White & Case's Latin America Focus recently highlighted several reasons to anticipate an economic resurgence in Latin America, including a technology-driven push to digitalize an increasingly global world economy, commitments to mitigate climate change by global natural resources and energy companies, and the search for yields in emerging markets.1 As these types of opportunities emerge, companies engaging in cross-border trade and collaborations across the United States and Latin America will need to carefully assess and mitigate potential antitrust risks while accounting for differences in local antitrust laws and rising international coordination among antitrust enforcers.
This article analyzes four US antitrust conduct and enforcement trends—involving digital markets, environmental, social, and governance (ESG) initiatives, labor markets, and other alleged cartel activities—that are likely to affect Latin American companies in 2023 and beyond.
1. US and Latin American Antitrust Authorities Are Prioritizing Digital Market Enforcement
Latin America has emerged as a major growth market for the tech sector and digital markets, particularly in the tech hotbeds of Brazil, Chile, Colombia, and Mexico.2 While digital markets have been in the crosshairs of the US Department of Justice (DOJ) for quite some time, Latin American enforcers also are paying close attention.
In a September 2022 meeting of global antitrust enforcers, including the President of the Brazilian Administrative Council for Economic Defense (CADE) and then Acting Chair of the Mexican Federal Economic Competition Commission (COFECE), Assistant Attorney General (AAG) Jonathan Kanter of the DOJ's Antitrust Division focused on the importance of antitrust enforcement in digital markets. Analogizing how "the age of machinery" brought about increased market concentration and in turn an era of "aggressive and effective enforcement" of antitrust laws, AAG Kanter explained that the circumstances now call for a similar response to "the age of connectivity."3
Three days later, in a separate speech about international antitrust law and policy, AAG Kanter emphasized the potential exclusionary power that digital platforms may wield, which he characterized as "a pressing challenge that demands an aggressive coordinated response from the competition law enforcement community."4 And more recently, in a March 2023 speech to an international audience, AAG Kanter again focused on digital markets, particularly digital platforms that function as intermediaries and are often two-sided or multi-sided.5 According to AAG Kanter, the competitive concern with such platforms is the incentive to scale, causing concentration in digital platforms.6 While he acknowledged that platforms can quickly scale through competitive means, AAG Kanter noted that new entrants are often left scrambling, eventually causing markets to tip, which allows the dominant firm to "set the rules of the road" in ways that may ultimately divert from a "properly functioning competitive market."7
Antitrust enforcers in Latin America also have expressed similar sentiments. At the September 2022 global enforcers panel, CADE President Alexandre Cordeiro Macedo noted that while Brazil does not have any new competition laws that specifically address digital markets, it does have a new data-protection law.8 President Macedo explained that "Brazilian regulators seek to adapt existing tools to address the challenges presented by digital industries—such as redefining relevant markets and analyzing two-sided platform markets."9 He shared the view that global collaboration is critical, which "means coming together and 'exchanging experiences and practices' with respect to lessons learned about similar (or identical) investigations across jurisdictions."10
Similarly, in a trilateral US-Mexico-Canada meeting in September 2022, Brenda Hernández, then Acting Chair of COFECE, focused on "how changes in the legal environments in these three jurisdictions may shape future enforcement efforts."11 In July 2020, COFECE established a digital markets unit to monitor such developments and their effect on competition. And COFECE officials previously commented that the "Commission understands the importance to explore the possibility of entering into second generation cooperation agreements that would allow for more effective and efficient cooperation with other jurisdictions."12
Despite the consistent emphasis on increased coordination among enforcers, antitrust enforcement in digital markets so far has largely focused on specific conduct at the local level. Still, antitrust enforcers are carefully watching their counterparts in other jurisdictions and coordination between enforcers is likely to become a key enforcement tool. Indeed, enforcers throughout the US and Latin America have launched parallel or follow-on investigations and enforcement actions involving alleged anticompetitive restrictions on digital products and in-app purchases, digital advertising, self-preferencing, and various exclusivity arrangements.13
What does this mean for you? Given the increasing role that technology and digital platforms have across jurisdictions, antitrust compliance and risk-mitigation strategies should be prioritized. Government antitrust inquiries can quickly balloon into multi-jurisdiction investigations and enforcement actions. As a result, companies not only need to understand local antitrust laws and enforcement trends, but should adopt an effective antitrust compliance program that includes a coordinated, multi-jurisdictional antitrust strategy.
