While private antitrust enforcement in Brazil is slowly evolving towards an efficient system of compensation of damages, claimants still face substantial obstacles when bringing such claims before courts. The main obstacle refers to the difficulty of proving the harm sustained by the claimant and of demonstrating causation between such harm and the anticompetitive conduct. This article aims to identify the evidentiary standards for antitrust damages claims in Brazil according to recent rulings handed down by the São Paulo State Courts, where the majority of private damage claims related to anticompetitive conducts were proposed, from 2019 to 2021.
According to the Brazilian Antitrust Act, private claimants pursuing compensation for damages caused by anticompetitive conducts must follow the general rules set forth in the Brazilian Civil Code and Brazilian Civil Procedure Code. This means that, in order to succeed, claimants must demonstrate (i) the existence of an anticompetitive behavior, (ii) the individual harm sustained by the claimant and (iii) causation between the conduct and the harm. Therefore, the burden of proof lies with claimants, who must demonstrate their right for compensation. However, if defendants allege any facts which impair, modify or extinguish claimants’ rights, the burden of proof will rest upon the defendant. Courts may change these rules and shift the burden of proof in light of specific circumstances, such as in claims concerning consumers’ rights or when one of the parties face excessive difficulties in providing evidence in a specific case.
The burden of proof in antitrust damage claims represented a significant obstacle to claimants due to the confidentiality of documents produced in antitrust investigations. Confidentiality, however, is deemed necessary to safeguard the effectiveness of Brazilian leniency system; in that framework, the Brazilian Competition Authority (“CADE”) issued a regulation in 2018 aimed at stimulating private antitrust enforcement by facilitating access to the documents produced in its investigations (Regulation No. 21/2018).
In addition to the difficulties above, litigants’ also face the challenge of courts’ interpretation of the provisions of the procedural and civil laws governing private damage claims.
In Brazil, civil, administrative and criminal spheres are independent, which means that private claimants can file claims for compensation for damages caused by anticompetitive conducts even if a decision by CADE is still pending.
Nevertheless, private claimants usually base their allegations on decisions issued by CADE. Decisions handed down by the São Paulo State Court of Appeals within the last three years did not dispute the occurrence of antitrust infringements already recognized by CADE in the relevant cases at hand. However, compensation is hardly granted when the claim is based solely on CADE’s decision. Courts require additional evidence to demonstrate causation between the conduct perpetrated by the offender and the damages sustained by the claimant.
In this context, CADE’s decisions tend to be of little use to demonstrate or quantify damages endured by potentially affected parties. This is because CADE generally does not perform in-depth analysis of the damages that result from the anticompetitive conducts reviewed by the authority.
The majority of the decisions handed down by the São Paulo State Court of Appeals dismissed prima facie compensation claims based on generic allegations. Although claimants may produce several types of evidence to demonstrate damages, the Court has, on few occasions, held that plaintiffs failed to provide minimum evidence of the existence of damage and of causation, and therefore, dismissed requests to produce expert evidence. In other cases, the Court found that expert evidence would be useful to demonstrate damages potentially sustained by the claimant.
There is also no real consensus regarding pass-on effects, that is, the transfer of the burden suffered by an injured party to third parties, such as consumers. Most recent rulings show that courts tend to presume pass-on effects of the anticompetitive conducts in cases in which such effects are well-known and perceived in the affected markets. In these cases, courts usually place upon the Claimant the burden of demonstrating the absence of pass-on effects. On the other hand, a minority of the decisions held that pass-on effects should not be presumed, provided that the presumption may extinguish claimants’ right to compensation. In these few cases, courts held that the burden of proof for pass-on effects should lie with the defendants.
These decisions reveal that courts’ current interpretation of procedural and civil legislation imposes clear conditions for private claimants to obtain compensation for damages caused by anticompetitive conducts. Such conditions are mainly related to demonstrating their allegations. Therefore, any legislative initiatives on private antitrust enforcement in Brazil should consider modifying some provisions in light of the specific features of antitrust laws.
In that regard, Bill No. 11,275/2018, currently under discussion in the Brazilian House of Representatives, proposes to modify the standard of proof for damage claims to the Brazilian Antitrust Act. Specifically, the bill proposes that (i) pass-on effects should not be presumed, and that in this regard, the burden of proof should lie with defendants; and (ii) CADE’s decision should be considered sufficient evidence for granting injunctive relief in private antitrust claims.
Measures that aim to incentivize damages claims for anticompetitive conducts in Brazil should also take into account the balance between public and private enforcement. To this purpose, bill No. 11,275/2018 proposes measures to safeguard CADE’s leniency program. The bill states that leniency applicants should not be jointly and severally liable for damages caused by other participants in the conducts, and that pecuniary sanctions imposed to them should be limited to the harm caused to claimants.
Safeguarding CADE’s leniency program is especially relevant to ensure that leniency applicants are not put in a worse position than non-cooperative agents in relation to damage claims, as well as to ensure that companies and individuals continue to have incentives to cooperate with the competition authorities. Private antitrust enforcement should support public enforcement in dissuading anticompetitive behavior and not the other way around.