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CADE issues first Lava Jato non-compliance penalty

Por: Latin LawyerImprimirVisualizar em PDF

Brazil's competition enforcer has issued its first non-compliance fine in the Lava Jato investigation, to an energy engineering company that did not pay its first instalment of a US$34 million settlement in December.

In a trial session on 25 April, the Administrative Council for Economic Defense (CADE) fined UTC Engenharia 200,000 reais (US$57,000) for failing to pay the first instalment of the settlement the company had negotiated with the authority. The non-compliance fine must be paid before 25 May, a spokesperson for CADE said.

The spokesperson also confirmed that it is the first non-compliance fine issued in relation to its high-profile Lava Jato investigation.

In January 2017, UTC settled with CADE for 139.15 million reais (US$39.6 million) with CADE. This agreement ended CADE's investigation of UTC for its alleged collusion on bids for Petrobras's onshore projects and a contract to build the Angra 3 nuclear plant.

UTC submitted a request to the antitrust agency in December to extend its payment due date, which CADE denied. The authority's spokesperson said on 27 April UTC's reasoning for its request was confidential.

In a statement on 27 April, the company said the delay in making the payments stipulated in the agreement happened "because UTC is in a judicial recovery process and has no access to its credits. The company highlights that will honour its payments as soon as it receives the credits to which it is entitled."

In announcing the non-compliance fine on UTC, CADE noted that Ricardo Ribeiro Pessôa and Antonio Carlos D'Agosto Miranda, two individuals who owed payments in December under the settlement agreement, had made their payments on time.

Vicente Bagnoli at Vicente Bagnoli Advogados in São Paulo said: "It is unusual for a company not to comply with the terms of a settlement that can be understood as an agreement negotiated by the parties, CADE and the company."

Pinheiro Neto Advogados partner Leonardo Peres da Rocha e Silva in Brasilia said, "The fine imposed is a very important development not only to the investigations related to the Lava Jato cases, but also to all of the other cartel investigations underway before CADE."

CADE's strict approach in the past to non-compliance means it is likely to raise such fines in future agreements, Rocha e Silva said.

"Companies have to understand that compliance within the deadlines established is key for CADE's settlement programme to be respected. It shows CADE's commitment to legal certainty and transparency," he said.

UTC Engenharia did not respond to a request for comment.

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