Latin American companies should also proactively assess when their conduct may implicate US competition laws. Companies outside the US often neglect to consider that conduct outside US borders may be subject to US antitrust enforcement when the conduct has a substantial and intended effect in the United States.14 While this assessment is fact sensitive and often nuanced, the Foreign Trade Antitrust Improvements Act and other US statutes impose important jurisdictional limitations on US enforcement.15 Any antitrust compliance program should address this issue.
2. US and Latin American Antitrust Authorities Are Also Scrutinizing Environmental, Social, and Governance (ESG) Initiatives
Climate change has shifted investor focus to how companies incorporate ESG factors into their business strategy. Certain antitrust authorities, governments, and academics have discussed relaxing competition laws to grant exemptions from competition law to support sustainability and to incorporate environmental factors into antitrust analysis. This is of particular importance in Latin America for three key reasons: the adoption of carbon markets at the national and subnational level, government incentives promoting low-carbon technologies, and existing energy infrastructure.16 Despite a desire to support sustainability, ESG collaborations between Latin American and US companies are generally not immune from the antitrust laws, and these collaborations are likely to be subject to antitrust scrutiny in both the US and Latin America.
In September 2022, Federal Trade Commission Chair Lina Khan testified before a US Senate subcommittee that there is no ESG exemption to US antitrust laws and commented that the FTC has "seen firms come to us and try to claim an ESG exemption and we have to explain to them clearly that there is no such thing."17 Chair Khan explained that if ESG agreements affect competition, they are "always relevant to us."18 And AAG Kanter similarly testified that "when firms have substantial power and they use that power to achieve anti-competitive ends, that should be actionable under the antitrust laws."19
Already, in the US, members of Congress and state attorneys general have opened antitrust investigations into ESG practices. For example, in December 2022, several members of the US House of Representatives sent a letter to "leaders of Climate Action 100+ requesting key documents" related to their ESG policies.20 Climate Action 100+ consists of 166 global companies, including several major companies in Latin America, that are key to driving the global net zero emissions transition.21
According to the December 2022 letter, Climate Action 100+ "seems to work like a cartel to 'ensure the world's largest corporate greenhouse gas emitters take necessary action on climate change.'"22 The letter emphasizes that "when companies agree to work together to punish disfavored views or industries, or to otherwise advance environmental, social, and governance (ESG) goals, this coordinated behavior may violate the antitrust laws and harm American consumers."23 And several US Senators expressed similar concerns in November 2022, suggesting that any "collusive effort to restrict the supply of coal, oil, and gas" may drive up energy costs across the globe in violation of antitrust laws.24
In Latin America, antitrust authorities have also expressed similar ESG concerns. For example, in November 2021, Brazil's Acting Superintendent General emphasized that "CADE cannot and should not shut its eyes to the self-evident economic consequences of environmental issues."25 In his view, certain "issues may directly affect elements of antitrust reviews (for instance relevant market, barriers to entry, and rivalry)."26 But he also noted that "this does not mean we should use environmental issues as evidence of anticompetitive conduct, nor that we should grant antitrust exemption in face of situations that demand that competitors coordinate or generate environmental efficiencies."27
What does this mean for you? The road to antitrust problems is paved with good intentions. Before embarking on industry initiatives, companies must take care to follow enforcers' guidance and general antitrust principles when collaborating. Conduct such as price-fixing, bid-rigging, and market or customer allocations are almost always per se violations under US antitrust law and many other jurisdictions. Joint action on ESG initiatives that harms rivals might draw scrutiny. Latin American companies participating in Climate Action 100+ or other ESG initiatives should be careful that collaborative efforts not cross the line and should implement compliance safeguards to protect against any improper conduct.
