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COMPETITION LAW IN BRAZIL: 2018 OVERVIEW 37

In this probe, CADE reiterated its consolidated understanding that lawsuits
may only constitute a sham litigation conduct if are completely baseless in the sense that no
reasonable plaintiff could expect success in them. On the other hand, the agency left open the
possibility that creating a “hostile climate” via threats may characterize an antitrust violation.

Analysis of various single-firm conducts in the payment system

CADE analyzed several issues related to conducts in the payments system.
In July and September, CADE’s Tribunal approved Cease and Desist Agreements (TCC in
its acronym in Portuguese) with Rede, Itaú, Cielo, Banco do Brasil and Bradesco. Rede is an
acquirer controlled by Itaú, a large retail bank; Cielo is also an acquirer controlled by other two
large retails banks, Banco do Brasil and Bradesco. According to CADE’s Superintendence, the
vertical integration involving Brazil’s largest acquirers and largest retail banks made possible a
number of behaviors with the potential to harm competitors.
Under the settlement agreements, the companies committed to cease a
number of practices, including (i) the imposition of a “banking lock-in” to prevent customers
from migrating to rival acquirers; (ii) refusing to grant rival acquirers with access to data like
receivables schedules, impairing their ability to offer competing services; (iii) tie-in sales of retail
banking services with acquirers services; and (iv) imposing excessive termination fines in incentive
agreements entered into with clients. The total amount of monetary contributions paid by the
companies reached roughly BRL 50 million (roughly US$ 13.5 million). Furthermore, CADE’s
Tribunal responded to a formal consultation in October, recommending that the Superintendence
initiates an inquiry to look into contract provisions among acquirers and payment facilitators
that implied possible exchange of sensitive information.
Finally, in December, CADE’s Tribunal recommended the launch of a large
inquiry to investigate potential impacts of the vertical integration in the banking and payments
industry. The request was based on a report called “Innovation and Competition: new paths to
reduce bank spreads (financial intermediation costs and margins)”, prepared by the Senate’s
Committee for Economic Affairs (CEA) Working Group. CADE’s interventions in the market
of electronic payments confirm the increasing concern with markets characterized by vertical
integration; even if some vertically integrated players in this market do not control assets
that could be strictly characterized as essential facilities, CADE has been constantly showing
concerns with potential impacts of their conducts in reducing innovation and preventing entry.
Notwithstanding, CADE has struggled to develop a well-designed theory to support such concerns
and has resorted to consent decrees to put an end to these disputes.