Settlements with CADE in judicial cases: shortening litigation or awaiting a final decision?

In 2024, the Federal Government launched the Desenrola Agências Program, which renegotiates debts with federal agencies. The benefit was previously restricted to the payment of tax debts, popularly known as Refis.

With discounts of up to 70%, the program mainly attracted companies with debts resulting from fines imposed by the Administrative Council for Economic Defense (CADE). Debts with the antitrust agency represented almost BRL 1.5 billion of the BRL 2.88 billion collected by the program.

The numbers may be impressive, but a closer look reveals that a significant number of sanctioned companies that are litigating against CADE did not join the program. More than 97% of the amount collected by the agency came from just three agreements signed with a cement company and two steel companies. The other settlements did not reach BRL 40 million.

Each situation is unique, but three reasons seem to be recurring in the decision of companies sanctioned by CADE not to join Desenrola Agências:

a) Companies in financial distress, preventing the available cash from being sufficient even to cover the remaining amount after such significant discounts;

b) Confidence in success in the judicial process, in which they question the lawfulness of the sanctions; and

c) The fact that debts with CADE are adjusted by the non-compound interest rate SELIC, without incorporating interest into the principal to compose the calculation of interest for the following period.

The last factor is particularly relevant. There are several cases of companies that were sanctioned in administrative proceedings that lasted several years and that currently have only a small fraction of the debt on which the SELIC rate is levied. A company sentenced to a fine calculated based on a percentage of its revenue in 2000 would have, for example, less than 27% of the current debt adjusted by the SELIC, a proportion that decreases over time. This means that the amount owed is currently adjusted by an index that is even lower than inflation.

This element, combined with the long expected time for cases to be processed in Brazilian federal courts, creates a strong disincentive to entering into agreements. Even so, there are cases in which the advantages of a judicial agreement with CADE outweigh these disincentives.

Even after the Desenrola Agências window of opportunity has closed, the following main factors may lead to the decision to propose negotiating an agreement with the antitrust agency after the case has been brought to court:

a) Forecast of an unfavorable court decision in the short term or high uncertainty regarding the outcome of the process;

b) Elimination of the cost of maintaining guarantees (usually insurance bonds or letters of guarantee issued by banks), which would need to be maintained until the end of the process, regardless of the result;

c) Cessation of process management costs and expenses with lawyers’ fees;

d) Exemption from providing explanations about the cause and status of processes, especially in the context of corporate transactions, in which procedural risk needs to be valuated;

e) Obtaining discounts granted by CADE, even if they are uncertain and probably smaller than those available at Desenrola Agências;

f) Extension of the payment timeline, that makes debt payment compatible with the company's cash flow, avoiding a liquidity crisis if the process is close to being concluded.

The last two aspects were decisive in agreements already reached by CADE in important cases. In an agreement reached with Ambev after the imposition of a fine of R$352.7 million in 2009, the antitrust agency agreed to receive R$229.1 million, six years later. The discount resulted from the correction of material errors that reduced the calculation basis, combined with a 20% discount on the amount due.

In 2020, in agreements reached in the case known as the Steel Cartel, companies obtained three additional years to pay off fines that had been imposed more than 10 years ago, even after unfavorable decisions in the lower courts.

The agreements may also result in less onerous solutions for non-pecuniary sanctions. Divestment obligations, for example, may be waived, as occurred in the agreement that ended the litigation over the Nestlé/Garoto case in 2023. The obligation to publish the decision in newspapers, in turn, may be replaced by the disclosure of the decision only on the companies' websites or even waived altogether.

Regarding the procedure, the Antitrust Law establishes that CADE’s Legal Unit (ProCADE) oversees the negotiation of the agreements, but approval by the Administrative Court for Economic Defense is required. This requires interaction with both ProCADE and CADE's advisors, who usually require demonstration of the advantageous nature of the transaction not only for the company, but also for the antitrust agency and society.

In this context of multiple stakeholders, it is essential for the success of the negotiation of a settlement agreement to demonstrate some elements. Aspects such as the significant abbreviation of the end of the litigation and the company's chances of success in the process can be decisive for the favorable outcome of a negotiation.

The outcome is that each company that litigates with CADE should periodically evaluate, throughout the process, the convenience of settling the case, weighing the favorable and unfavorable elements indicated above and others that are specific to each case.

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