Indirect Regulation and the Disinterested Official -- A Study on Sham Litigation in Brazil

158 Pages Posted: 21 Dec 2014 Last revised: 27 Jan 2015

See all articles by Roberto Domingos Taufick

Roberto Domingos Taufick

Ministry of Health (Brazil) - General Coordination of the Health Industrial Complex

Date Written: December 18, 2014

Abstract

This paper addresses possible scenarios for the application of state action antitrust immunity and of derivative petitioning immunity by the Brazilian Competition Commission. First I argue that by applying the Noerr-Pennington doctrine as complementary to the rights abuse doctrine and bad faith litigation the decisions of the Commission have been quite heterogeneous so far and propose the application of a functional approach as an alternative to bring more consistent decisions. Second, the paper discusses the scope of Article 31 of the Brazilian Competition Law. I rely on the functional approach and relevant literature to claim that market regulation can be attained both by the organization of governmental agencies and by direct market participation. I also claim that the adoption of a transparent policy of antitrust immunization of indirect regulation will lower market uncertainty, improve the effectiveness of the exercise of the right to petition and strengthen market control over improper immunities granted to private action. Further, I defend that undertakings performing commercial activity that have been mistakenly granted antitrust immunity might use the cloak of the antitrust immunity to file sham antitrust claims, pursuing remedies (particularly) against the valid exercise of IP rights (that artificially create scarcity). Finally, I advocate that the usual adoption of a reverse state action by the Competition Commission increases the incentives to private and political capture of the Competition Commission by lowering transaction and monitoring costs and turns acuter the aforementioned use the cloak of the antitrust immunity by commercial undertakings to file sham antitrust claims. Due to the high rate of IP claims among sham litigation cases tried before the Competition Commission, I find the subject of this study particularly relevant for the future of industries that substantially rely on IP rights and that are subject to universal access regulations that not necessarily encompass active supervision of the public policy by the regulatory agency in Brazil, including healthcare and telecommunications.

Keywords: Keywords: sham litigation, petition immunity, state action, disinterested official doctrine, active supervision, bad faith litigation, rights abuse, indirect regulation.

JEL Classification: K21

Suggested Citation

Taufick, Roberto, Indirect Regulation and the Disinterested Official -- A Study on Sham Litigation in Brazil (December 18, 2014). Available at SSRN: https://ssrn.com/abstract=2540341 or http://dx.doi.org/10.2139/ssrn.2540341

Roberto Taufick (Contact Author)

Ministry of Health (Brazil) - General Coordination of the Health Industrial Complex ( email )

Brazil

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