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The Antitrust Source

Antitrust Magazine Online | June 2023

Interview with Alexandre Cordeiro Macedo, President, Administrative Council for Economic Defense (CADE)

Alexandre Cordeiro Macedo


  • Alexandre Cordeiro Macedo speaks about the evolution of competition law in Brazil, the political independence of the agency, the digital economy, the debate about the consumer welfare standard, and the importance of international cooperation.
Interview with Alexandre Cordeiro Macedo, President, Administrative Council for Economic Defense (CADE)
Jiande Wu via Getty Images

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Alexandre Cordeiro Macedo has been the President of Brazil’s Administrative Council for Economic Defense (CADE) since July 2021. He was the Superintendent General of CADE for the four years previously. He also previously served as a Commissioner at CADE. He holds a PhD in Law from the University of Minas Gerais. He is a professor at several federal universities in Brazil and abroad, including as a Visiting Scholar and International Fellow of the Global Antitrust Institute of the Antonin Scalia Law School. He was interviewed for the Antitrust Magazine Online by Krisztian Katona on March 29, 2023.

Antitrust Magazine Online: Alexandre, thank you so much for accepting our invitation for an interview. Perhaps we could start with a little bit of an historical overview from the last decade. In 2012, there was a very significant landmark in the development of competition law and enforcement in Brazil, which is the new law that came into effect. Could you please tell us about the key results during this last decade and during your term with CADE.

Alexandre Cordeiro: Thank you very much for having me here. I want to thank the ABA as well.

In the past ten years, CADE has changed a lot. The new Law transformed the whole structure of CADE. For me, the most important change was the premerger notification system. These were the main things, the structure of CADE and the notification system.

In the Brazilian competition system, there used to be three different institutions spread around the country. One ministry, the Ministry of Economics, which incorporated the Secretariat for Economic Monitoring; the Ministry of Justice, which used to include what we call today the Office of the Superintendent-General; and CADE’s Tribunal, an independent institution with a term of office for its Commissioners. Now, with the new law, everything was brought together.

The Secretariat for Economic Monitoring was not incorporated into CADE, but some of its functions were absorbed by CADE. They still have a little part of competition advocacy, but the main thing that they used to do, economic studies, is now a role of the Department of Economic Studies that we have inside CADE. Now it is much easier. We investigate and judge our cases when everybody is together.

If you ask me how the structure of CADE is now, I can say we have two completely independent institutions inside CADE. One is the Tribunal, which is formed by six Commissioners and one President, and the other one is the Superintendent-General. All of them have to be appointed by the Brazilian President and confirmed by the Senate. For the Commissioners and the President, the term is four years, and for the Superintendent-General, the term is two years. Tribunal members cannot be renewed, and the Superintendent-General can be renewed only once. This is a huge change because it gives CADE substantial power and independence.

The other main change that we can feel the results of right now is the premerger notification system. CADE used to take two to three and a half years to judge a case, to analyze a merger or acquisition, but when firms submitted a transaction, they had fifteen days to notify CADE, and CADE had two yeas to review it. Back before, if CADE decided to block the case, the parties used to go to the judiciary and get an injunction to maintain the merger until the judiciary decided on the case. This would take ten years, so CADE would always lose. We lost so many cases because of that.

We had a very tricky and interesting case, Nestle/Garoto. The deal was notified to CADE in 2002, and CADE blocked it in 2004. They went to court, and the case has been pending in court, for twenty-one years! This is unbelievable.

You can see how this change was important. Since the new Law, there was no single case in which the parties got an injunction to stay together because they cannot come together before CADE’s approval anymore. Before the Law, it was easy to get this injunction because they had already merged, and CADE took too long to analyze the case. But now, at CADE, our usual timeframe to review a transaction, if we are talking about our “fast-track” procedure, is fifteen days. A complex case takes around ninety days, and the average is twenty-eight days.

When they come to CADE and we say no, there is no one in the judiciary who looks at CADE and says, “Okay, you should get together in order to consummate your deal, and later we will see what happens.” The structure of incentives offered to firms when a case is being reviewed by CADE and when the case is at the hands of the judiciary completely changed the way that we see things.

Usually, the Brazilian judiciary does many things, and antitrust issues are, as you know, just one small, very specialized thing. There is a decision from the Brazilian Supreme Court saying that the judiciary cannot touch the competitive merits of a decision of the Antitrust Authority—and not just the of the Antitrust Authority but usually of all the Executive branch. The judiciary can only change the decision if, for example, it finds procedural problems, such as a violation in due process.

