CADE versus Judiciary

Laércio Farina - June 20th, 1997

Decisions of the administrative body, specific and of a technical nature, should not undergo judicial reassessment.

In the 1990s Brazil has witnessed an increase in what one can (almost) truly call a market economy. Within this framework, free enterprise and its derivative, free competition, as well as all freedom, must be subjected to the necessary limitations so that they do not become free anarchy.

These limitations are contained in Law 8.884 / 94, which outlines, in general, what acts may be considered abusive, establishing penalties in case of violation of these rules. In addition to this repressive nature, the law contains a preventive one, which obliges companies, interested in concentration acts, to submit to the appreciation of the government agency, the Administrative Council for Economic Defense (CADE), when significant for the market and within certain parameters.

The law establishes that the same agency should judge acts that may constitute abusive, or more specifically, "infractions of the economic order". The trial will not take place until after the investigation of the administrative process by other organs of the federal government, one linked to the Ministry of Finance, another to the Ministry of Justice.

It is precisely here that the impasse is established that puts in check the efficiency of governmental control over the mechanisms of competition. It is translated by efficiency the respect that the business community devotes to the administrative organ.

There is no doubt that the possible reform of CADE decisions by the judiciary, especially in cases of great repercussion, will greatly affect this respect, now in its first decade of formation. The still incipient jurisprudence of our antitrust agency, therefore, may not have the necessary indicator role for the definition of the strategies of the entrepreneur, since the concepts of Law 8.884 are not enough to mark them.

In our legal system, almost nothing can escape the examination of the Judiciary. Except for the discretionary administrative acts - those that the administrator is authorized to practice, at his own discretion, without the decision being subject to judicial review. But it is true that there are no pure discretionary acts, as some authors maintain, because every act of public administration is bound at least to the general principles established in Article 37 of the Constitution, which are those of legality, impersonality, morality and publicity.

Law 8.884, like any rule of economic law, is subject to the dynamics of the economic fact, for which it is not possible to create rigid legal types. The balance between the particular interests of the public and private economic agents and the general public interest must be sought by the responsible authority with the consideration of the conjuncture and the random. It is how CADE decides, valuing interests and measuring consequences of an act for the market.

In deciding, CADE does not have clearly typifying standards at its disposal. It is worth of procedural instruction haurid of the official investigation of the governmental organs and of information brought by the parties. It applies concepts derived almost entirely from economic science. It brings together a more or less wide margin of opinion of the members of the collegiate and, therefore, a great deal of subjectivity, supplemented by the application of the rule of experience and scientific knowledge.

The characteristic of this type of decision is to be discretionary with regard to merit. For some, it is about technical discretion, as debated in Italian doctrine. And, if admitted as discretionary, the substantive decision is protected from judicial review, except as regards obedience to those four constitutional principles.

The logic points exactly to this interpretation. The Judiciary does not bring together the structure, experience and the same scientific knowledge as the members of CADE, together with the bodies that support it, to analyze with equal depth the issues of abuse of economic power. As the judge, when faced with a technical issue, can appoint only one expert, we will face a situation in which a professional is replacing a whole collegiate and a highly specialized technical staff.

If there were specialized courts of law, the question would not be so dangerous, because specialization would be enough for different value judgments to be compared. It is not, however, the case. Nor is the solution as viable, as the judiciary is already facing enough structural problems.

We are not saying that CADE's decisions should not under any circumstances be subject to judicial review. In addition to the constitutional issues already mentioned, it would be necessary to control the intensity with which the antitrust agency can interfere in the freedom of the market, not to mention any deviations from the procedures defined by the competition protection law itself.

One example is the case in which the agency, going beyond the analysis of the particular case, drew up general rules, as seems to be the recent case of the decision that defined the form that foreign investments should have in certain situations. It instituted a standard that the law does not foresee and apparently affected even constitutional matter.

These circumstances can not, under any circumstances, be excluded from judicial review. Discretionary is the examination of the merits of CADE's decision in each specific case, due to the technical-scientific and subjective implications involved.

The question is far from peaceful. Criticism of this position generally comes from dogmatic positions. However, considering the nature of CADE's decisions, the group can form, in a shorter term than the Judiciary, an important source of information for the conduct of business activities.

Rapid definition of the rules of the game is crucial to the development of healthy competition. Doubt matters neither to the economic agents nor to the economic order to be preserved.