Private sector in defense of competition

Fernanda Farina - May 29th, 2018

The above case is just one example among numerous others involving anti-competitive practices. Practices that undermine all economic agents involved in the target market, from suppliers to end consumers. But who protects all those battered victims? And more than that, who repaid the damages suffered by them? Looking at the Brazilian reality, three agents are easily identified: the CADE, the MP and the PF - all organs of the State. But if we look outside, especially to the US, UK and Europe, a character will be missing: the victims. International experience and doctrine show that an important part of a country's antitrust policy is its private enforcement. That is, the fight against anti-competitive practices depends not only on the performance of public agents but also on the victims themselves. "Private" agents - consumers and injured companies - have the right to see the damage suffered by anti-competitive acts repaired. This repair is an essential weapon to restrain new acts. Thus, two major structures in the defense of competition are identified: one public, that is, the State through its various organs, and another private. The latter covers the lawsuits brought by individuals seeking redress or prevention of damages. The two spheres, public and private, must be complementary in building an effective antitrust policy. Among private actions, however, a particular species stands out as the one with the best potential to generate preventive effects. These are collective actions in Brazil represented by public civil actions to protect individual homogeneous rights. This particular type of collective action allows the joint protection of the rights of a group of individuals in a single demand, which is offered by a representative of the group. This enables the costs of action for the individual to be drastically reduced by the scale, which allows those who would not take their case to court, do so through the collectivity. In addition, with the aggregation of the demands, there is a considerable increase of the potential condemnation, which increases, consequently, the opportunity cost to cartelization. The collectivization of individual rights therefore functions not only as an instrument for expanding access to justice but also as a mechanism to prevent new practices. In the USA, a great exponent of this instrument, victims' actions usually take place through class actions. Between 2007 and 2010, 3,168 individual lawsuits were filed in the United States to repair damages caused by anticompetitive conduct. Among them, 1,811 were federal class actions, which represents more than 57% of the total shares promoted. Of these, 60% resulted from administrative convictions from the US competition authority (FTC) or from foreign authorities. It is this same path that the European Community is now pursuing, with the approval in 2014 of Directive 2014/104 / EU, which seeks to intensify public policies to stimulate private actions to repair damages. Similarly, the United Kingdom, which in 2015 passed the Consumer Rights Act, which provides for the possibility of class action to repair damages in antitrust matters. As already mentioned, the Brazilian legal system also allows us to use the same tool. The combination of various legal provisions indisputably authorizes the offer of collective actions for the aggregate reparation of damages suffered by victims of economic illicit acts. Nevertheless, the reality of the forums does not show the same relevance. Very few actions are taken by the victims - be they companies or consumers - aiming at compensation due to anticompetitive practices (cartels, monopolies, predatory pricing etc). Much of this inexpressiveness is due to the lack of the culture of collectivization in Brazil, derived from an excessively individualistic inheritance of the process. In addition, the legal restriction of those legitimized to bring collective action also makes it difficult to expand. The law states that, among private agents, only associations with more than one year of existence may propose public civil actions. This ends up limiting the instrument's range, which could have much wider claws. However, it does not prevent it, nor does it prevent the offer of individual claims for compensation for anticompetitive practices. In addition, the new Code of Civil Procedure, which enters into force this year, also allows the aggregation of these actions by mechanisms other than collectivization. We have exit, therefore. It is urgent that victims fill this gap in Brazilian antitrust policy. The actions to repair damages mean not only doing justice to injured individuals, but mainly hampering anticompetitive practices. We need to align with the international policy of private enforcement in antitrust. We all gain from this: victims, society and free competition. Only losers lose, who will have one more fighter to compete.