On 20 January 2016, the Brazilian Competition Commission (CADE) published guidelines on competition compliance programs  . The guidelines explain what sorts of steps companies can take to avoid breaking the competition rules and also sets out CADE’s view of the key ingredients of an effective competition compliance program.
Significantly, the guidance explains that a company which has sought to implement a “robust” compliance program (comprising of proportionate and good faith measures) is eligible for a penalty reduction in the event of a competition law violation.
The specific guidance on what CADE considers to be a robust compliance program is extremely useful for companies looking to solidify their corporate culture of compliance and is to be applauded.
CADE also joins a growing list of competition authorities around the world (see map) which are willing to treat genuine attempts at compliance as a mitigating factor (leading to a lower fine) in the event the company breaks the competition rules. Most recently, the Antitrust Division of the US Department of Justice has (in an apparent change of policy) recommended a lower fine in the face of evidence that companies took extraordinary efforts to improve their compliance programs for the future.
Regrettably (and in contrast to the guidance in other countries such as France and the UK) the Brazilian guidance stops short of explaining in clear terms how any reduction in penalty would be calculated. It therefore remains to be seen how this guidance will be followed in practice.
In any event, what is clear is that any company seeking to obtain compliance credit in Brazil will need to be able to provide solid evidence of the steps and processes that it took in order to instill a genuine compliance culture. So while there may be a lack of clarity around how any reduction in fine will be calculated, it would be prudent for companies to check that their compliance programs include the elements listed by CADE and that this can be evidenced. For example, it is important to be able to show that employees in higher risk areas (e.g. those with responsibility for pricing or which may come into contact with competitors) have been properly trained and given an opportunity to seek guidance on how competition law affects their day to day job.
What is a “robust” compliance program?
CADE guidelines clarify that only a robust compliance program resulting in material changes to the corporate culture – as opposed to “sham compliance programs” – could entitle companies to a reduction of fine levels imposed by CADE. The features of a robust compliance program include:
|Table 1 – Features of a robust compliance program|
|Commitment from the top|
|Autonomy and independence|
|Reviewing of the program|
These factors are very much in line with the emerging global consensus on the key elements of corporate compliance. See for example Baker & McKenzie’s “5 Elements of Compliance” and the UK competition authority’s four-step compliance ‘wheel‘:
What are the benefits of having a robust program in place?
CADE guidelines provide general directions on how compliance programs may impact fines imposed by the authority when a violation takes place.
The Brazilian Competition Law provides that the defendant’s good faith is one of the elements to be considered when determining the level of fines. A robust compliance program meeting the requirements explained above may be considered evidence of good faith of the company and thus be used as a mitigating factor in the calculation of the fine. The guidelines, though, provide no certainty or objective guidance on how a finding of good faith would ultimately impact on the fine levels (i.e., there is no clear percentage or methodology to anticipate the mitigating effect resulting from a finding of good faith).
In the context of settlement negotiations, a robust compliance program may justify CADE granting the maximum discount available to the company. The maximum discount available, however, depends on a number of additional elements, such as the timing for the settlement requirement, the level of cooperation provided by the settling party, among others.
In any event, CADE guidelines clarify that the company itself has the burden to prove that its compliance program qualifies as robust in order to benefit from any potential fine reduction. If the company can produce evidence of the adoption of such program, with the provision of clear, consistent and detailed guidance on compliance to a specific employee, her/his unlawful behavior could ultimately be considered as an individual deviation by a “rogue employee” — in which case the good faith of the company should be presumed.
Best practices: avoiding anticompetitive behavior
CADE guidelines also provide a non-exhaustive summary of best practices to avoid the risks of engaging in particular types of anticompetitive conduct:
|Table 2 – Best practices|
|Avoiding unlawful behaviour by members of associations, trade unions and SSO|
|Avoiding unlawful behaviour of associations, trade unions, and SSOs themselves|
|Avoiding unlawful unilateral conducts and vertical restraints|
CADE’s new guidance is a helpful step forward in terms of competition compliance: companies can see what kind of elements their compliance programs should include and start to think about how they could evidence this in the event of a breach. Investment in compliance efforts now could completely avoid a breach or at the least help reduce any fine that CADE sought to impose.
 The guidelines lists the following examples of competitive sensitive information: current and future prices, costs, production levels, expansion plans, discount policies and others.