So, if we look to the past and at what happened with mergers and acquisitions, we can really see that this change in our notification system was, I think, the most important one.

In terms of numbers, when the Law passed, the idea was that CADE would handle about 500 to 600 cases per year. But would CADE be able to analyze those deals in short timeframes? We proved that CADE was able to do it. But not just that; we did not just do it with mergers and acquisitions, but we took care of cartels, unilateral conduct, and advocacy programs.

Antitrust Magazine Online: July of this year will mark the halfway point of your four-year term as CADE President. What have been your priorities and main agenda items at the helm of the agency and what should we expect in the second half of your term.

Alexandre Cordeiro: I have been in CADE for the past eight years. I was a Commissioner, Superintendent-General, and now President. When I think of the future, I have to look back and see what happened and where we could not reach. We did many things, and CADE has developed and improved each day.

We just talked about the new Law, but the new Competition Law came in 2012. We are adding good things that we think can improve our enforcement.

For example, we believe that private lawsuits can help CADE with public enforcement. Private enforcement is growing. Why is it growing? We just passed a new law in the Congress that creates what we call “double damages.” Thus, if the people who are not collaborating with CADE are convicted in a cartel case, they have to pay the damages, but double. Those who are collaborating will also pay the damages but just once. This is a change in the structure of incentives so that we preserve the Golden Rule, we preserve our settlement system, and also respond to the needs of society. This is one thing that I think is going to be on the top of my list, not just for me but for the antitrust community in general.

The other priority that is impossible to hide from and is growing a lot in CADE is unilateral conduct. When I took the Superintendent-General’s office in 2017, I said publicly that we are very good dealing with cartels, especially with cartel investigations, but we were missing something as to unilateral conduct. So we started to bring more and more cases and put more effort in those issues.

Last year we created a specialized unit for unilateral conduct. As I told you, when we changed the system from post-merger notification to pre-merger notification, the law gave us a number of days to analyze merger cases: it is 240 days and can be extended for an additional ninety days. The law gives us time for a thorough analysis to issue a decision to clear with or without restrictions and also block a merger.

What happened inside CADE is that the unit that takes care of unilateral conduct was also responsible for mergers and acquisitions. When they were analyzing unilateral conduct and a merger or acquisition came in, they would stop the unilateral conduct case and work on the merger or acquisition. This would often put off unilateral conduct cases.

Thus, what we did was create a specific unit for just unilateral conduct, so they do not have to stop working when they see a merger or acquisition in front of them, and many cases are being solved faster and with more quality because we, the public servants, are getting specialized in the analysis of rule-of-reason cases.

Another priority is advocacy. We can see the results very clearly when we are engaged in improving our advocacy role with other Brazilian public institutions, for example, sectoral regulators. We have around eleven agencies in Brazil—gas, energy, telecom, data protection, health insurance, health protection, mining—so it is a lot.

They are creating regulations every day, creating a way to control the market, and sometimes they can make some mistakes in terms of competition. We are there to help them to see it is important to protect the issues they want to protect but also consider competition. Every day we talk to them and say: “Okay, listen, we have another idea. The thing that you want to do, you can do in this way. So you are going to do whatever you want to but also protect competition. What do you think?”

They are using CADE to help them to create their regulations, and this is just very nice. For example, Brazil was setting up a lot of infrastructure projects, with concessions for companies. CADE was helping them not just to make a contract, but to detail the whole structure of how this project will run in Brazil. For example, what kind of rules need to be implemented in the process to enforce competition in the result of the project. For instance, if they accepted consortia, like one, two, or three competing getting together to participate in this bid, does CADE allow this or not? We can help them to launch those biddings with the mindset of, “Okay, let’s give some privilege for competition in this case because this project can receive more money and that will then ensure a better product and service at the end of the day.”

Another important issue is that this year the term of four out of our six Commissioners will end in October. Now, people are starting to think about the profile of the people who are interested in running for these positions. We are worried about it as we need good people in CADE because of the relevance of the agency.

We have also to think about 2024, when the term of Superintendent-General Barreto ends. It is an important issue because I think that is the most important position in CADE. It is the top investigator, the guy who looks at all cases and decides what to investigate.

Antitrust Magazine Online: In recent years, CADE has signed a number of MOUs with sectoral regulators focusing on collaboration and cooperation on common issues.

