Brazil: Antitrust Investigation against Human Resources Professionals
CADE has launched its first investigation against Human Resources professionals regarding the exchange of information about several HR related matters, particularly those related to wages and benefits. According to CADE, the exchange of the sensitive information may have enabled the companies to adopt coordinated behaviors. More than 100 individuals (including HR directors, managers and other employees) and 37 companies within the healthcare sector were included as defendants and will be investigated.
In addition to CADE’s administrative investigation, the Public Prosecutor Office is now aware of the case and will decide whether to also pursue criminal charges against the individuals.
It is a very important investigation, since it questions the legality of information exchanges among HR professionals (within groups or even associations) and the legal scope for benchmarking in the area, potentially affecting multiple such initiatives that may have been taking place for a long time. This new development poses significant risks for companies and for professionals who have participated in this type of activity in recent years, depending on the type of information that was exchanged and how. Although the current proceeding is focused on the healthcare sector, similar investigations of different sectors are likely to emerge (and may already be under way, confidentially, by CADE).
This matter was bound to arise in Brazil, since other jurisdictions have been concerned with it for a few years now. Indeed, CADE had been showing great interest, for instance, in the developments in the United States, since their 2016 guidelines specifically aimed at professionals in the area of Human Resources warned of possible violations in this area – such as so-called “gentlemen’s agreements” to restrict hiring from each other or coordinating wages – and the significant amounts paid in fines.
CADE has now clarified that the concern goes further than agreements, and that the mere exchange of competitively sensitive information in the HR area, among companies, can be considered as an anticompetitive practice.
This ground-breaking new investigation may deeply impact the market and the way HR professionals work. Companies should evaluate any current vulnerabilities to implement possible corrective and mitigating measures.