At the same time, enforcers recognize that many competitor collaborations are pro-competitive and lawful. In the US, for example, antitrust enforcers typically will consider potential pro-competitive benefits, anti-competitive harms, and overall competitive effects when analyzing competitor collaborations. Pro-competitive benefits may include lower prices, higher quality, more efficient business practices, new research and development, meeting unmet needs, or faster innovation and market introduction. And ESG initiatives can have other procompetitive benefits, such as encouraging sustainable development, the adoption of fair standard-setting processes, the internalization of human rights and ethical values, and the reduction in costs and limited resources.28 By contrast, anticompetitive effects generally may include higher prices, harm to rivals, and reduced output or innovation.29
Latin American companies should work with antitrust counsel to implement actionable compliance policies to mitigate antitrust risks. Collaborating companies can also use business review letters to ask the US antitrust agencies to state their current enforcement intentions as to whether US authorities would challenge the proposed conduct as anticompetitive. While this process can take several months and often involves the production of significant numbers of documents, the Antitrust Division has never brought a criminal enforcement prosecution after issuing a letter saying it had no intent to prosecute a planned activity—known as a No Action letter. Past cases have shown that a No Action letter can be very persuasive to courts in finding that the described conduct does not violate antitrust laws.30
3. US and Latin American Antitrust Authorities Are Increasingly Focusing on Competition in Labor Markets
US and Latin American antitrust authorities are also focusing on competition in labor markets, particularly when employers allegedly restrict worker mobility or limit wages and other employment benefits.
In the US, the Antitrust Division obtained early victories before the US District Court for the Eastern District of Texas in United States v. Jindal, No. 4:20-CR-00358 (E.D. Tex. Nov. 21, 2021), and the US District Court for the District of Colorado in United States v. DaVita Inc., No. 1:21-cr-00229 (D. Colo. Jan 28, 2022), by defeating motions to dismiss and obtaining confirmation from those courts that those wage-fixing and no-poach agreements could be prosecuted as per se criminal violations.31 But in the ensuing separate trials in April 2022, juries in both cases acquitted all defendants of antitrust charges.32
Following those acquittals, Antitrust Division officials have acknowledged that "aggressive antitrust enforcement means the division will not secure convictions in every case," emphasizing that those losses do "not mean those cases were not worth bringing."33 Indeed, the Antitrust Division has continued to investigate and bring criminal charges for alleged wage-fixing and no-poach agreements. In October 2022, the Division secured guilty pleas related to an alleged conspiracy between competitors to allocate employees and fix their wages.34 But, in March 2023, the Division was handed another loss in the US District Court for the District of Maine when a jury found four homecare agency managers not guilty in a criminal wage-fixing case.35
In Latin America, antitrust enforcers have also begun to focus on labor markets. For example, in the last few years:
- Brazil's Administrative Council for Economic Defense launched its first-ever investigation into healthcare labor markets where human resources managers allegedly formed an unlawful information-exchange scheme;
- Mexico's Federal Economic Competition Commission fined 17 football clubs, the Mexican Football Federation, and eight individuals a combined 177.6 million pesos in its first-ever no-poach case;
- Colombia's Superintendence of Industry and Commerce investigated alleged no-poach agreements concerning national football players that prevented players from negotiating with other teams in the country's top professional league; and
- Peru's National Institute for the Defense of Free Competition and the Protection of Intellectual Property opened an investigation into six construction companies that allegedly agreed not to hire each other's employees.36
What does this mean for you? While antitrust enforcement involving labor markets has been largely confined to local, jurisdiction-specific enforcement so far, there are important cross-border implications. For example, in United States v. Knorr-Bremse et al., No. 1:18-cv-00747 (D.D.C. Apr 03, 2018), the Antitrust Division entered into a consent decree with two global rail-equipment suppliers to resolve allegations that the companies had for years agreed not to compete for each other's employees.37 According to the Antitrust Division, "one of those alleged conspiracies covering US workers" was formed abroad in Germany where one of the suppliers was based.38 As Antitrust Division officials have emphasized, "cross-border collusion in labor markets is likely to increase," particularly as remote work becomes more prevalent and labor markets "become less confined by geographic limitations."39
At minimum, companies seeking to reduce antitrust risks involving labor markets should:
- Implement clear policies that prohibit conduct that could be perceived as restricting competition in labor markets;
- Train human resource employees and other executives responsible for hiring decisions to avoid communications or arrangements with competitors that could be perceived as no-poach or wage-fixing agreements; and
- Establish and follow internal hiring and wage policies that demonstrate independent decision-making.
