Comments on the introduction of the Antitrust Bill

In memory of Agamenon Magalhães¹

"Politics draws you in, little by little,
until you forget everything else".
Michael Dibdin²

I - The purpose of this article

1. With approximately seven lustrums' experience in Economic Law, and abdicating both vanity and humility, the author hereof shall penetrate the meanderings of this Bill³ through its Introduction, which might otherwise correspond to a Preamble, due to the importance it deserves from whomsoever shall interpret it⁴. And, from the outset, he shall dare to asseverate that, since the enactment of Law No. 8.884, on 11th June 1994, this is the first time that, in this country, there has been the necessary intellectual probity, impartiality and technical competence in this respect. And more. It is certaintly the case that the prevailing law itself, modified by this Bill, came into being at once sullied by the converging interests of the time of its enactment and at variance with President Itamar Franco's true designs. For this reason, let us enthusiastically greet the Bill and, in due exercise of our rights and obligations as citizens, let us make all those repairs set forth in this punctilious message. And, further, let the author hereof act as a virtual representative of the people to whom this text is directed.

2. The Bureau for Economic Analysis of the Treasury Department, the Bureau for Economic Law of the Justice Department and the Administrative Council for Economic Defense have assumed responsibility for elaborating the Bill in question. This meeting, which had not yet taken place when I drew up a bill in 1994, at the request of Minister Aléxis Stepanenko, and by determination of the President of the Republic, was the reason why the innovative and daring proposals made at that time were laid to rest, never having been seriously or constructively debated. This is a fact that I most bitterly put on record. And I do so in honor of the grandiosity of those who were willing to offer up to the Nation this Bill, whose motivation, in ten pages, leaves no doubt as to the commitment of those who devoted themselves to the cause.

However, although the author hereof is vocal in his praise, he shall endeavor, in parallel, to add criticism, which, to his mind, should be acted upon.

2.1. On the Introduction. The written information that, during the process of elaboration of the Bill, involved both the government agencies and other entities and civil society, is sullied by its incompleteness and, above all, by the brevity with which the text delineates⁵ the route⁶ taken by the Bill to come into being, which was that of diplomacy as opposed to the commonly-expected channels. When - and I emphasize - reference is made to the fact that they debated with civil society and that "the proposed text sought to incorporate, to the greatest possible extent, the ideas and suggestions heard at these meetings", it gives us a false idea that civil society, in its widest sense, had been consulted. In order for this doubt - cruel, for a government elected by the overwhelming vote of the poor and the socially excluded - not to exist, far less even be raised, the sectors with whom the bill was discussed should have been mentioned.

Quite frankly, this did not occur with the prevailing law, while it was being elaborated, nor did it occur at a later date. Therefore, it would be healthy if the government were now to allow access to this information. After all, this law should have "man" at its heart" over the "market", for the latter is fiction and the former is the only being on this planet that speaks, feels, perceives, suffers, has passions and criticizes.

This is being put on record, while it is still possible, so that congressmen, above all others, can decide to put "man" first, and not the "market".

There is a very vague insinuation, at the end of the "Preamble", so called by the author hereof because of the legislators' failure to give it a name, when the affirmation is made that the presentation of a "diagnosis of the current law, the logic behind the quest for celerity and efficiency that guided the elaboration of the bill and the main modifications of the current text" was the cause of its implementation.

2.2. The proposal in item 2 entitled "Why is reform necessary?" begins with fervent micro- and macro-economic considerations, in verbis: "Competitive markets are very efficient mechanisms for coordinating the actions of economic agents. Prices defined by companies competing freely for consumer preferences encourage such companies to unfailingly seek a reduction in costs, an increase in productivity, an increase in quality and the launching of new products. Consumers are benefited, with cheaper, better products and with a greater supply of new products; the country is benefited, thereby becoming more competitive."

Competitive market, consequently referred to, correctly, as "text book fiction" if the above-mentioned logic is to be applied, as the authors thereof would say, whilst the author hereof would tarry in the intention⁷ of legislator. A diabolical mechanism, which is granted to those who care little for the less fortunate, is being employed when this market is accepted and is required to be competitive, as if such a thing were possible. It is the unfettered dictates of money, which controls everything, even consciences and destinies.

If I criticized the emptiness of the presidential words, I am repeating the same old story. No. It is their independence alone that allows those who are aware and conscious to travel to the bottom of this contaminated well, where power + market + control + illicit gains + inducement all mix together with political practices that are deleterious⁸ to the poorer sections of society, or the "hyposufficient"⁹, as they were known.

If Brazil is a member of the G20, or purports to be, at the same time as it presses for a New International Economic Order, it should build its own Economic Order, confronting, forthwith, its domestic iniquities, maintaining permanent sovereignty over its natural resources, making society equal, preserving human values and fighting for distributive social justice. In the crystalline words of Kamal Hossain, then Director of the Research Center for the New International Order at the University of Oxford, England, in 1981, this desideratum would be attained with the application of those proposals by means of the elaboration of specific legislation.

