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Arbitration
Overview
Including: Institutions; Seminars and conferences; Research; International treaties and conventions.
The Senate recently established a special committee to discuss amendments to the Arbitration Act. While the committee's president has pledged not to hinder the progress of arbitration in Brazil, he has expressed the need to adjust the legal text to reflect Brazil's dynamic economic environment and the modifications brought by changes to both the law and the judiciary in recent years.
Another good year for arbitration
The more the Brazilian courts get acquainted with arbitration, the more effective this method becomes. Another set of important court decisions from 2012 illustrates how knowledgeable the judiciary has become regarding the validity of agreements to arbitrate, the scope of arbitration, the enforcement of foreign awards and the judiciary's role before, during and after arbitral proceedings.
The concession agreements of three recently privatised airports contain clauses submitting any disputes to International Chamber of Commerce arbitration, sending a clear pro-arbitration message to all interested foreign investors. However, the draft agreements for two relevant upcoming projects indicate that the government may have shifted its position on arbitration in major infrastructure works.
The Sao Paulo appellate court recently held that insurance companies are precluded from commencing arbitral proceedings abroad until Brazilian courts have decided the merits of a challenge brought by the insureds against the validity of the underlying arbitration clause in the agreement. Proceedings which had been commenced in London were suspended as a result.
The quality of arbitration jurisprudence is likely to improve with the creation of a specialised chamber of the Sao Paulo Appellate Court which has exclusive jurisdiction over commercial law disputes, including lawsuits arising from arbitration. Despite the recent establishment of this chamber, a review of its first arbitration-related decisions reveals a pro-arbitration stance among its members.
Violation of public order has been a recurring argument in challenging the confirmation of arbitral awards rendered outside Brazil, particularly those arising from proceedings applying foreign law. However, as confirmed by its decision in a recent case, the Superior Court of Justice continues to uphold a restrictive view of such an important, yet fluid concept of law.
Asset Finance
According to recent changes to the Civil Code, the perfection of a security interest over equipment (through equipment pledge agreements) must meet certain conditions which differ from those for security interests over other assets.
Aviation
Despite Brazil's position as a major emerging market, its transportation infrastructure is somewhat lacking. Ground-based alternatives are limited, which exerts tremendous pressure on the air transport system. As the government does not have the necessary resources to modernise its facilities, it has turned to privatisation to speed up renovation of the country's most important airports.
Despite committing to the Cape Town Convention over a year ago, Brazil's legal system requires publication of a further executive order before the convention can be fully implemented. Notwithstanding this, the government recently announced proposed rules and procedures concerning how international interests over aircraft registered in Brazil may eventually be made with the International Registry, among other things.
Mortgages given over aircraft registered in Brazil have been used for many years. However, there are several major differences between Brazilian aircraft mortgages and those given under New York or English law. An understanding of these differences assists lending institutions in deciding how to evaluate their security packages, when to require aircraft mortgages and what they can expect from such mortgages.
Since the early 1990s repossession of leased aircraft in Brazil has been a relatively efficient process, with most lessors able to secure possession of leased aircraft in a matter of days. However, over the past two years, several changes have occurred in the procedures that have resulted in longer periods for exporting and deregistering aircraft repossessed from Brazilian lessees.
In recent months Brazil has been inching closer to ratification of the Cape Town Convention on International Interests in Mobile Equipment and the attendant Protocol to the Convention on Matters Specific to Aircraft Equipment. The Senate recently approved both the convention and the supplementary protocol, completing the last legislative step in the approval process. The president is expected to ratify the convention shortly.
The National Civil Aviation Agency (ANAC) has recently made two changes in its practices that are causing uncertainty and difficulty in some aircraft lease deliveries and redeliveries. As in the past, changes in ANAC practices are subject to review and may be reversed, especially if airlines and other operators raise any problems relating to them. Occasionally, ANAC alters its policies without realising the potential consequences.
Banking
Overview
Including: Defining Trends and Challenges; Regulatory Agency and Legal Framework; Licensing; Universal Banks; International Banks; Ownership Restrictions; Equity Interests of Existing Investors; Additional Approvals for Transfers of Control to Non-Brazilian Buyers; Trends in Limitations on Non-Brazilian Shareholdings; Prudential Regulations; Capital Adequacy Ratios; Capital Requirements.
