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The Brazilian Competition Authority authorises competitor collaboration to assist the recovery of small retailers of beverages, food and personal and domestic care products against the economic effects of COVID-19 (“Movimento Nós”)

In an Extraordinary Judgment Session held on May 28th, the Tribunal of the Brazilian Antitrust Authority (Cade) ratified a decision of its General Superintendence and authorized a collaboration among a group of companies (including competitors) - Ambev, BRF, Coca-Cola, Mondelez, Nestlé and Pepsico - aiming to assist the recovery of small retailers especially considering the industries of beverages, food and personal and domestic care products. This is a special authorization in the context of crisis generated by the Covid-19 pandemic. [1]

Objectively speaking, this collaboration would not require Cade’s approval, since it does not fall within Cade’s jurisdiction thresholds for the characterization of an “Associative Agreement”. Nonetheless, the parties in good-faith and precautionary submitted the proposal to CADE, citing, for such purpose, Cade’s precedent when it authorized the so- called “Crisis Protocol” involving cooperation among fuel distributors in the context of the truckers’ strike that severely disabled nationwide logistics in 2018. [2]

Accordingly, in an exceptional and temporary basis, the collaboration was authorized as Cade concluded, in short, that (i) there was a reasonable economic justification for the agreement, (ii) the parties adopted specific measures and protocols to prevent antitrust risks, (iii) there was no evidence of attempted anticompetitive practice, and (iv) the parties were concerned in restoring competitiveness and normality of the sector. In order to authorize the collaboration, CADE relied on international recommendations from OECD and ICN, and stated that its decision will preserve a competitively healthy economic environment.

In particular, CADE was clear and stressed that the exceptionality of the measure did not represent an antitrust immunity. In fact, there are news of other collaboration protocols among competitors in other industries that are said to have been abandoned by the parties after CADE expressed concerns with the effects on competition.

Also, it is important to underline that if, by any chance, at any time, CADE detects any irregularities arising from the collaboration at hand / any practice that can potentially harmful the competition landscape, the Brazilian Antitrust Authority can take actions to preserve the structures of the market. The parties should also provide CADE with monitoring reports about the regularity of the actions from the antitrust viewpoint. It is also worth pointing that, given the urgency of the matter, the parties submitted the proposed collaboration in a specific and super accelerated procedure exceptionally allowed by CADE so as to streamline the antitrust assessment in the face of the particular context of the Covid-19 pandemic.

Bottom-line, the message is that Cade is indeed sensitive to the market reality but is also vigilant and cautious to avoid any kind of anticompetitive practice in these extraordinary times. Further, one could not neglect that new proposals of commercial collaborations among competitors may knock on Cade’s door during the pandemic crisis, thus requiring the parties to observe Cade’s orientations attentively in light of the case at issue, and also considering guidances from OECD, ICN and public statements of CADE’s representatives on the matter, always demonstrating the needs, limits, scope and efficiencies resulting from a given proposed collaboration, with grounded justifications and robust antitrust compliance measures and governance to avoid risks. It is of utmost importance to demonstrate the pro-competitive feature of a given proposed collaboration among competitors, as well as the absence of any anticompetitive practice.

Footnotes

[1Proceeding No. 08700.002395/2020-51.

[2Proceeding No. 08700.003483/2018-56.

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Eduardo Caminati Anders, Marcio de Carvalho Silveira Bueno, Guilherme Teno Castilho Misale, The Brazilian Competition Authority authorises competitor collaboration to assist the recovery of small retailers of beverages, food and personal and domestic care products against the economic effects of COVID-19 (“Movimento Nós”), 5 June 2020, e-Competitions June 2020, Art. N° 95310

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