For this undertaking, he called upon governments to assume responsibility for formulating policies that would allow for the implementation of proposals, such as "in other cases, the task awaiting lawyers is the elaboration of international norms and regulations, for example with regard to the protection of the environment, or in relation to the international regime to govern the sea-bed and the ocean floor beyond limits of national jurisdiction."¹⁰

2.3. In no way will it avail the Brazilian people - in the opinion of the author hereof - to seek "the maximization of the benefits of a strong market economy (that) depend not only on macroeconomic stability but also on the permanent action of a strong Government that deters the abuses of market powers and that seeks systematically to improve upon the rules and norms that govern the activities of agents in the markets in such a way as to promote the greatest degree of competition" and "the guaranteeing of the application of antitrust laws through well-equipped agencies skilled in analyzing the real conditions of the markets." ¹¹

The justification therefor:

a. Competitive market presupposes the existence of sufficient competitors;

b. Competitive market only is competitive market when there are consumers;

c. There are only constant consumers when there exists a just distribution of income;

d. In the absence of "income", in the precariousness of state schools, in the absence of health within the population's reach, in the crumbling of the State and in the steering of economic policy toward maintaining primary surpluses, it is difficult to accept and agree with the generic proposal, in the way it is put. And more. There is no repression of anti-competitive conduct when the Judiciary has shown itself to be incapable of providing just and appropriate service in most of the cases submitted to it. There is the famous decision that went as far as to allege the unconstitutionality of CADE.

In sum, without enforcement¹², any law that professes to inhibit anti-competitive practices is innocuous.

2.4. The criticisms of specialists, as seen on pages 2 and 3, generated the acceptance of their suggestions, primarily because: "The main criticisms of the current law and of the Brazilian Antitrust System (or the SBDC) are: (a) the existence of two instructive agencies (the Bureau for Economic Law or SDE and the Bureau for Economic Analysis of the Treasury Department or SEAE) for the decisions of the administrative court (or CADE), generating a redundancy of jobs and re-work; (b) the criterion that defines which merger and acquisition operations have to be submitted to the SBDC is far too broad; (c) CADE hears and judges all cases (of mergers and acquisitions and anticompetitive conduct) thereby compromising its focus in truly complex cases; (d) mergers and acquisitions are analyzed a posteriori, or rather, companies can consummate operations before CADE'S judgment, which creates perverse incentives to procrastinate the presentation of information to the SEAE and to the SDE during the discovery phase thereby creating yet another deluge of opinions on the eve of CADE'S judgment; (e) the inefficiency in analyzing mergers and acquisitions prevents resources from being allocated toward prioritizing the investigation of anti-competitive conduct and the promotion of competition, two areas with much greater potential for generating benefits for society; and (f) the lack of stability of the SBDC'S technical arm and the mere two years' tenure of the Members of the Board generates a very high turnover rate, making the creation and accumulation of expertise within the SBDC very difficult to achieve."¹³

To complete and support these criticisms regarding the analysis of mergers and acquisitions, the text goes on to affirm that "society" is harmed in three ways: "The first is due to the fact that the cartels artificially reduced the supply of products and increased prices thereby resulting in an improper transfer of the consumer's income to a restricted number of producers. The second is due to the fact that a lack of effort has been made to promote competition through changes in the regulation that the State itself imposes on the economy, thereby generating inefficiency and a lack of innovation and dynamism. The third is due to the fact that monetary and fiscal policies end up having to offset the lack of competition in order to maintain price stability." ¹⁴

I rise up against the position of the authors and the grounding they invoked in the elaboration of the reproduced excerpts.

And stand my ground.

Not believing there was dialogue between the agencies of the SBDC and civil society, since the suggestions that the law might be changed did not come from agencies involved with the defense of competition, but rather from experts harboring a professional interest in mergers and acquisitions, or in transactions of similar nature (suffice it to check the number of niches created with this purpose in mind in banks, legal firms, economic concerns, advertising and marketing agencies, lobby groups etc.), it is here that resides the Achilles Heel of the proposal, which fails to include those social groups from within the population that have their own specific legal status.

Indeed, we are told that the efficiency of the perfectly competitive market presupposes efficiency through prices, just like consumer and producer efficiency likewise do. An efficient transfer¹⁵ in the equilibrium of the economy, taken in the general sense, requires that producers make their marginal costs equal both to the prices of the products in every company and to consumers, when they exist, in order to try to maximize the usefulness thereof, putting on a par the known coefficients between the marginal usefulness of goods and the price relationships thereof, all of which should be done in such a way as to ensure that the marginal usefulness of a given monetary spending unit is the same as that of the last consumed unit of each product.

The role of the democratic State is not to make the State appear "strong", as is proclaimed in the text, but rather, to make the State efficient and to ensure not just the correction of errors through far-reaching reforms but also to ensure the creation of laws that inhibit the prevailing licentiousness. The incentive to concentration, in any kind of imperfect competition, induces prices, which are purposefully erroneous, to determine quantities of goods that do not reflect the relation of scarcity of one thereof - such scarcity being occasionally provoked - and that lead to a reduction in social well-being.

I agree with Sergio G. Guestrin: "En este sentido -como ya lo hemos explicado-se sostiene que: - si el equilibrio general de Ia competencia perfecta no se verifica libremente, debido a Ia presencia de fallas deI mercado, Ia función deI sistema jurídico consiste en eliminarIas, para que pueda lograrse ese equilibrio, superándose Ias diferencias entre los costos y los beneficios sociales; - si el mercado de competencia perfecta no es posible, por no poder superarse Ias fallas, el sistema jurídico debe crear Ias condiciones de actuación que lo imiten, asignando costos y beneficios en Ia misma forma que lo hubiera hecho el mercado. El juez debe resolver una situación determinada en Ia misma forma en que lo habría dispuesto el mercado si no hubieran existido Ias falIas. Lo mismo tendrían que hacer el legislador, el funcionario y todo aquél que tuviera capacidad de decisión aI respecto. Si se tratara de un accidente, el derecho a ser indemnizado le correspondería a quien le hubiere sido más costoso evitarIo. Recíprocamente, el obligado a indemnizar sería aquél que hubiera podido evitarlo con un costo menor" ¹⁶.