Fiduciary cession of rights as security
Pursuant to Article 66-B(3) of Law 4.728/65, security can take the form of security bonds, a chattel mortgage of unfungible and fungible movables or a fiduciary cession of rights over movables. However, the legal system also accepts the establishment of atypical fiduciary legal business activities as security, such as the fiduciary cession of rights.
Commercial Property
Overview
Including: Legal system; Regulations; Main rights; Guarantees; Transactions; Developments.
Under the so-called 'segregated estate' regime, a real estate developer can segregate its regular assets and liabilities from those directly related to a specific real estate development. However, the process of registering such estates with the Real Estate Registry Office is somewhat cumbersome. A new special tax regime aims to provide incentives for developers to segregate their real estate assets.
Brazilian companies controlled by foreign individuals (or by legal entities headquartered abroad) and foreign companies are subject to restrictions on the acquisition of rural properties. In the latest twist in the many years of debate on the application of the law, the Sao Paulo Superior Court recently published an opinion that changed the understanding of such restrictions in the state.
A new law has recently been introduced that will explicitly regulate built-to-suit lease agreements for the first time. It is hoped that these changes to the legal framework will bring stability to such agreements, which are increasingly being applied in the real estate market and are often associated with structured finance capital market transactions (eg, issuing backed securities with the related lease credits).
Company & Commercial
In addition to the legal remedies set forth under Brazilian law, piercing the corporate veil is an alternative to the general rule of limited liability. Although the courts have widely applied this doctrine, it has not always been the proper and most effective measure for resolving disputes. A new bill therefore aims to prevent misuse of the doctrine and safeguard certain principles recognised by the Constitution.
In a limited liability company, the liability of each partner is limited to the quota for which he or she has subscribed, but all partners are jointly and severally liable until the social capital has been fully paid up. Once the capital has been paid up, liability is limited to the amount of each partner's ownership interest (ie, the amount of their respective quotas). However, there are exceptions to this general rule.
Competition
Overview
Including: Mergers; Administrative Processes; Preliminary Investigations; Flow of Cases; Comment.
Music associations fined for price fixing
The Administrative Council for Economic Defence (CADE) recently fined the Brazilian Public Performance Collecting Rights Society (and its six associations) approximately $19 million for engaging in price fixing. CADE stated that the society and the associations had acted in a concerted manner to fix the rates that they collected in relation to royalties for public performances.
Following implementation of the new merger control regime, the Administrative Council for Economic Defence (CADE) has shifted its focus to establishing new settlement rules for its leniency programme, with the aim of encouraging more companies to blow the whistle on cartel cases. However, uncertainties in relation to fines and the new obligation to admit to participation in a cartel may undermine CADE's good intentions.
There is a general consensus that one of the main purposes of the new antitrust legislation is to reduce the submission of irrelevant M&A transactions and to allow the Administrative Council for Economic Defence to focus on relevant mergers and conduct cases. However, as far as investment funds are concerned, it appears that the legislation has not yet achieved its goal.
The new Brazilian antitrust legislation recently entered into force. The legislation includes changes to the pre-merger system, as well as the introduction of notification thresholds, statutory time periods and notification forms. The new regime aims to bring Brazil into line with US and European antitrust standards, and will present a significant challenge for the authorities and professionals that must adapt to the new system.
The Administrative Council for Economic Defence (CADE) recently granted an injunction suspending the rights of a steelmaker to buy shares in its rival. This ruling consolidates CADE's view that the acquisition of a minority stake in a rival company may generate competition concerns, even if the acquiring company has no relevant influence on the target deriving from its position as a minority shareholder.
What to expect from CADE in 2012
The Administrative Council for Economic Defence (CADE) recently carried out an internal survey showing that a total of 892 merger cases were heard in 2011. According to CADE President Olavo Chinaglia, this impressive figure is a result of both the increasing number of notified cases, thanks to growth in the Brazilian economy, and the enhanced ability of CADE personnel to deal with the increasing workloads.
Corporate Finance/M&A
With the warming of the Brazilian economy and an increase in the overall income of the population, the education sector in Brazil is undergoing a phase of burgeoning development. The sector, which has previously been characterised by fragmentation, is experiencing a trend for consolidation. As such, the number of transactions involving the acquisition of private institutions has boomed.