Each of these steps should be taken as part of a local and global antitrust-compliance strategy, along with other cartel-related compliance steps identified below.
4. US and Latin American Antitrust Authorities Continue to Focus on Price-Fixing and Other Cartel Activities
In addition to the specific enforcement areas above, the Antitrust Division seems reinvigorated to pursue international price-fixing and cartel activities more broadly. Latin American enforcers are expected to play key roles in the multi-jurisdictional investigations of alleged cartels.
For example, in December 2022, the US Department of Justice, including the Antitrust Division, charged 12 individuals for an alleged cross-border conspiracy that monopolized the market for forwarding used cars from the southern tip of Texas into Latin America.40 According to the November 2022 indictment, these defendants allegedly implemented a price-fixing conspiracy that effectively imposed an extortion fee or "piso" on rivals to secure safe passage through Mexico.41 The piso allegedly began at $40 per car in 2013 and gradually increased to about $80 per vehicle by 2019, resulting in around $27 million in alleged extortion fees.42
Notably, the indictment invoked both Sections 1 and 2 of the Sherman Antitrust Act, along with other US federal criminal laws.43 In 2022, the Antitrust Division announced that it intended to prosecute criminally monopolization or attempts to monopolize as violations of Section 2 of the Sherman Antitrust Act.44 Though monopolization under Section 2 has long been a felony, the Division had not used it as a criminal enforcement tool for roughly the last 50 years. This appears to be the first case to do so since the DOJ's recent announcement.
Beyond this ongoing cartel matter, there are various sectors where antitrust enforcers in both the US and Latin America have consistently focused, such as healthcare, pharmaceuticals, food and beverage, transportation, and shipping,45 making those areas prime for potential international cartel scrutiny. While coordination between competition authorities will help drive cartel enforcement, leniency programs have long been a staple of US antitrust enforcement.46 In general, corporations and individuals who report their cartel activity and cooperate in the Antitrust Division's investigation of the reported cartel can avoid criminal conviction, fines, and prison sentences, if they meet the requirements of the program.47
As Antitrust Division officials have consistently recognized, the leniency program is "our most important investigative tool,"48 the "linchpin of criminal antitrust enforcement,"49 and led "to the successful prosecution of many long-running and egregious international cartels."50 Even so, Division officials have acknowledged "external challenges to leniency's incentives" when cross-border cartel enforcement is implicated.51 This is partially because "the increased costs of self-reporting and cooperating in multiple jurisdictions" can be a disincentive to seeking leniency.52
As of 2020, at least 12 Latin American countries had some form of a leniency program, although many of those programs are still developing.53 Indeed, in 2018, five Latin American countries—Argentina, Brazil, Chile, Mexico, and Peru—committed to reviving or updating their leniency programs.54 For instance, in February 2023, in an effort to revive a faltering leniency program, Peru's National Institute for the Defence of Competition and the Protection of Intellectual Property (Indecopi) announced that it is preparing to submit a proposed bill "restricting antitrust criminal prosecutions exclusively to hardcore cartels and only in cases where the authority has issued an infringement decision."55 The proposed legislation would "exempt abuses of dominance and softcore cartels from criminal sanctions while increasing protections for whistleblowers."56
What does this mean for you? While most companies have policies that prohibit sharing competitively sensitive information with competitors or engaging in price fixing and other cartel-like activities, it is just as important to have an internal compliance program that, among other things:
- Periodically assesses the risk of cartel conduct occurring, including locally and across jurisdictions;
- Offers training to employees concerning antitrust risks and compliance, particularly senior management and other employees who attend trade associations or have competitor contacts as part of their job responsibilities;
- Requires certain communications and collaborations with competitors to first be cleared by internal or external counsel; and
- Incorporates internal monitoring and reporting mechanisms for potential antitrust concerns that are identified.