Guestin closes by saying: "Si el mercado logra el equilibrio general competitivo, los bienes y los recursos tienden a gravitar en torno a su uso más eficiente, por lo que aI derecho, desde Ia perspectiva económica, no le compete ninguna función relevante el logro del objetivo de eficiencia, aunque si para garantizar las condiciones de libertad y seguridad que posibiliten su funcionamento y las consiguientes transacciones" ¹⁷.

2.5. The six statements on pages 2 and 3 seem adequate and judicious.

At this point, let us consider the conclusions offered by the authors in justification of the proposal, for, in the face of "dysfunctional hypertrophy in the analysis of mergers and acquisitions" society is harmed because: (i) the activities of the cartels tend to reduce the supply of products, with an increase in prices, "with an undue transfer of the consumers' income to a restricted number of producers"; (ii) the State does not promote competition in its change of regulations; and (iii) the State, in order to offset the lack of competition, uses the classic tools of monetary and fiscal policy in its quest to "keep prices stable."

These conclusions do not consider the domestic effects arising from the exogenous factors caused by globalization and, when it sometimes occurs, from importation as a vehicle of market domination, either by destroying domestic competition, as yet reasonably organized, or by inhibiting free initiative from trying to compete. And it is always more difficult to attack enormity because the financial architecture that is already in place and the manipulation of the press terrorize any government and the regulatory agencies thereof.

Let us take a look at the confrontation happening within the U.S. vis-á-vis¹⁸ China. In 2004, the Americans imported US$ 150 billion from China. If, in the past, they imported bric-a-brac¹⁹, now sophisticated products are beginning to arrive (mostly small electronic components). And, in the face of the deficit, that becomes progressively more gigantic with each passing year (124 billion Dollars in 2003), the American economy runs the risk of possible collapse.

To their succor, the valuable information elaborated by Erik Israelewicz, astute director of the French magazine Echos. This is the case of Wal-Mart, which advances unmercifully throughout the world, "et généralement dénoncé pour son appétit sans fin et sans complexe"²⁰. This chain of stores has spread its truths, creating in the collective subconscious the idea that it always has the lowest prices.

If the walmartian slogan is "large volumes and small margins", its unwitting victims are countless because, by drastically reducing its prices, it brings ruin to its competitors and its suppliers. Indeed, if Wal-Mart, with its methods - even paying a pittance in wages - grows at an annual rate of 15% to 20%, it has brought in tow an impressive social cost with the loss of thousands of jobs in the U.S. This emerging capitalism therefore already exists. Except that, amoral to the core, it cares little about domestic jobs and less still about its competitors and, what is worse, its domestic suppliers. With that slogan, brandished to the seven winds, it favors but a few at any given moment and annihilates the entrepreneurial spirit, above all in the young who, nowadays, are averse to risk and want immediate gain: the dish should be ready by now.

This somber facet of globalization with its domestic effects was not addressed in the general conditions in question concerning the Bill that modifies Law No. 8.884/94, for should it be up to "the market" to finance factories abroad in order to import ready-made products for domestic use or consumption?

What is to be done?

If this monetary policy is castrating, if the Government does not want to invest in research and development, if it does not want to radically improve education and reduce its chronic deficits in order to relieve, again radically, the cost of capital, and if we do not make haste to confront this situation with strong legislation, I repeat strong legislation, and with challenges in the face of a recurring situation, then imports alone, in the guise of something other than what they are, will be the ruin of the already scarce labor market and will inhibit the entrepreneurial spirit of the very few who are willing to accept the risks. And this strong law has to be grounded in a strong, speedy, prepared and sagacious²¹ Judiciary so that the rulings being rendered by the new CADE may be enforced. The successful passing of this law will be of no use if the Judiciary is inefficient.

Does the Wal-Mart case escape the new changes? Yes it does, because punishable conduct has to be specific, according to the economic-penal system adopted in the elaboration of the text. Wal-Mart's activity would be illegal if there were specific provision covering any intervention in any company that used similar conduct, above all if the slogan "large volumes, small margins" was sold, delivered and accepted.

2.6. In the Bill, starting at item 3, the title elucidates the objective: "Logic and the general structure of the SBDC'S Reform Bill", aspiring celerity and promoting efficiency with the rationalization and strengthening of the SBDC'S agencies, with the increase of selectivity and speed when analyzing mergers and acquisitions, with the strengthening of the investigation of anti-competitive conduct and with the creation of a focus when promoting competition.

2.6.1. Rationalization and strengthening of the SBDC'S agencies

Although the SEAE is still part of the SBDC, it shall focus, in a relevant way, upon the work done to promote competition, and shall also be focused "in relation to mergers or administrative processes of function or when requested by CADE, and may promote administrative procedures with the objective of formulating representation to the autarchy."

A question: is it within the SEAE'S jurisdiction, or that of the SDE, to gauge the socio-economic effects of a delocalization resulting from an acquisition? Should it be empowered to seek out the socio-economic effects of outsourcing? ²². Yes, although there is no identification in the text of the Preamble, as I like to call the communication under scrutiny²³.