One area that has been particularly in the spotlight in recent years is financial markets and CADE’s relationship with Brazil’s Central Bank. In 2018, CADE and the Central Bank signed an MOU providing for closer communication and cooperation regarding competition issues in financial markets, in particular merger reviews in that sector. What has been CADE’s experience cooperating with sectoral regulators in general, and working together on merger review with the Central Bank in particular?

Alexandre Cordeiro: One of the most important settlements we made involved an agreement with the Central Bank. The discussion was: Who has the competence to analyze mergers and acquisitions in the financial market, the Brazilian Central Bank or CADE? This dispute went on for a long time.

Around three or four years ago, we made an agreement through an MOU saying that both authorities have to play a role, under the terms of which CADE has the jurisdiction to analyze mergers and acquisitions generally but if we have a system problem—for example, if a bank goes bankrupt and can cause damage to the whole country—the Central Bank has the jurisdiction over it. This is a big deal because it shows how we can work together.

Competition is important, but if we want to maximize the welfare of the entire country, there are other issues that we must look at before competition. CADE is mature enough to understand that sometimes competition is not the most important issue every time.

This is a very good example. Can you imagine it? A bank goes bankrupt, and the Central Bank says, “Okay, this is going to cause harm to the whole system, to the whole economy, to the whole country.” We cannot say: “Okay, there is a competition issue there and it is much more important.” So, what CADE does is say: “Okay, do your job.” That was the agreement that we reached, and it has been working out very well.

Antitrust Magazine Online: For the last few years, some Brazilian political developments have made headline news in the United States and other countries. What could you tell us about CADE’s role within the Brazilian government?

Also, relying on your experience at the agency since 2015, how do you see CADE’s role evolving in Brazil?

Alexandre Cordeiro: I have been in CADE for the past eight years, and I think I can say I am really open and transparent about this because I was appointed four times by three different Brazilian presidents and served four administrations. There was Dilma Rousseff, Michel Temer, Jair Bolsonaro, and now President Lula. I can say very clearly and transparently that CADE does not change. It does not change.

Do you know what helped us? Our issue is very technical, very specialized. For sure, we understand the necessities of the government and the Brazilian State. We are not on an isolated island; we are not like that. We adopt the big directives the government issues. That is important.

But the independence that we have is related to how we deal every day with our cases and our policy. If you look at CADE ten years ago and if you look at it now, you can see we have the same idea of everything—the same idea of the processes, how we analyze our cases, what is the goal of antitrust—and we have witnessed four different presidents. This gives to market stability and predictability. They look at CADE and say: “Okay, it does not matter who is going to be in the government. CADE will do its business—that is, protect competition.”

For sure, in the gray area, we can go to different sides, but this does not change the predictability and transparency that CADE has had. I am saying ten years, but we can say twenty years—ten years since the new Law passed. CADE has been perceived like it is right now for twenty to twenty-­five years. I think this conveys a very important message.

One thing that is good to highlight is that every time we have a radical political change, we think about how the agencies and independent institutions will act. What I can say about Brazil is that they will act completely independently. The government knows it and does not try to change it because the system was built to do that. If they want to change it, they must change the people inside these bodies. But there is a term of office— they must wait until people finish their terms to replace the people. Usually, those who go into agencies have independent, technical minds to judge a case how they are supposed to.

Antitrust Magazine Online: Cartel enforcement, has historically been the key focus of CADE’s activity. In recent years, CADE signed numerous leniency agreements as a result of the so-called “Car Wash/Lava Jato” investigation; but also 2021 saw a very significant hike in cartel fines. Based on this and other recent investigations how would you evaluate CADE’s cartel enforcement program?

Alexandre Cordeiro: It is still under development. Sure we had our “Car Wash” case, the huge Petrobras case. I think today we still have about twenty-eight cases related to the Operation Car Wash, or Operação Lava Jato in Portuguese, within CADE, a lot of settlements, and the cases have started to be adjudicated by the Tribunal. Also, we are still signing leniency and cease and desist agreements. You just mentioned the government is trying to reach a considerable number of settlements; when a cease and desist agreement is signed, the signatories have to pay an amount of money to be dismissed from the case.

I think in 2017 we negotiated sixteen agreements that resulted in fines of approximately $1 billion reals, meaning over $200 million dollars. In 2021, I believe it was nineteen agreements, leading to about $275 million dollars in fines.