To the extent that any potential antitrust violations are identified internally, it is critical to engage antitrust counsel immediately to conduct an internal investigation and assess legal options, including whether leniency programs are an appropriate strategy.
Companies operating throughout the Americas may be facing a perfect storm of antitrust scrutiny. US antitrust authorities have become more aggressive and many Latin American authorities are paying closer attention to the role of antitrust enforcement, including by strengthening existing antitrust laws or enacting new antitrust laws. As Latin America's antitrust climate is changing and international cooperation is increasing, the benefits of robust compliance by companies cannot be overstated, which includes developing a coordinated, multi-jurisdictional strategy for antitrust compliance and responding to government inquiries.
1 Latin America Focus: Outlook for 2023: Amid Turmoil, Opportunities, WHITE & CASE LLP (2022).
2 Latin America Focus: Growth of Carbon Markets in Latin America, WHITE & CASE LLP (2002).
3 Jonathan Kanter, Speech, Respecting the Antitrust Laws and Reflecting Market Realities, DEPARTMENT OF JUSTICE (Sept. 13, 2022).
4 Jonathan Kanter, Speech, Solving the Global Problem of Platform Monopolization , DEPARTMENT OF JUSTICE (Sept. 16, 2022).
5 Jonathan Kanter, Speech, Assistant Attorney General Jonathan Kanter of the Antitrust Division Delivers Remarks at the Keystone Conference on Antitrust, Regulation & the Political Economy, DEPARTMENT OF JUSTICE (Mar. 2, 2023).
8 Global Competition Enforcement: Digital Markets and International Coordination, NEW YORK LAW JOURNAL (Nov. 7, 2022).
12 Alejandra Palacios, Mexico: Federal Economic Competition Commission, GLOBAL COMPETITION REVIEW (Oct. 12, 2021).
13 See Latin America & Caribbean, GLOBAL COMPETITION REVIEW; USA, GLOBAL COMPETITION REVIEW al Competition Review.
14 Antitrust Guidelines for International Enforcement and Cooperation, US DEPARTMENT OF JUSTICE AND US FEDERAL TRADE COMMISSION (Jan. 13, 2017).
16 Taylor Pullins, Growth of Carbon Markets in Latin America, WHITE & CASE (Oct. 25, 2022).
17 Testimony by AAG Johnathan Kanter and Chair Lina Khan, Oversight of Federal Enforcement of the Antitrust Laws, Subcommittee on Competition Policy, Antitrust, and Consumer Rights (Sept. 20, 2022).
20 Press Release, Judiciary Republicans: Woke Companies Pursuing ESG Policies May Violate Antitrust Law, US HOUSE OF REPRESENTATIVES JUDICIARY COMMITTEE (Dec. 6, 2022).
21 Who's Involved, CLIMATE ACTION 100+.
22 Press Release, Republicans Launch Antitrust Investigation Into Climate-Obsessed Corporate ‘Cartel,' US HOUSE OF REPRESENTATIVES JUDICIARY COMMITTEE (Dec. 22, 2022).
24 Letter from Senator Tom Cotton et al. to Fifty Law Firms, US SENATE (Nov. 3, 2022).
25 Environmental Consideration in Competition Enforcement – Note by Brazil at 11, OECD (Nov. 15, 2021).
28 Letter from Attorney General Karl Racine to various Senators and Representatives re Fund Managers' Use of ESG Factors (Nov. 21, 2022); Witold Henisz, Tim Koller, and Robin Nuttall, Five Ways that ESG Creates Value, MCKINSEY (Nov. 2019).