Corporate Immigration
The National Immigration Council recently published a resolution that reduces the steps for acquiring a 90-day technical visa. According to the resolution, it will become possible for Brazilian consulates abroad to issue VITEM V (work) visas to foreign nationals who wish to work in Brazil, under certain circumstances. The measures will benefit Brazilian companies that need foreign workers for a short period of time.
While many companies wish to participate in the major upcoming sporting events that will be held in Brazil over the next few months and years, only a few have studied the immigration legislation pertaining this matter. A new resolution has therefore been introduced to govern this issue. The most time-consuming requirements for work visa applications have been waived by the resolution.
The Ministry of Foreign Affairs recently posted a statement announcing that the governments of Brazil and Mexico have decided to reintroduce the Agreement on the Exemption for Short-Term Visas for Common Passports. The agreement allows Brazilian and Mexican nationals to pass from one country into the territory of the other without a visa for periods of up to 90 days from the date of entry.
Corporate Tax
Overview
Including: Introduction; Federal taxes; State taxes; Municipal taxes; Corporate income tax; Withholding income tax; Revenue tax; Excise tax; State sales tax; Import duties; Finance tax; Tax reform.
One of the most important taxes in Brazil is the state sales tax or ICMS, a type of value added tax charged by all companies when they import, produce or sell any product or telecommunications and transportation service. Some Brazilian states have recently been authorised to offer an amnesty of interest and penalties in exchange for payment of overdue tax.
Companies with high profit margins and previous annual revenue of less than R48 million often realise significant tax savings by electing to pay corporate tax under the deemed profit method. Under this method, instead of paying tax on the company's actual profits, a universal predetermined profit margin is used. Such companies may wish to consider spinning off entities in order to unlock tax-saving opportunities.
New method for determining transfer pricing
Several modifications were recently made to the transfer pricing rules, one of which alters the way in which the Brazilian equivalent to the comparable independent price method is calculated. The new rule uses a weighted arithmetic average of identical or similar items sold or purchased by the taxpayer or by third parties under similar conditions.
Maximising the value of indirect tax credits
When manufacturers acquire inputs (eg, raw materials or components), indirect tax is incurred. The indirect tax credits can later be used to offset taxes levied on the sale of the manufactured goods. There are a number of procedures and solutions for companies with surplus tax credits with which companies should become familiar in order to maximise the tax benefits available to them.
Recent developments in Brazil have prompted the government to enact several tax measures designed to promote foreign investment in technology, infrastructure and manufacturing. Multinational companies with sales, operations or investments in Brazil may benefit from the new regulations and should conduct a thorough analysis to determine how they can take full advantage of these new opportunities.
The Brazilian Internal Revenue Service recently issued Ordinance 1.154 on the principles of thin capitalisation. The principles had been previously established by Law 12.249; the new ordinance consolidates the applicable rules and procedures. These rules apply to money borrowed by a Brazilian company from a foreign controlling party or a party under common foreign control (ie, a related party).
E-commerce
Overview
Including: The Internet and Telecommunications; Electronic Transactions; Bills of Law; Consumer Protection; Government Initiatives; Data Protection; Taxation
In recent years the judiciary has implemented electronic communication solutions for procedural acts in Brazil. Following uncertainty regarding the forwarding of electronic petitions, the Superior Labour Court has recently published Normative Instruction 28, which permits the use of email through a centralized website for certain administrative procedures regarding the labour courts.
Lawyers Welcome Electronic Procedural System
In the wake of the digitization of legal procedures, the Supreme Court president has instituted an electronic system that permits registered lawyers to use email in the course of the court's procedural acts. The system involves the digital printing and registration of documents by the Procedural Registration and Information Coordination Department.
Spam: The Backlash Begins
A number of initiatives are set to bring the issue of spamming to the attention of Congress, particularly given that the E-commerce and Development Report 2003, published in November last year by the United Nations Conference on Trade and Development, ranked Brazil as the world’s fourth biggest recipient of spam.
Electronic Transactions and the Law
The unique nature of electronic transactions highlights the need for specific regulations to resolve such issues. Fortunately, Brazilian law does recognize electronic documents and digital signatures through ICP-Brasil. Nevertheless, specific legislation for electronic transactions remains imperative.
A new decree sets out the duties of the country's Internet Management Committee. These include the establishment of strategic policies relating to the use and development of the Internet in Brazil, and organizational issues such as domain name registration, the allocation of internet protocol addresses and how best to manage the '.br' top-level domain.