The case of the acquisition of Gillette by Procter-Gamble caught my eye, where an entire community, not the market, was affected, involved and harmed.

Established a hundred years ago in Massachusetts, Gillette, a traditional family name, put down roots in that State in addition to manufacturing products there, providing employment and supporting philanthropic and cultural entities. Of these entities, I put on record only the generous contributions to the internationally accredited Boston Symphonic Orchestra.

I do not have the wherewithal to clarify what on grounding the authorities may have based themselves to seal the acquisition, but I bring into the discussion Professor Richard M. Brunell's research on the acquisition of Fleet Boston by Bank of America. I cannot emphasize enough that this banking institution has been incorporated into the New England tradition since 1784. The effects on the psyche and morale of the inhabitants of the State of Massachusetts were enormous²⁴.

Worthy of note is Brunell's authoritative voice: "Putting aside questions of legitimacy, even a purely economic or efficiency-oriented approach to merger analysis does not rule out 'non-economic values' when the economic effects of mergers are ambiguous, as noted above. More significantly, however, there is no reason to consider the preservation of local control of business to be a "non-economic" value; on the contrary, as suggested in this article, the loss of local control may have predictable adverse economic consequences on communities - lower philanthropy, jobs and investment. Moreover, the intangible loss of civil leadership is no less 'economic' merely because it is difficult to quantify in dollar terms. As recent scholarship has emphasized, 'welfare economics' broadly encompasses all effects on the well-being of individuals. Indeed, the effects of delocalization on local communities are classic extemalities, like pollution, that ought to be considered in any economic or efficiency analysis" ²⁵.

And his thoughts would be isolated without the reinforcement of quotations numbers 140 and 141, which, due to their theological significance, I also reproduce: "140 See Louis Kaplow & Seven Shavell, Fairness Versus Welfare, 114 HARV. L. REV. 966, 968 (2001) ("The welfare economic conception of individuals' well-being is a comprehensive one. It recognizes not only individuals' level of material comfort, but also their degree of aesthetic fulfillment, their feelings for others, and anything else that they might value, however intangible."); see also Brett McDonnell & Daniel Farber, Are efficient antitrust rules always optimal?, 2003 ANTITRUST BULL. 807, 811 (maintaining that consideration of the effects of antitrust policy on political life is fully consistent with welfare economics, which generally insists on tracing out the effect of a policy throughout the many areas in which it may have notable effects); Herbert Hovenkamp, Antitrust Policy After Chicago, 84 MICH. L. REV. 213, 242 (1985) ("The concept of allocative efficiency or wealth maximization must incIude everything to which people assign a value.") (emphasis in original). 141 See Barnes, supra note x, at 841 (arguing that "[c]ontrolling external effects of discretionary power by forcing absentee managers' firms to bear the local costs of their decisions" is not "analytically different from any regulation of the external effects of corporate activity such as internalizing the environmental costs of pollution")"²⁶.

I applaud the loyalty with which the authors of the Bill in question have taken pains to present "the changes to the organizational structure of the SBDC "²⁷. I have never been fortune enough to read a presentation of proposed legislation that provided for what would happen in the eventuality that Congress adopted it. The way in which the form, the means and the strategy are centered in order to provide autonomy and technical know-how to the "New CADE", deserves to be put on record and applauded. Everything, or at least almost everything, points to the fact that the dream of my illustrious and beloved countrymen, like Agamenon Magalhães, to whom I dedicate this article, is under vigil.

2.6.2. Increase in selectivity and speed when analyzing mergers and acquisitions.

With regard the increase in selectivity and speed when analyzing mergers and acquisitions, the text of the proposal states: "The logic in the process of analysis of mergers and acquisitions will go through a significant change for the better. Instead of encouraging procrastination and the creation of consummated facts, the new bill gives strong incentives to companies and to the New CADE to sit down and talk from the beginning of the analytical process, in order to allow companies to seek legitimate gains in efficiency from mergers and acquisitions, which are processes inherent to the restructuring of dynamic economic sectors, but at the same time preserves the conditions in which competition may be had, without which these gains in efficiency are not passed on to society. In order to increase selectivity in the analysis, the bill proposes a change in the criterion of notification in cases of mergers and acquisitions. The current "filter" is excessively broad and captures situations in which a company with high sales abroad and with no relevant presence in Brazil buys a small company. The new bill makes it clear that the criterion of notification refers to mergers and acquisitions where the companies involved have a minimally relevant presence in Brazil. More importantly still, it establishes a mechanism by which the selection criteria can be modified without requiring a change in the law."²⁸

Below, a synthesis of the reforms: "(a) an alterable limit established by ordinance from the Justice or Treasury Ministry; (b) operations in which at least one of the groups has annual gross sales or volume of business in Brazil of at least R$ 150,000,000, and in which at least one other group has sales or volume of business of, at least, R$ 30,000,000; (c) simplified analysis in cases that present no risk to the competition; (d) CADE judges only complex cases or cases that it discretionarily takes on appeal as the higher court or cases that interested third parties present as problematic; (e) prior analysis with several strict intermediary deadlines with the possibility of approval due to lapse of term; (f) the general-superintendent's office may negotiate a settlement with the parties involved; and (g) the settlement is submitted to the Court for approval". ²⁹

In my opinion, this is where the matter gets stuck, in the way it has been treated, because, without populist demagogy the proposal seems to me to be naïve. I perceive that the authors are not familiar with the state machinery and the workings thereof and, unless they messianically establish, through the new law, when enacted, that the mentality will change, businessmen are not going to use political lobbies (as in the case of the state of Espírito Santo) or exogenous influences (pressure from commercial attachés or conferences abroad in well-paid universities in order to create a climate in which deals may prosper, or a cycle of lectures in Brazil with "specialists" to transmit concepts, proposals, philosophies, strategies and everything else that can be put in the "technical package", with the help of a section of the very-domesticated press.)

