Private enforcement of competition law in Brazil: still a long road ahead

Brazil’s 2011 Competition Act was amended in 2022 with the explicit goal of fostering private enforcement of antitrust violations. The plan was to encourage victims of anticompetitive conduct (such as cartels) to seek redress directly against wrongdoers, aligning Brazil with international best practices. Nearly three years later, it is still unclear whether the law delivered – and whether it may still deliver – on its promise.

The 2022 statute established (a) a unified five-year statute of limitations for private antitrust lawsuits (known in Brazil as “ARDCs”), (b) the suspension of this period during administrative investigations carried out by Brazil’s antitrust authority CADE, (c) the reversal of the burden of proof when it comes to the so-called “pass-on defense” (in cases where plaintiff is not the end user or consumer of the good or service acquired from the defendant who is alleged to have breached competition law, defendant will customarily ask plaintiff to prove that it did not pass the alleged price increase onto the end user or consumer), and (d) the express recognition of CADE’s final decisions as a basis for evidentiary relief in court. It also limited the liability of leniency applicants, exempting them from joint and several liability and from double damages.

Complex lawsuits typically take more than three years to unfold at the lower court level – let alone at the appellate level. It is unsurprising that no ARDCs filed after 2022 have been adjudicated by the Superior Court of Justice (the “STJ”) or by appellate courts to date.

Yet, Brazilian courts have addressed the amendment in the context of a few pre-2022 ARDCs. Judicial interpretation of these changes has been cautious and fragmented. State courts have basically refused to apply the new rule to old cases, but the STJ’s position is a bit more nuanced. The STJ has found that the new five-year time limit does not apply retroactively to cases where the previous limitation period had already expired before the law came into force, i.e., that the new rule could not revive claims already time-barred under the old regime. On the flip side, it has found that even for pre-2022 ARDCs (a) the old statute of limitations should remain suspended during CADE’s investigation and (b) CADE’s final administrative decision against defendant should be deemed the starting point of the limitations period, on the grounds that the 2022 applies immediately to pending cases and in many aspects does not innovate but rather reflects the right interpretation of the original 2011 Competition Act.

The practical impact of the reform on the volume of private antitrust litigation remains limited. While the 2022 statute has clarified key procedural issues and aligned Brazil with international standards, it has so far proven insufficient to trigger a significant increase in the number of new ARDCs.

Part of the reason is that some structural barriers to litigation—such as the cost of expert evidence, the complexity of damage quantification, the perception that very few civil courts are qualified to handle competition law matters, and the risk of adverse costs and attorney’s fees if defendant prevails —continue to discourage potential claimants.

In addition, there is an inevitable interplay between public and private facets of competition law. The lesser investigative work on cartels and other anticompetitive conduct CADE undertakes, the smaller the chance that victims will even know that they are victims, that they will gather sufficient evidence and therefore that they will be in a position to file an ARDC. And the fact of the matter is that CADE, for political, budgetary and structural reasons, has not been able to take on many large investigations lately.

To fully realize the law’s potential, further steps are needed. Congress should discuss and pass new legislation removing outstanding hurdles to ARDCs; for instance, it may provide for additional issues that warrant reversal of the burden of proof in plaintiff’s favor and may cap adverse costs and attorney’s fees to be borne by plaintiff if defendant prevails. While CADE does not play a direct role in ARDCs, it can contribute by ensuring that its decisions (and some key supporting evidence) are publicly available and written in a way that is accessible to those who are not familiar with the technicalities of competition law. And courts can also contribute: it is not their role to design and implement public policy, but they should carefully consider the consequences that their decisions may have on the policy chosen by the Legislative and Executive branches.

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