The second panel of judges of the First District of the Highest Court of Appeals has decided that the services provided by Brazilian internet access providers are not liable to value-added tax (VAT). The issue of VAT aside, a debate has now commenced as to whether such activities should be subject to municipal service tax.
Employment & Labour
New law governs domestic employees
Congress has passed a constitutional amendment extending to persons who work in homes ('domestic employees') a number of rights protected by the Federal Constitution, including compliance with minimum wage requirements and rights to maternity and paternity leave. While it is too early to predict the impact of these new laws on domestic workers, labour costs are certain to rise.
The rise in the use of IT systems in Brazil has led to repercussions for employers, in particular in relation to monitoring those who use the Internet for leisure activities while at work (eg, sending private emails or visiting online social networking sites). A number of tools exist to protect employers from the risks that arise as a result of employee use of technology in the workplace.
Energy & Natural Resources
The Brazilian Constitution provides oil-producing states and municipalities with the right to receive a larger share of royalties as indemnification for allowing potentially hazardous activities to be carried out in their jurisdiction. However, following the 2007 discovery of huge oil and gas reservoirs in the pre-salt layer offshore Brazil, the existing system for the distribution of royalties has been called into question.
Following the discovery of the so-called 'pre-salt area' offshore southern Brazil, the government enacted a new law that established the production sharing agreement as the contract that would govern exploration and production activities in the area. However, licences to blocks outside this area are still granted through a concession agreement. Whether this mixed regime will be positive for the sector remains to be seen.
The National Agency of Petroleum, Natural Gas and Biofuels (ANP) recently published a draft of the preliminary tender package for the 11th oil and gas bidding round. The package lists the procedures that companies willing to participate in this bidding round must follow. Through a public consultation procedure, ANP hopes to gather additional information on the bidding round's rules and on the draft concession agreement.
Environment
The Constitution legitimises the protection of environmental assets. Such protection is considered a fundamental right, essential to a healthy lifestyle. However, the Constitution also considers the right to economic development equally fundamental. Therefore, in spite of the known environmental impact of mining activity, the Constitution expressly allows it, as it is considered an activity of national economic interest.
Brazil has been facing criticism from international institutions and non-profit organisations regarding the environmental and social impacts of the implementation of hydropower projects in the Amazon. Brazil has a large renewable energy sector, but 70% of the non-explored hydropower potential is located in environmentally sensitive areas, mainly in the Amazon and the Brazilian savannah.
Steel manufacturers carry a heavy social and environmental burden with regards to the charcoal that is used in the steel production chain. A significant proportion of the charcoal consumed as fuel by steel mills is produced under dubious practices. Steel mills have taken significant steps towards the adoption of sustainable practices, especially focusing on higher standards for the selection of charcoal manufacturers.
Rio de Janeiro has achieved a new milestone in its mission to control greenhouse gas (GHG) emissions in the state. A new regulation has been passed by the state environmental agency, in alignment with its climate change policy set forth in 2010. The state has imposed new obligations on businesses responsible for high GHG emissions, which will help to achieve its aim of promoting the transition to a low-carbon economy.
In recent years the discovery of new contaminated sites has become routine for Brazil's environmental agencies. The authorities have therefore established specific regulations that aim to address the clean-up and public disclosure of such sites, including an obligation to provide notice of contamination to the Land Registry Office. This is in line with both national and international environmental law.
A recently proposed complementary law represents hope for the end of jurisdiction disputes among federal, state and local environmental agencies in Brazil, increasing the efficiency of environmental permitting procedures and allowing the country to develop its infrastructure in a swift and environmentally conscious manner. Proposition of the law has therefore been classified as a matter of urgency.
Franchising
Overview
Including: Domestic Franchising System; Franchising Agreement; Taxation.
Franchisors Hit By Services Tax
While in the past the Brazilian courts have ruled that franchising activities are not subject to services tax (known as ISS), recent amendments to the ISS regulations have expressly included franchising as a taxable activity. The changes will hit Brazilian master franchisors particularly hard, as they must now pay ISS both as importers of services and as providers of services.
New Civil Code: A Headache for Franchisors?
Although the new Civil Code does not mention franchise agreements expressly, certain provisions may substantially affect franchise businesses. One provision offers first-time franchisees a way out of the franchise contract without triggering penalties for early termination. However, the courts must apply this provision carefully.
Information Technology
Data Protection and E-commerce: A Fine Line?