This is a very important issue that shows our agreement means are doing good and still growing. But we must separate Car Wash cases from others. Doing this, we see that in the past ten years, we had an average per year of ten to twelve leniency agreements and about thirty-five cease and desist agreements signed. If we include the Car Wash cases, the number increases; but if we disregard them and look back to ten years ago, it would be almost the same. In fact, during one year of the pandemic, we did not sign any agreement as it was hard to do so. But otherwise, it was similar. It is growing little by little, like ten percent—one case up, two cases up. We are still giving a lot of attention to cartel enforcement and investigations.

Antitrust Magazine Online: Digital antitrust issues are the topic du jour in the international antitrust debate. A key part of the debate has been whether the existing ex-post antitrust enforcement tools are sufficient to address potential competition issues in digital markets, or whether additional tools, including ex-ante regulation, is necessary. You have been the voice of caution about ex-ante regulation in this debate, strongly supporting the consumer welfare standard and noting that the existing antitrust framework is sufficient to address competition issues in this space.

I understand that a European Digital Market Act (DMA)-type regulatory proposal was also introduced in the Brazilian Congress just a few months ago. What are your views on the Brazilian debate about these issues?

Alexandre Cordeiro: The first thing I want to say is that CADE does not regulate any market. We are not a regulatory agency. We are enforcers. And I still believe in the enforcement of antitrust.

To regulate ex ante is to create presumptions, and there are costs and benefits to that. If you want to create presumptions, especially in digital markets, you must be sure of what you are doing because it can cause considerable harm to innovation. Imagine twenty years ago if you decided to regulate these practices and ended up forbidding many of them. Do you think that we would be in the stage of technological advance as we have right now? That is the question. What is the cost of that?

I understand that maybe market power, the economic power, especially of Big Techs, is a concern of every agency, but I still believe in antitrust enforcement. I do not know if ex ante regulation is the right solution. but as an antitrust agency, we could first think of a case-by-case analysis with interim measures. That could be a good idea because it is not a general regulation, but it is a specific determination for that case that you can revoke immediately if you think it is not a good thing. I consider we have been doing this successfully at CADE.

I am not against regulation. It is relevant. What I am saying is, let’s be careful about it.

Sometimes strict regulations detailing every aspect of every case may create several economic problems, such as barriers to entry, transaction costs, and legal disputes since these matters are always uncertain.

The question is, should the regulation be very specific or broad and general, leaving those issues to the handling of the antitrust agency?

In some countries the antitrust agencies will also have the role to regulate the digital market. In other countries, is another institution that regulates the digital market.

Besides, the digital market is no longer regarded as a sector but a tool. Basically, every market is going to be digital. Every market will become digital.

So I think what happened is that people are more concerned about digital markets because they want to fight big companies. But there are many small companies already prepared to compete, full of technology—in agriculture, transportation, whatever sector it is. Nobody lives without technology.

My point is that it is important to think about how to control those things. We must decide which model to apply. If it is ex-ante regulation, what kind of regulation is that? If we choose a very specific narrow definition of the digital market, what does that definition really mean? Or, if we go for a more general regulation, will we leave the specific regulation to the agency that has jurisdiction over it to analyze case by case? This should be the main discussion for us to hold right now.

Right now, Brazil is considering how to regulate that. The discussion is growing, but we are still at the beginning, and we have not decided which model we want to follow. Also, we have not decided yet which body will have competence on that.

Antitrust Magazine Online: Continuing on the digital antitrust track but turning to merger enforcement, a number of recent mergers reviewed by CADE addressed issues in digital or connected markets, including StoneCo/LinxItau/TOTVSItau/XP, and Microsoft/Activision. What can you tell us about CADE’s experience reviewing mergers in digital markets? Also following up on some of the points you mentioned regarding smaller companies, what can you tell us about the competitive dynamics in the Brazilian digital sector, including the country’s startup ecosystem?

Alexandre Cordeiro: As you mentioned, we have reviewed a lot of mergers and acquisitions in many sectors that are relevant to many digital markets—for example, Itaú/Totvs and Microsoft/Activision.

We still use our old tools but we are considering if there is something we can implement as markets are changing. For example, the definition of a “relevant market” is not an end in itself for the competition analysis. We don’t want to define the relevant market just because we need to but because it is a tool for assessment.

That is especially true in digital markets since we need to consider more than one side of the market, sometimes multiple sides.