The text that was reproduced above emphasizes avoiding "the potential risks to the public interest in preserving competition" (verbis).

It is irritating that, always and always, the text avoids discussing or mentioning that the anti-competition laws have, as their target, above all else, man, that unfortunate Brazilian who is being defrauded with hundreds of cases and is at the mercy of games instead of the rules of the market. Below, the same policy of collective amnesia in Terry Eagleton's valuable contribution: "But it is not only the traditional middle class which has faded from view. It is also the traditional working class. And since the working class stood for political solidarity, it is scarcely surprising that we should now have a form of radicalism which is deeply distrustful of alI that. Postmodernism does not believe in individualism, since it does not believe in individuaIs; but it does not pin much faith in working-class community either. Instead it puts its trust in pluralism - in a social order which is as diverse, and inclusive as possible. The problem with this as a radical case is that there is not much in it with which Prince Charles would disagree. It is true that capitalism quite often creates divisions and exclusions for its own purposes. Either that, or it draws upon ones which already exist, and these exclusions can be profoundly hurtful for a great many people. Whole masses of men and women have suffered the misery and indignity of second-class citizenship. In principIe, however, capitaIism is an impeccabIy inclusive creed: it really doesn't care who it expIoits. It is admirabIy egaIitarian in its readiness to do down just about anyone. It is prepared to rub shoulders with any old victim, however unappetizing. Most of the time, at least, it is eager to mix together as many diverse cultures as possible, so that it can peddle its commodities to them all" ³⁰.

2.6.3. Strengthening of the investigation of anti-competitive conduct.

In the proposal, or the Preamble, there is an entire chapter dedicated to this theme.

Literally, the legislators propose that: "The reform bill provides for the creation of three distinct phases in the investigative process. Firstly, a preparatory procedure, which will basically serve to distinguish cases with grounds from empty denouncements. Next, a second phase of "administrative enquiry", which has the characteristics of an investigative process and which may, or may not, result in an accusation of anti-competitive conduct. And, lastly, a third phase, involving an 'administrative process', in which the parties involved may exercise their broad right to defense and to the adversary system." And, in order to attain this goal, the following procedures were set forth: "(a) a clear distinction in three different phases: (a.1.) 'preparatory procedure' to filter out empty denouncements; (a.2.) 'administrative enquiry' as investigative phase; and (a.3) 'administrative process' for the right to defense and the adversary system; (b) general-superintendent acquires the powers to shelve preparatory procedures and administrative enquiries; and (c) Superintendent's office requests from its Attorney-General's Office the Judiciary's request for an interlocutory injunction of search and seizure "³¹.

Within this framework, and without being pessimistic, the investigative process will come up against many difficulties unless the Attorney General's Office has sufficient lawyers working for it and provided good performance and exactitude³² in their tasks are strongly required of them.

The cultural question, indisputably relevant, shall lead to a demand for independence, primarily of the financial sort, of the governing authorities because, in truth, and in this context, the relationship between law, markets and culture itself intersects. The examples we can draw on from the recent past have bestowed no dignity upon their authors or those agencies responsible for executing these procedures³³.

I disagreed, and will likewise disagree in this phase, with the use of the expression "public interest to be protected." Showing all the respect the authors of this exceptional bill deserve, public interest should not be used in this case, because it is not pertinent in a legal structure, and because we should preserve our secular, and even terminological, construction. However, one nation that does, justifiably, use it, and has done so for a long time, is the U.S., and does so with well-pondered grounding, for it is pertinent to their system.

The extremely erudite Professor Rudolph J.R. Pevitz wrote, in 1990, in commemoration of the first centenary of the Sherman Act, an essay that figured as the opening article in a special edition of the New York Law School Review: "Foreward: antitrust as public interest law".

When it was published³⁴ in 1990, the NYSL Magazine vindicated Reagan and Thatcher's proposal with its triumphalist discourses on the new economy. Three lustrums further on, it is what we are watching on television and the internet, and in every means of information and communication, but such proposal, by being inodorous, amoral, relativist and concentrated, has caused so many evils, as Doug Henwood was to write in "After New Economy", which was completed in the last edition with a thirty-page essay on the Bush period³⁵.

2.6.4. Creation of a focus when promoting competition.

Under this heading, the presentation of the Bill draws its recital to a close.

It embarrasses me to applaud and criticize the pertinent text. The encomium³⁶ is supported in the criterion adopted for the reform of the system, where the New CADE goes on to obtain "a suitable degree of autonomy to guarantee the applicability of the Antitrust Law"; "the Agencies' Bill and Complementary Bill No. 344/2000 (financial system) concentrate the job of analyzing mergers and investigating conduct in one single agency with the necessary specialization" whilst the SEAE, as promoter of competition, shall be responsible for "specializing and focusing on opportunities with high potential for improving competition and the competitiveness of the economy; direct insertion in the government to collaborate with mechanisms of competition when defining and implementing government policies; provision in the Agencies' Bill for the possibility of a formal manifestation from SAEA on the agencies' new rules and regulations as well as a secretary, who may be fired at any moment, thereby generating commitment and alignment with the objectives of the government." ³⁷

My criticism lies in the timidity with which the legislator approached CADE, although I call it a Court. I used this nomenclature when I made the Draft Law of the same law for President Itamar Franco, at the time: a strong Court.