The protection of privacy (and databases) is guaranteed by the Constitution. However, no specific legislation in this regard exists, other than consumer relations rules, a handful of legal provisions that can apply on a case-by-case basis and general privacy principles. Nonetheless, the high number of legislative bills on the matter is proof of Congress's preoccupation with this issue.
Shrink-Wrap Software Licences
In Brazil, the validity of shrink-wrap agreements has not yet been questioned before the courts and there is no legal disposition ruling this subject. However, provided that the licences fulfil certain legal requirements, they should be fully enforceable in Brazil.
IT Sector Receives Tax Incentives
According to Law 10,176 companies involved in the development and manufacture of IT and computer goods will enjoy certain benefits, including a 95% reduction of tax, provided that they invest in research and development.
Overview (February 2001)
Including: Software; Database Protection; IT Crime; Tax Incentives
Insurance & Reinsurance
The extension of strict liability to a broad range of activities has required new methods for financing potential indemnities and has led to a need for insurance to protect against the losses that can result from damage claims. However, despite the strong growth of the civil liability insurance market, and of directors' and officers' insurance in particular, few court cases have involved disputes related to this type of coverage.
Intellectual Property
Is Retaliation a Solution?
A new bill introduced by House of Representatives Member Paulo Teixeira seeks to regulate the process of cross-retaliations at the World Trade Organization. The bill will introduce such measures as the "suspension, dilution or extinction of IP rights protection by the president of Brazil".
Court Decisions on Patent Term Extensions
The First Specialized Chamber of the Federal Court of Appeals recently decided against the extension of patent terms granted under the former Patent Law. The court ruled that the extension infringed acquired rights of third parties to exploit the invention once the patent term had expired.
Efforts Being Made to Reduce Software Piracy
Recent reports show that Brazil is taking effective steps towards reducing software piracy. The Brazilian Association of Software Companies, the Business Software Alliance and the Entertainment Software Association have disclosed figures that confirm this statement.
As a further and most recent example of the Brazilian Patent and Trademark Office's effort to modernize and accelerate trademark procedures, it is now possible to obtain electronic copies of oppositions, administrative nullity petitions and cancellation proceedings.
The Brazilian Patent and Trademark Office recently obtained approval from the World Intellectual Property Organization to become an international search authority and an international preliminary examination authority. Brazil is the only country in Latin America to receive this status.
The Hidden Threat of Trade Names
There are approximately 2 million trademarks registered or applied for at the Brazilian Patent and Trademark Office (PTO) and nearly 5 million companies registered at commercial registries throughout Brazil. While the PTO has effective and economical procedures to challenge trademark infringement and will reject obvious infringing cases ex parte, there is no such procedure for trade names.
Litigation
Following disagreement among the lower courts, a majority of the Superior Court of Justice recently confirmed that claims arising from advances against exchange contracts are not subject to court-mandated debt restructuring when the debtor has filed successfully for judicial recovery. This ruling should not be subject to further appeal, as the judge provided a clear and unquestionable basis for the decision.
Is change in store for judiciary in 2013?
In recent decades the complications of litigating in Brazil have led commentators to suggest that "a good deal is worth more than a good fight". However, the new Code of Civil Procedure, although still in draft form, appears to have helped the judiciary to implement significant improvements. As a result, it is expected to experience fewer problems in dealing with anticipated increases in disputes and conflicts in future.
The preservation of financially challenged companies is arguably the greatest innovation introduced by the Judicial Recovery Law. A direct action of unconstitutionality was recently filed against Articles 60 and 141 of the law, arguing that such provisions would release the acquirers of assets of companies in judicial recovery from their labour obligations. The Supreme Court ruled that the law was in fact constitutional.
There has been much discussion regarding the right of the Public Prosecution Office to take action in defence of collective and common individual rights. A recent case examined whether the office could sue in relation to discussions of alleged abuse in readjusting tuition fees, which notably affect consumer rights. The court considered that the office could sue when the protection of individual rights was related to inalienable rights.
The National Department of Transport and Infrastructure, supported by a decision of the Federal Court of Accounts, has been unilaterally amending public contracts in order to apply discounts on previously agreed payments to contracted parties, based on the allegation that they were overpaid. This will directly affect contractors hired by the department for the execution of work or the maintenance of highways.
