Following a recent review of the limited application of corporate criminal liability in Brazil (for further details please see "Corporate criminal liability under Law of Environmental Crimes") and the indirect legal consequences that companies may face following criminal investigations targeting individuals (for further details please see "Corporations and law enforcement"), it is necessary to examine some of the possible penalties under Brazilian law. Corporations may face harsh administrative and civil penalties for business crimes which, in Brazil, only individuals can be held liable for.
A variety of legal statutes in Brazil establish tough penalties for legal entities, which are comparable to the criminal penalties set out in jurisdictions where corporate criminal liability is more widely accepted. In the wake of Brazilian enforcement actions over the past decade, this article discusses the anti-corruption legal regime currently in effect.
The Antitrust Law (Law 2,529/11) subjects corporate defendants to fines for anti-competitive behaviour ranging from 0.1% to 20% of the gross revenues registered by the company, group or conglomerate in the fiscal year prior to the launch of the investigation into the line of business in which the infringement occurred. In addition to fines, corporate defendants may be subject to penalties, including (among others):
- a prohibition from participating in public procurement procedures and obtaining tax benefits and funds from public financial institutions for a certain time;
- compulsory licensing of IP rights; and
- publication of the decision in a major newspaper or on the company's website.
The Anti-corruption Law (also known as the Clean Company Act) sets out civil and administrative penalty regimes, many of which are as strict as corporate criminal liability regimes. Penalties under the Anti-corruption Law include:
- fines of up to 20% of the company's gross revenues (which should never be less than the advantage obtained through the unlawful act);
- public reprimand;
- the seizure of assets obtained from the illegal activity;
- a partial suspension of or prohibition from undertaking certain activities;
- the compulsory dissolution of the company; and
- a prohibition on receiving donations, grants, subsidies or funding from public entities and financial institutions.
In addition, companies found guilty under the Anti-corruption Law may have to pay compensation for any damages arising from the illegal conduct. The Anti-corruption Law also establishes a controversial mechanism of strict liability, which means that authorities may impose penalties without proof of fault or wilful misconduct by the company; therefore, corrupt intent is not required.
Clearly following the successful introduction of the leniency programme (Articles 86 and 87 of Law 12,529/11) in the antitrust field, the Anti-corruption Law introduced(1) a cooperation mechanism which offers reduced penalties for companies that cooperate with enforcement authorities and meet other requirements.
Nevertheless, the enforcement authorities' lax rules and the persistent lack of coordination among different regulators and enforcers have, in recent years, left much room for legal uncertainty regarding this type of settlement, particularly with reference to the cooperation mechanism established by the Anti-corruption Law. In light of this, companies should seek expert advice from individuals with solid experience in handling complex and multi-disciplinary (and often multi-jurisdictional) matters.
In relation to anti-corruption enforcement, the international legal community is well aware that companies doing business in Brazil should be alert to the risks which may arise from foreign laws with extraterritorial reach. These include the US Foreign Corrupt Practices Act and the UK Bribery Act, which have both influenced other legal reforms in a number of countries and have clearly influenced the culture and – to the extent possible – the practices of Brazilian enforcers.
Although legal entities cannot be held criminally liable under Brazilian law (except in the case of environmental crimes), corporations can be seriously affected in many ways by the interactions between criminal law enforcement and administrative regulatory and disciplinary bodies. This is especially true where cross-border investigations in the anti-corruption sphere and foreign anti-corruption laws, policies and international treaties result in white collar crime regulations becoming increasingly denationalised and tougher than ever before.
For further information of this topic please contact Rogério Fernando Taffarello, Renato Tastardi Portella or Michelle Marques Machado at Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados by telephone (+55 11 3147 7600) or email ([email protected], [email protected] or [email protected]). The Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados website can be accessed at www.mattosfilho.com.br.
Endnotes
(1) Article 16 of the Anti-corruption Act.
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