Strong and compact because:

(1) its procedural part inhibits procrastinatory manoeuvres by adopting a format that has, to a great extent, adopted the teachings of the summary ways;

(2) it demanded rigorous compliance with the deadlines, many of which, twelve years on, I perceive as draconian³⁸, inhibiting an ample defense in the adversary system;

(3) although it is a government agency, the Court had been modeled in semblance to what has existed since 1954 and has never been contested: the Naval Court, and

(4) in order to reach CADE, the usual aspirants' prerequisites did not suffice for me. I required proof of personal assets and forbade all forms of nepotism.

This is why I close with a fortunate expression of Jack Kemp's, quoted by Henwood, whereby timidity can be overcome: "if you are going to go for it, you should really go for it"³⁹.
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Clarification and bibliographical footnotes

¹ Agamenon Magalhães (1894-1952). He was the author of the first Brazilian law with an antitrust slant, solemnized as the Malaia Law, signed by Vargas on 22nd June 1945, which gave powers to the government to expropriate any organization, linked to trusts and cartels, whose business activities harmed the national interest. After he signed the decree-law, Getúlio Vargas did not even last five months in power, having been deposed by a military coup.
² DIBDIN, Michael. Dead lagoon. London: Faber and Faber Ltd., 1999. p. 96.
3 House of Representatives. http://www.camara.gov.br. Bill nº 5877/2005. Submitted to the National Congress is the text of the bill that "Structures the Brazilian Antitrust System and provides for the prevention and repression of violations against the economic order and other matters." Access on 21^st December 2005.
⁴ On the sources of law. The sources of objective law, elegant theme that it is, deserve the attention of scholars. Our dearly-missed Vicente Rao did well to remember this important theme of legal science when he wrote that "the problem of the sources of law can be studied from two angles: the scientific and philosophical and the technical: the former involving the substance of the issue, the latter, its formal character, or rather, the study of the forms through which positive law is exteriorized and acquires an obligatory force." RAO, Vicente. O direito e a vida dos direitos (Law and the Life of the Laws). São Paulo: Max Limonad, 1960. p. 275, item 174.
In this article, which focuses so exclusively upon the Introduction of the Antitrust Bill that - as it happens - it partially revokes or derogates some sections of prevailing Law No. 8.884/94, it is up to the interpreter, in strictly scientific terms, to protect the formal state source consolidated into that which, again according to Rao, are "the parts of the law not comprised in the provision per se." Among which, "programatic declarations" and "preambles." Although they do not contain the power of obligatoriness, "they have value, however, as guidelines that inspire interpreters in applying the texts, which, with the same declarations, form a single whole, or rather, the unit of the constitution or of the code or of the law." Ibidem, p. 323-324.
And the unsurpassable master Pontes de Miranda, on the subject of the Political Letter of 1946, and remembered by Rao, consolidates this methodology: "Programatic rules are those through which the legislator, constituent or not, rather than editing a regulation for concrete application, merely outlines guiding lines with which the public powers must orient themselves. Legislation, enforcement and justice itself are subject to these principles, which are like programs given up to their functions." Ibidem, p. 324, note 210.
The admirable Carlos Maximiliano, who participated in the Supreme Court with his memorable decisions, remembered that the success of the law depends on the quality of the one who applies it. For this reason, he would blush were he to cite to his peers the causes of why so many legal proceedings have been corruptly interpreted, either because the letter thereof was too closely followed, or because the exegesis was forced, or because of affinity or aversion, or because of personal inclinations, or because of a penchant for generalization, or because of a preference for absolute ideas, and so on and so forth.
Indeed, when a complex law, like the antitrust law, is under discussion, and CADE is given, before society, the aura of an administrative court, society expects its judges (i.e. those who hand down judgment), to apply the law "more than just to the letter. It expects the ends and the motives of the law, the probable result of the exegesis, in order to determine the scope of the interpretation." MAXIMILIANO, Carlos. Hermenêutica e aplicação do direito (Hermeneutics and the Application of the Law). 7^th edition. Rio de Janeiro, São Paulo: Livraria Freitas Bastos S/A., 1961. p. 295-296.
The SDE now requires the same criteria in the application of consolidation and merger requests, and this agency has now been given a relevant judging function. To take only the market, or the competition, into consideration, as opposed to those for whom the law was made, is to defraud all hope of seriousness and of a commitment to society, which is the most vulnerable of all, in order to win over the trust of a few economic groups that pretend to invest in the country. The desire and the intention of the legislator were not clarified in the introductory text, and neither was it clarified whether or not the people, as opposed to the consumer, were his final beneficiaries.