In accordance with Law 7.102/83, every bank branch is required to obtain approval of its security plan by the Federal Police Department. The plan must include minimum security requirements for the bank. The First Region Federal Court recently ruled that the enforcement of penalties by the police must be in keeping with those provided for by law, to avoid violating the principle of strict legality.
Offshore Services
Previously, the Brazilian government made no attempt to restrict or otherwise limit offshore investments (aside from de facto measures to prevent remittances abroad). However, stringent regulations which were recently introduced now provide that all foreign securities and offshore bank accounts held by Brazilian residents must be fully disclosed to the authorities.
Product Liability
A special committee of the Senate is set to jumpstart what could be the largest reform of consumer protection laws since the Consumer Defence Code was enacted in 1992. One of the bills added to the committee's docket should be on the radar of product liability practitioners, as it would introduce punitive civil penalties in consumer-related lawsuits. Industry members have been encouraged to call for its rejection by Congress.
Since the Civil Code came into effect in 2002, plaintiffs in product liability litigation have frequently argued that manufacturers are strictly liable for damages to the consumer caused by risky products, regardless of whether defects exist. Although usually grounded on two provisions of the code, the argument misinterprets and misapplies both provisions. Instead, the Consumer Defence Code should apply.
Considering product defects and causation
The Consumer Defence Code governs the issue of product liability in Brazil. The general rule is that damage caused by defective products should be rectified by the supplier, irrespective of fault. In product liability cases, the main issues under dispute are whether the product is defective and whether causation exists between use of the product and the damage claimed.
Securitisation & Structured Finance
The burgeoning securitisation market
A strong demand for residential, commercial and industrial real estate ventures has led the civil construction sector to seek alternative funding options outside of the banking system. In turn, this has led to the securitisation of assets or mortgage-backed securities - a national innovation in the financial market created by economic agents to finance the real estate market without bank intermediation or limits.
Shipping & Transport
The notary public and the court official of the Maritime Contracts Registry Office recently filed suit against the federal government requesting acknowledgement of the fact that the Admiralty Court does not have the jurisdiction to register maritime contracts. In turn, the court alleged that the port authority had been failing to fulfil its role as notary with regards registration of vessels.
In 2009 the National Federation of Port Workers filed a notice with the Federal Accounting Court alleging irregularities in the activities of private terminals located in organised port areas. According to the federation, by handling a small proportion of their own cargo in comparison with third-party cargo, some terminals were acting more as public terminals. The court's technical unit recently issued its opinion on the matter.
Following concerns over the visual impact of the view of docked ships from the southern part of the city, the Rio de Janeiro City Attorney's Office recently requested that the port captaincy provide alternative anchoring locations for ships at the port. The changes aim to reduce the large number of ships at anchorage by increasing access to the port at night and during bad weather, among other things.
Congress is in the process of analysing a provisional presidential decree that has created a new regulatory framework for the Brazilian port system, setting forth provisions on the direct and indirect exploitation by the government of ports and ports facilities and revoking the Ports Law. The commission has scheduled public hearings so that representations from those that operate or make use of the port system can be heard.
The National Agency for Water Transportation recently issued a statement announcing that the new economic and financial qualification requirements for granting authorisation for a company to operate as a Brazilian shipping company recently entered into force. Under the rule, applicants must submit independently audited balance sheets. However, those deemed micro-companies or small businesses are exempt.
New commission aims to reduce pilotage costs
The National Commission on Pilotage Matters was recently established by the federal government. The commission is expected to rule on the methodology for pilotage service price control and the maximum price for pilotage services in each pilotage zone, as well as measures for improving the control of services in each zone and the boundaries of each zone.
Telecommunications
Overview
Including: Provision of services; Ownership of service providers; Fixed-switched telephony service; Interconnection; Personal mobile service; Mobile virtual network operator; Radio frequency use; Internet service providers; National broadband plan; Infrastructure sharing; Voice over Internet Protocol; Certification.
Brazil's telecommunications regulator (ANATEL) recently approved the bid notice for the 2.5 gigahertz radio frequency band, to be used for the provision of 4G technology, and the 450 megahertz radio frequency band, designed to improve coverage in Brazil's rural areas. The requirements to use national technology set out in the initial draft bid notice have been maintained.
The Ministry of Communications recently published Call for Proposals 001/2012-MC, relating to the Digital City Project. The project is designed to achieve greater efficiency in the management of cities through the deployment of network connection infrastructure between municipal authorities and local public equipment, thereby improving community access to government services.