We examine various scenarios—sometimes five, six, or seven definitions in the same case—and analyze how competition will be in these scenarios if the deal is approved with remedies. The decision is, “Let’s get the most conservative scenario, and let’s approve or block the case based on it.” We have already analyzed many of those scenarios, and if somebody argues, “But this is not the reality,” we will look back and see what we did.

What we do with the digital economy most of the time is to understand that it is very dynamic. Sometimes we do not mind only the number of transactions but also the value of the deal. Sometimes the value of the deal is not the amount of money the companies pay, but the reason behind the merger. That is the thing. Does a company want to buy another because there is a synergy and they just want to get a piece of market share? Do they want to buy it because there is a new relevant technology? Do they want to buy it because of the amount of data the other company has and it is relevant for them?

In digital cases, we look at every aspect to find the value of the deal. Why is the deal worthy for the buying company? Usually when we ask this question, we can find the really important issues under discussion for those mergers and acquisitions, which also leads to a better decision on the remedy that will work in our market.

With the merger the share may increase considerably; but the problem is not the share. It can go to rivals, maybe there are two or three companies that compete for this market share. But the thing that they are acquiring for their company, the amount of data, will in one year or two change the whole market because of the dynamic that the other companies will not have.

That is just a little general flavor of how we treat this.

Antitrust Magazine Online: CADE has had a particularly active international agenda, including participation in multilateral and regional organizations and bilateral cooperation with counterpart agencies. How do you see CADE’s role in the international antitrust dialogue? Also, based on recent developments and trends, do you see more convergence or divergence in global antitrust enforcement and policy?

Alexandre Cordeiro: This is a very important issue for CADE. Our international cooperation brought us here, where we are. We learn about antitrust with the United States, Europe, Japan, and Australia. We are always looking for best practices from countries that are more experienced, but also from younger agencies that propose new ideas and new things. Brazil is completely open to discussion, to exchange of information and experience with other jurisdictions. And this question of whether there is more convergence or divergence comes up in every event we go to.

I think that today there is more divergence especially regarding what we have been facing in terms of antitrust goals. Every time we talk about international cooperation, this issue comes, and it comes very strongly, because the views of the United States and Europe are very relevant internationally speaking. If they are going in one direction, everybody looks at them thinking “Okay, it is important to see what they are doing.”

So the United States and Europe have a great responsibility in this regard. Brazil and other agencies are always looking to them and trying to get best practices. They have experience for a longer time.

Also, we understand that our market is different, our country is different, and we have to handle these differences as well. Now in Brazil we can see things happen as we look at the world and see that a lot of issues that were not in our discussions ten years ago are now a hot topic for debate.

And what do I think about this? I think that we have to be very careful not to change things suddenly. If you want change, let’s discuss it extensively beforehand with everybody. Let’s discuss it with other agencies. Let’s discuss it with the OECD. Let’s discuss it at ICN. Let’s come to the ABA and discuss it. Let’s talk to the private sector. Let’s debate it with lawyers and economists.

Do you know why? Because four years from now we can change everything again if people currently holding those positions are not in such positions anymore. With the market we cannot play. It is people’s lives. We are talking about the economy. We are talking about inflation. We are talking about the daily life of people.

I think the most important is for us to be cautious because damages can be high. If a company asks a lawyer right now, “What should I do in this situation?” the questions to be answered should be “does your lawyer know what to say to the client? Does your lawyer really understand your agency right now?”

If he is prepared to say, “The agency will follow this direction and that is what is going to happen”, your lawyer and your economist can give the client predictability.

That is, if the antitrust community can answer these questions, the antitrust policy is predictable, so we are having more convergence. If responses to these questions cannot be assured, we are having more divergence.

Antitrust Magazine Online: These are interesting times, with antitrust being discussed more than perhaps ever before. Other jurisdictions are closely watching Brazilian antitrust enforcement and policy, and CADE has been a particularly strong voice among Latin American enforcers. Any final thoughts on suggestions for competition agencies around the world, but especially in Latin America? Do you have any particular message, for policymakers in emerging economies?

Alexandre Cordeiro: Yes, I do. I think that we should go back to speaking the same language again, the language of antitrust. That is what I think we should do.

The world is full of diversity. Countries are different. Even Latin America is completely different from Asia, which is completely different from Europe. We have other important issues.

For example, in the OECD, we are discussing poverty and competition. Imagine if we decide to put poverty as an issue for approving or blocking any merger or acquisition. This is not the language that the United States, Europe, and developing countries speak.

If we do not speak the same language, antitrust abroad will be a mess. That is what I think.