Without much ado, after being converted from a provisional measure into a law, Law no. 11,482/07 was published on May 31, 2007, bringing relevant and immediate implications to companies and individuals being investigated for cartel conduct. Although this law approves a slight amendment to Terms of Commitment to Cease Conduct (Termo de Compromisso de Cessação de Prática – "TCC"), Brazil's version of consent orders – maintaining high expectations in relation to the general reformulation of the Antitrust Law (Law no. 8,884/94) –, the change may be fundamental, to the extent it makes the Brazilian Antitrust System (Sistema Brasileiro de Defesa da Concorrência – "SBDC") more efficient for those affected by it.

Until approval of the above mentioned law, the Secretariat of Economic Law Enforcement (Secretaria de Direito Econômico – "SDE") and the Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica – "CADE") were authorized to enter into TCCs during the course of a large part of the activities investigated by the SBDC. Similar to the Term of Conduct Adjustments (Termos de Ajustamento de Conduta) entered into by the Public Prosecutor's Office, in which the party under investigation undertakes to cease certain conduct, the prior TCC brought benefits to both parties involved: to the companies and the individuals under investigation, the administrative process is suspended without financial consequences and the conduct is not even characterized as illegal; and for the authorities, the allegedly anticompetitive conduct is ceased without the need to continue spending significant public funds on the investigation.

This instrument, however, until this moment, has been little used in the scope of investigations pending before the SBDC, perhaps due to the fact that a large portion of the cases seeks to determine the existence of a cartel and, until the enactment of Law no. 11,482/07, a TCC was not applicable to such cases.

Based on the argument that it was necessary to give Brazilian authorities instruments that could make the battle against cartels more effective, Law no. 8,884/94 underwent substantial changes in 2000, such as: introducing the possibility of entering into Leniency Agreements; allowing the SDE - after obtaining a court order - to make search and seizures in companies; and prohibiting agreements suspending cartel investigations. At the time, it was thought that allowing such agreements, after a cartel investigation had begun, would encourage private agents to act in a collusive manner, since they could end the investigation without suffering any real penalty.

Thus, until Law no. 11,482/07 was approved, if a cartel investigation was underway before the SDE, even if the party under investigation wanted to collaborate with the authorities to put an end the investigation, the party had only one option: to submit its arguments and await a final decision. In practice, in light of the impossibility to make a settlement, many proceedings were prolonged by the use of judicial measures filed both during the course of the investigation and after the decision rendered by the CADE. In this context, the amendment by the new law is quite radical: it now allows cartel investigations to be suspended by a new type of TCC, which requires payment of a financial contribution that is not less than the amount of the fine established in Law no. 8,884/94 and provided the TCC is executed before a decision in the case is rendered.

The more the SDE focuses its activities and promotes Leniency Agreements, the greater the number of complex cartel investigations. As a result, it is possible to speculate that the main purpose of the above mentioned legislative amendment is to reduce the duration of the investigations in course before the antitrust agencies, thus allowing better use of its resources, while enabling companies and individuals to put an end investigations which affect their reputation and consume their resources (even if they have to bear financial obligations which, in many cases, could be postponed, but probably not eliminated). In fact, the amendments introduced by Law no. 11,482/07 liken the new TCC to a plea bargain, which is a measure increasingly used in the US, where its effectiveness is acknowledged in antitrust investigations.

Some of the practical effects of this law are still uncertain, especially because regulation under the law still must be issued by CADE, and because CADE has the discretion to enter into a TCC and to decide which fine is to be applied. Likewise, the wording of the law is unclear as to whether entering into such a new TCC in cartel cases will imply in acknowledging that the conduct under investigation is illegal – which is a relevant aspect used to assess the risk both with respect to possible criminal repercussions of the case and with respect to possible judicial proceedings seeking payment of funds by clients and consumers, which are especially common in other jurisdictions.

The question now is how the authorities will react to this relevant amendment, since their reaction will reveal the actual effectiveness and efficiency of the new TCC, to the extent that it impacts the conduct of companies in the cases already pending before the authorities, and how it affects the companies' compliance policies and the behavior of their officers.

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