Brazil's telecommunications regulator (ANATEL) recently submitted for public consultation its proposed Regulation of the Fixed Switched Telephone Service Universalisation Obligations. The proposed regulation will govern the General Universalisation Goals Plan, which establishes the universal access and service goals for fixed switched telephone service incumbents for the period 2011 to 2015.
Brazil's telecommunications regulator, ANATEL, recently published a statement in the Official Gazette stating that an additional digit will be implemented in the numbering of personal mobile services. The current numbering system has eight digits. The ninth digit will initially be added only to mobile phones from Area 11, which corresponds to the City of Sao Paulo and 63 other municipalities of the metropolitan region.
Brazil's telecommunications regulator (ANATEL) recently submitted to public consultation the draft bid notice for the 450 megahertz (MHz) and 2.5 gigahertz (GHz) radio frequency bands. The 450 MHz band auction aims to provide the lowest price to end users and the 2.5 GHz band bidding process aims to promote access to high-speed mobile broadband, using fourth-generation mobile technology.
ANATEL, the Brazilian telecommunications regulator, recently submitted to public consultation an application it had received for the annulment of several provisions of the service quality management regulations for multimedia communication and personal mobiles. The provisions affected by the application relate to the indicators used to evaluate the quality of fixed and mobile broadband and the quality perceived by the user.
Trade & Customs
The government recently presented its new industrial, technological and foreign trade policy in the Plano Brasil Maior. Most of the measures established by the plan aim to intensify trade defence policies. Measures recently adopted include a change in the method of applying anti-dumping duties, a new procedure for opening investigations and an amendment to the anti-dumping act.
Brazil recently introduced anti-circumvention measures for the import of goods and made it possible to launch investigations on the practice of circumvention. This comes in response to continued attempts to circumvent the application of trade remedies or the use of undue tariff preferences and aims to reduce the quantity of goods with false declarations of origin entering the country.
The growth of the economy has led multinational companies to consider exporting production capacity to Brazil. One way to do this is to transfer capital goods under-used in other countries. This update discusses the three main possibilities for the import of used machinery or equipment.
Recently held public consultations opened up the opportunity for the business sector to provide comments and input on negotiations for the conclusion of a free trade agreement between MERCOSUR (Argentina, Brazil, Paraguay and Uruguay) and the European Union. A MERCOSUR-EU Coordination Group has been set up to examine and recommend the Brazilian position in the negotiating process.
Exporters and foreign producers practise circumvention in order to evade anti-dumping measures that are applied in importing countries. Law 11786/2008 provides that if it can be verified that circumvention practices are being used to frustrate the application of an anti-dumping measure, trade remedies may be extended to third countries and to parts and components of products that are subject to ongoing measures.
Two anti-dumping investigations were recently initiated in Brazil concerning imports originating from the United States. These investigations reveal a growing interest in protectionism of the chemical industry, particularly in relation to the US industry. It is important that countries and companies interested in the opening of trade and the maintenance of their markets seek to participate in these investigations.
White Collar Crime
Brazil is a country full of contradictions regarding the punishment of tax evasion. Under the law, those who can afford it can claim impunity from their crimes. This impunity risks bringing the entire criminal legal system into disrepute. Perpetrators of such offences can transcend the proper sense of justice and reduce judges and public prosecutors to little more than tax collectors.
After more than four months of intensive debate, the Supreme Court recently issued judgment in the country's most complex corruption and money-laundering case to date, involving the bribery of several congressmen. The decision gives hope that criminals who belong to the elite and commit so-called 'white collar crimes' can no longer rule with impunity.
Reform of the Money Laundering Law
Brazil has long been active in the global effort to fight money laundering. Congress recently voted on a new Money Laundering Law, bringing about reform for the first time in 14 years. This will arguably lead to an increase in new criminal charges in Brazil, giving public prosecutors, police officials and judges strong measures to combat crime, as well as the illegal benefits obtained through criminal activity.
The Sao Paulo Section of the Brazilian Bar Association recently presented the Mercosul Parliament with a proposal for the creation of a criminal court with jurisdiction over the Mercosul region (ie, Brazil, Argentina, Uruguay and Paraguay). Following the example of the International Criminal Court, the proposed Mercosul court would address crimes such as transnational money laundering and trafficking of people, drugs and arms.