Always repeated, never equaled, Karl Engisch, in a valuable note in Chapter VII entitled "Law of the Jurist, continuation: filling in the gaps and correcting incorrectly legislated law", on going back to the actual historiography of gaps and analogy, assays a possible conclusion with regard these sources when he says that "logic has to go hand in hand with theology," or "the formal process of concluding, which, of course, has to be logically correct, practically only works in connection with specific material knowledge that has to be acquired through a specifically legal methodology." Basing himself on Klug, Larenz, Heller and Nawiasky, he concludes his dissertation with the judgment of Friburg, which fit the theme like a glove, verbis: "It is indispensable to ask after the intentions and the ends which the legislator had in mind when he drew up the law." ENGISCH, Karl. Introdução ao pensamento jurídico (An Introduction to Legal Thinking). 2^nd edition. Lisbon: Calouste Gulbenkian Foundation, 1968. p. 238 and 287.
⁵ Debuxar is the term used in the original Portuguese text. Caldas Aulete informs us that it means to delineate, to draw, to trace outlines. In AULETE, Caldas. Dicionário Contemporâneo da Língua Portuguesa (Contemporary Dictionary of the Portuguese Language). 5^th edition. Vol. II. Rio de Janeiro: Editora Delta S.A., 1964. p. 1.060.
⁶ Iter, (or itineris), is the term used in the original Portuguese text, and it comes from the Latin. It means journey, route, way, path. In CINTRA, Geraldo de Ulhoa; Cretela Júnior, José. Latin-Portuguese Dictionary. São Paulo: Editora Anchieta Ltda, 1944. p. 595.
⁷ Mens is the term used in the original Portuguese text. It means intent, intention, design. Ibidem. p. 680.
⁸ Deletério is the term used in the original Portuguese text. Still following Professor Aulete's teachings, it means noxious, harmful, injurious to life or health. Op. cit., p. 1.078. The English word Deleterious has the same meaning as its Portuguese counterpart.
⁹ Hipossuficiente, is the term used in the original Portuguese text. According to Caldas Aulete, it is used of a person who is economically weak, who is not self-sufficient. Op. cit., p. 2.072. Hypossufficient should be similarly understood.
¹⁰ HOSSAIN, Kamal. The role of law and lawyers in the building of the new international economic order: a challenge to legal creativity. In: Philippine Yearbook of International Law. vol. 7. [s.l.], [s.n], 1981. p. 98-107.
¹¹ The new Bill proposing the reform of the Brazilian Antitrust System p.2. The text was elaborated in a joint effort by the Bureau of Economic Analysis attached to the Treasury Ministry, the Bureau of Economic Law attached to the Justice Ministry and the Administrative Council for Economic Defense, by reason of the ceremony for the signing, by the President of the Republic, of the message remitting to the National Congress the Bill that structures the Brazilian Antitrust System, on 1^st September 2005.
¹² The original Portuguese text uses the English word enforcement, and goes on to explain that, according to the highly-regarded Black's Law Dictionary, it means "the act or process of compelling compliance with a law, mandate or command." In GARNER, Bryan A. Black's Law Dictionary. 7^th edition. Saint Paul: West Group, 1999. p. 549.
¹³ The new Bill proposing the reform of the Brazilian Antitrust System. p. 2-3.
¹⁴ The new Bill proposing the reform of the Brazilian Antitrust System. p. 3.
¹⁵ Transferência is the term used in the original Portuguese text. It means the "act through which title of ownership is transferred from one person to another, either voluntarily on the part of the parties, or by legal imposition." In MELLO, Maria Chaves de. DICIONÁRIO Jurídico Português-Inglês-Português (Portuguese-English-Portuguese Legal DICTIONARY). Rio de Janeiro: In English, the term assignment is used, which means "the transfer of rights or property." In GARNER, Bryan A. BLACK'S Las Dictionary. 7^th edition. Saint Paul: West Group, 1999. p. 115.
¹⁶ GUESTRIN. Sergio S. Fundamentos para un nuevo análisis económico del derecho: De las fallas del mercado al sistema juridico. Buenos Aires: Editorial Ábaco de Rodolfo Depalma, 2004. p. 419
¹⁷ Ibidem, p. 419-420.
¹⁸ Vis-à-vis means with regard to.
¹⁹ Bugigangas is the term used in the original Portuguese text. Caldas Aulete defines it as knick-knacks, bric-a-brac, objects of low value. p. 604.
²⁰ IZRAELEWICZ, Erik. Quand la Chine change le monde. Paris: Le Grand Livre du Mois, 2005. p. 117.
²¹ Solerte is the term used in the original Portuguese text. Caldas Aulete defines it as meaning skilled, astute, sharp-witted, diligent, industrious, guileful, sagacious, prudently astute. Op, cit., p. 3.789.
²² Outsource/outsourcing is to be understood as to "obtain (goods etc.) by contract from an outside source". In The Oxford English Reference Dictionary. 2^nd edition. Oxford: Oxford University Press, 1996. p. 1034
²³ Escrutínio is the term used in the original Portuguese text. According to Caldas Autele it means scrutiny, or detailed, thorough examination. Op. cit., p. 1.516.
²⁴ Impactante is the term used in the original Portuguese text. According to Houaiss, it means that which causes impact, that which is shocking. In Dicionário Eletrônico Houaiss da Língua Portuguesa (versão eletrônica) - Electronic Houaiss Dictionary of the Portuguese Language (electronic version).
²⁵ BRUNELL, Richard M. Delocalization as a factor in merger analysis: Corporate social responsibility and antitrust. 15^th March 2005. p. 67-68. Draft distributed on 15^th March 2005 to the guests and participants of the 5^th Annual Loyola Antitrust Colloquium of Institute for Consumer Antitrust Studies - Loyola University Chicago School of Law.
²⁶ Ibidem, p. 68.
²⁷ The new Bill proposing the reform of the Brazilian Antitrust System. p. 5.
²⁸ Ibidem, p. 5-6.
²⁹ Ibidem, p. 6.
³⁰ EAGLETON, Terry. After theory. London: Penguin Books, 2004. p. 18-19.
³¹ The new Bill proposing the reform of the Brazilian Antitrust System. p. 8.