29 J. Mark Gidley, Kathryn J. Mims, Kate Kelliher, Competitor Collaboration: From Combatting COVID-19 to the Climate Crisis, WHITE & CASE (Sept. 16, 2020).
31 Adam Acosta and Eric Grannon, DOJ Criminal Antitrust Enforcement Outlook for Rest of 2022, LAW360 (Aug. 10, 2022).
33 Adam Acosta and Eric Grannon, DOJ Criminal Antitrust Enforcement Outlook for Rest of 2022, LAW360 (Aug. 10, 2022).
34 Press Release, Health Care Company Pleads Guilty and is Sentenced for Conspiring to Suppress Wages of School Nurses, DEPARTMENT OF JUSTICE (Oct. 27, 2022).
35 Dan Papscun, Justice Department Handed Defeat in Maine Criminal No-Poach Trial, Bloomberg Law (Mar. 22, 2023).
36 Olivia Rafferty, Latin America Should Expect Influx of No-poach Cases, Says Former Enforcer, GLOBAL COMPETITION REVIEW (June 28, 2022).
37 Final Judgment, United States v. Knorr-Bremse et al., No. 1:18-cv-00747 (D.D.C. July 11, 2018); Richard A. Powers, Speech, Remarks at Fordham's 48th Annual Conference on International Antitrust Law and Policy, DEPARTMENT OF JUSTICE (Oct. 1, 2021).
40 Press Release, Criminal Charges Unsealed Against 12 Individuals in Wide-Ranging Scheme to Monopolize Transmigrante Industry and Extort Competitors Near US-Mexico Border, DEPARTMENT OF JUSTICE (Dec. 6, 2022).
41 Indictment, US v. Martinez, et al., No. 4:22-cv-560 (S.D. Tex. Nov. 9, 2022).
44 Adam Acosta and Eric Grannon, DOJ Criminal Antitrust Enforcement Outlook for Rest of 2022, LAW360 (Aug. 10, 2022).
45 See, e.g., Aimee Imundo, Americas Antitrust Review 2021 United States: Department of Justice, GLOBAL COMPETITION REVIEW (Oct. 20, 2020); Olivia Rafferty, CADE Punishes Air Fuel Cartel, GLOBAL COMPETITION REVIEW (Nov. 14, 2022); Alex Bagley, Uruguay Issues Highest-Ever Fine Following Second AB InBev Exclusivity Probe, GLOBAL COMPETITION REVIEW (Nov. 3, 2022).
46 Vivek Ghosal and D. Daniel Sokol, The Evolution of US Cartel Enforcement, THE JOURNAL OF LAW & ECONOMICS (Aug. 2014).
47 Leniency Program, US Department of Justice's Antitrust Division (last viewed Mar. 6, 2023).
49 Bryan Koenig, DOJ Adds New Obligations to Leniency Program, LAW360 (Apr. 4, 2022).
50 Brent Snyder, Speech, Deputy Assistant Attorney General Brent Snyder Delivers Remarks at the Sixth Annual Chicago Forum on International Antitrust, DEPARTMENT OF JUSTICE (June 8, 2015).
51 Richard A. Powers, Speech, A Matter of Trust: Enduring Leniency Lessons for the Future of Cartel Enforcement, DEPARTMENT OF JUSTICE (Feb. 19, 2020).
53 See OECD, Latin American and Caribbean Competition Forum, at 2-3 (Apr. 8, 2022) (explaining that although some clemency programs in the area have existed for over two decades, Latin American jurisdictions are now searching for ways to improve, design, or begin to apply the program).
54 Alianza Estratégica Latinoamericana en Materia de Libre Competencia, COFECE (Nov. 28, 2018).
55 Julie Masson, Peru Seeks to Curtail Criminal Antitrust Sanctions and Expand Leniency Protections, GLOBAL COMPETITION REVIEW (Feb. 9, 2023).
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