filing of the lawsuit.”
A prior finding by the Brazilian competition authorities that an infringement has occurred is not required to bring a claim (and such findings do not in any case bind the Brazilian courts). In fact, judicial private enforcement action is independent of administrative enforcement by the authority and claims can be brought even where no investigation into the conduct in question has been initiated.
In addition, the Public Prosecutor’s Office (State and Federal) can file a public class action on behalf of an injured class to obtain compensation, a duty to do something or a prohibition from doing something, for any infringement of competition law, based on Law no. 7.347/1985 (the Brazilian Public Class Action Law). The same type of lawsuit can be brought by the Public Defender’s Office, the Union, States, municipalities, agencies/authorities, public companies, foundations, semi-public corporations or duly organized associations, on behalf of their members. The basis and requirements for such actions are explained further at section 4 below.
Applicable limitation periods
The statute of limitations for private civil action to recover damages resulting from a breach of competition law is three years, based on Article 206, § 3º, V of the Brazilian Civil Code. In claims for damages, precedents have stated that the limitation period is triggered upon the date when the cause of action is discovered, but there is no settled case law in relation to competition law-based actions yet.
For public class actions seeking damages resulting from a breach of competition law, the limitation period is five years, according to the Superior Court of Justice, based on Article 21 of Law no. 4.717/1965 (the Brazilian Class Action Law).
In cases involving allegation of wrongdoing of a public employee there is no statute of limitations on related claims for damages. There are also a few lower court decisions which set out generally that in all cases involving the government or state-owned enterprises there should no statute of limitations at all, but this position is currently in the minority and has no support in the higher courts at this time.
Civil claims are brought before a state court (in the case of public class actions, claims may be brought before the federal court, depending on the nature of the claim). The decision in the first level court is made by a single judge. This decision can be appealed to the State Court of Appeals or Federal Court of Appeals, which has jurisdiction to review matters of fact and of law.
A further appeal is possible to a higher court on points of law only. If the issue subject to appeal relates to the application of acts, the appeal will be heard by the Superior Court of Justice. If the appeal is made on constitutional grounds, it is directed to the Brazilian Supreme Court.
Availability of class actions for infringement of competition law and/or damages in Brazil
As indicated above, the public prosecutor and certain entities are entitled to file public class action on behalf of a class of injured parties.
Specifically, according to Article 5, V, of Law no. 7.347/1985 (the Brazilian Public Class Action Law), any association bringing a claim in the general public interest must be at least one year old and have in its institutional objectives the protection of the environment, the consumer, the economic order, the free competition, or the touristic, aesthetic, historical or landscape heritage.
If the public prosecutor or any other entities described above file an action, then the injured parties themselves will not be directly involved in the conduct of the litigation. However, if a party that suffered a damage brings its own separate claim for compensation, these actions can be consolidated and addressed as part of the same proceedings.
The amount of the compensation secured by a class action can, depending on the nature of the claim: (i) go to a state-run fund managed by a committee, based on Article 13 of Law no. 7.347/1985 (the Brazilian Public Class Action Law) and ruled by Act no. 1.306/1994; or (ii) be individually pursued by every person damaged by the breach of competition law, and, after that, be applied to the fluid recovery system.
Conduct of proceedings and costs
Burden of proof
The burden of proof is not directly related to any particular standard of proof and will normally lie on the claimant. However, the Brazilian system accepts the fluid/dynamic distribution of the burden of proof, which means that the judge can, depending of the specific situation, place a burden of proof on the defendant regarding its arguments.
The judge can analyze and evaluate the claims in a lawsuit according to his own understanding of the facts and law, and is not bound by any decision of the Brazilian Competition Commission (“CADE”).
However, a decision by the CADE will typically carry significant weight in the courts and may be seen as a form of expert opinion on matters of competition law. Moreover, the claimant can use the evidence relied upon by any CADE decision (except for any confidential documents) as a basis for bringing a civil claim. However, to produce a finding of a violation of competition laws, the CADE need not determine whether the conduct in question actually produced any effects in the market. Therefore, even with a favorable CADE decision, the claimant still has to show that the conduct in question actually produced effects and that such effects caused injury.
In any event, as discussed, judges can disregard a CADE decision and determine a claim differently, although this is unusual.
Joint and several liability of cartel participants
There is no joint and several liability for damages between cartel participants that do not belong to the same economic/corporate group.
Each party to a cartel will be liable to injured parties only inasmuch as its own conduct caused damages to that party.