³² Exação is the term used in the original Portuguese text. Caldas Aulete defines it as care, zeal, specificity, exactitude and fastidiousness in a work. Op. cit., p. 1.658.
33 Robin Paul Malloy astutely, In the opinion of the author hereof, concludes a chapter of his book: "This chapter set out a way of understanding the relationship among law, markets, and culture, and it developed a basic three-step model of legal argument. It indicates that economics can help us understand law in a market context but economics can not eliminate the need to engage in the exploration of the meanings and values of worthy human objectives. Likewise, it can be concluded that even though we operate and make decisions within a world of constraints, we also have an ability to influence and facilitate the values and meanings of social organization. Thus, we can improve legal reasoning and public policy making by paying more attention to the human experience of exchange, by expressly recognizing the need for esthetic and ethical references in legal decision making, and by using a basic set of tools to examine the relationship among law, markets, and culture". MALLOY, Robin Paul. Law in a market context: An introduction to market concepts in legal reasoning. Cambridge: Cambridge University Press, 2004. p. 110.
³⁴ The edition in question is edition 4 of the New York Law School Law Review. For their historic value as well as being a valuable source of research, I enumerate the other essays that were printed in that edition: (a) Sherman Antitrust Act Jurisprudence and federal policy-making in the formative period 1890-1914, de Martin J. Sklar; (b) The legal culture of the formative period in Sherman Act Jurisprudence, de William P. La Piana; (c) Historical analysis in Antitrust Law, de James May; (d) The new antitrust history, de Daniel R. Ernst; (e) Antitrust policy and the concept of a competitive process, de John J. Flynn; (f) Economic analysis to guide antitrust enforcement: prospects for Section 2, de William G. Shepherd; (g) The antitrust vision and its revisionist critics, de Walter Adams e James W. Brock; (h) Analyzing anticompetitive behavior in retail markets: Things are not always as simple as they may appear, de David T. Levy; (i) After 100 years: A disquieting discourse of poverty and wealth, de William J. Curran III; e (j) When should states challenge mergers: a proposed federal/state balance, de Robert H. Lande.
And on the work of Peritz, relative to the idea of public interest in North-American law: "The year 1990 marks the one-hundredth anniversary of the Sherman Act, American antitrust law's 'charter of economic liberty'. Inspired by the anti-monopoly and anti-cartel sentiments of the Progressive Era, the Act has withstood cycles of uneven enforcement by successive presidential administrations, shifting interpretation by the federal courts, and wavering public support. This record, in significant part, has been the result of recurrent controversy over the public interests to be served. Although these public interests have always been associated with competition policy, this consensus has settled very little about antitrust law because competition policy has meant too many things to too many interpreters. In seeking to understand the kinds of public interests implicated in competition policy, judges, practitioners, government policy makers, and scholars have often looked outside legal discourse to the disciplines of history and economics. Over the last century, each discipline has offered various formulations of the public interests to be associated with antitrust law and competition policy". PERITZ, Rudolph J.R. Foreword: antitrust as public interest law. In New York Law School Law Review. vol. XXXV New York: New York Law School, 1990. p. 676-790.
³⁵ This excerpt from the conclusion of the book deserves to be reflected upon: "The New Economy was supposed to be the prosperous payoff of the neo-capitalist revolution. It worked in the U.S. for a while, but now several dividend payments had to be omitted. Outside the U.S., global economic prospects don't look brilliant. Current economic policy looks unlikely to remedy the situation. Massive tax cuts for the very rich-pretty much the Bush administration's only approach-may provide a little fiscal boost. But they won't do anything to address the long-term pathologies of the US. economy, like polarization, insecurity, and a massive dependence on foreign capital inflows. Yet things are hardly hopeless. Four or five years ago, the ideological/political case looked pretty much closed. But in the last few years, a global movement that sometimes calls itself anticapitalist has developed. In the months leading to the U.S. war on Iraq, millions of people filled streets worldwide to object, in a movement that sometimes calls itself anti-imperialist. That's a pretty big deal". As it happens, Doug also focuses in his book on the pernicious activities of Wal-Mart. HENWOOD, Doug. After the new economy. New York; London: The New Press, 2005. p. 229.
³⁶ Encômio, is the term used in the original Portuguese text. According to Caldas Aulete, it means adulation, praise. Encomium in English means the same as its Portuguese counterpart. Op. cit., p. 1.377.
³⁷ The new Bill proposing the reform of the Brazilian Antitrust System. p. 10.
³⁸ Draconiano is the term used in the original Portuguese text. Caldas Aulete tells us that it means that which is excessively severe or rigorous. Op. cit., p. 1.286. The English draconian has the same meaning as its Portuguese counterpart.
³⁹ HENWOOD, Doug. After the new economy. New York; London: The New Press, 2005. p. 230.
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Jayme Vita Roso é advogado do escritório Jayme Vita Roso Advogados e Consultores Jurídicos