Documents and evidence that can be used by claimants (for example, investigation evidence) and legal privilege
Except for expert evidence and testimonies (presented during a lawsuit), the claimant has a duty to present all evidence in its favor that is available to it at the moment of filing (more evidence can be presented as the case goes on, if not readily available at the beginning). If the claimant is aware of any particular document in the possession of the defendant, it may ask the court to order its attachment to the dockets. However, there is no general discovery that would require the parties to deliver any relevant document to the court.
The claimant can use as evidence the records of the CADE investigation, and such evidence will be considered documentary evidence. The defendant can contest that evidence, regardless of the view taken by CADE. Recently, the Superior Court of Justice decided that the CADE must cooperate with the course of the private damages action, which means that evidence produced in the course of the CADE investigation should be shared with the court reviewing the damages claim, provided that such disclosure does not jeopardize the CADE investigation itself.
The claimant can also present expert opinions on the issue of damages, or request the court to appoint an expert to carry out such analysis.
If in the course of an investigation any report or opinion issued by an attorney is attached to the records of the case, the party subject to investigation can request its removal from the file, on the grounds that it is an attorney-client communication and cannot be used as evidence against the company that received such advice.
A claimant may file a preparatory claim against the defendant for the production of specific document(s), based on Articles 305 and 396 of the Brazilian Civil Procedure Code.
Average length of time from issue of claim to judgment in Brazil
Litigation in Brazil can last for a very long time. For a first instance decision, the case can last between two and four years, but in certain cases can take even longer. After all appeals, the total length of litigation can easily exceed 10 years. For public class actions, the length of time can be even longer.
Average cost from issue of claim to judgment in Brazil
Direct court costs are not too significant, and do not act as a deterrent for litigation in Brazil. However, the length of a case can increase attorneys’ fees and therefore costs overall.
The losing party will pay for any expert evidence produced at the request of the judge and will also be required to pay a certain amount of attorneys’ fees to the winning party. The rule is not varied for associations, which must bear the costs if they lose (meaning that the members will likely be paying for such costs through their contributions to the association). Attorneys’ fees are not awarded in public class lawsuits and “popular” lawsuits.
A third party may wish to fund the claimant in its litigation if it so wishes.
Alternative methods of dispute resolution
There is no legal rule in Brazil that prevents competition claims from being arbitrated or settled privately through mediation or direct negotiation by the parties.
Scope to arbitrate depends on the existence of an agreement through which parties appoint one or more arbitrators to resolve the dispute definitively. The arbitral award can be enforced by a state court, if not voluntarily complied with by the losing party.
There is no mandatory mediation prior to litigation or arbitration. In some cases injured parties will not file a formal civil claim but instead approach addressees of a CADE decision and agree to a private settlement of damage claims. Such private settlements are legally valid and can be enforced in court.
Availability of damages and quantification
Damages have to be demonstrated by the claimant, and relate to either any actual loss or forfeited profits (if any can be shown in the context of a competition related claim). The judge may either stipulate the amount of damages to be awarded – based on any available evidence that would allow for such finding – or can determine that damages be quantified in separate subsequent proceedings. If addressed in separate proceedings, then an expert opinion can be sought by the court to determine the amount to be paid.
Punitive and exemplary damages
Punitive and exemplary damages are not available in Brazil, although “moral damages” can be claimed in cases where the injury caused substantial distress. It is arguable that “collective moral damages” might be claimed in the context of public class actions.
Availability of interim or final injunctions in respect of an alleged competition law infringement
Injunctions and interim relief are generally available in litigation in Brazil, whenever the specifics of the case require immediate intervention by the court. For such relief to be granted, the claimant must show a likelihood of a successful claim, and a clear risk that inaction by the court can generate damages that may not be compensated in the future.
In the context of competition litigation, such claims can exist in case of: (i) refusals to supply; (ii) discrimination or any other type of commercial conduct that may generate ongoing damages; or (iii) a risk of foreclosure.
Other types of relief
In addition to damages, claimants can ask the court to order the cessation of the infringing conduct, which can be granted as interim relief or as a final order in the judgment.
Private competition litigation is not common in Brazil, although the volume of claims being brought is growing. Claims are typically driven by a CADE finding that a cartel has taken place. However, in certain cases the courts have found differently from CADE on the issue of whether a violation in fact exists.
Therefore, whenever there is a CADE decision it is in no way certain that civil claims will be brought or, if brought, will be successful. Further, this type of claim is relatively new and, as such, there are no publicly available decisions as yet on issues such as damages calculation or of the evidentiary value of a CADE decision.