The excess of fines imposed by the Departments for Consumer Protection and Defence (Procons) and recommendations for businessmen

There is no doubt that the fines imposed by the municipal and state Departments for Consumer Protection and Defence (Procons), as well as investigations within the scope of the Public Prosecutor’s Office, as consumer protection and defence bodies, have become a major concern for the Brazilian business community, given the imposition of oftentimes exorbitant fines, which go beyond what is reasonable and, therefore, causes a financial liability that is capable of unbalancing a company’s revenues and negatively impacting its cash flow.

In view of this scenario of unmistakable insecurity, businessmen must always be aware of the sanctioning processes instituted by these consumer protection and defence bodies, especially regarding the quantification of the financial penalties imposed, noting that their amount must observe a minimum level of 200 times and a maximum of 3,000,000 times the value of the Tax Reference Unit (UFIR).

In São Paulo, particularly, businessmen should bear in mind that Procon in that state has defined important parameters instituted in Ordinance nos. 57/19, 29/21 and 81/21. Such Ordinances establish that consumer fines are determined based on the “monthly gross revenue” of the infringing company, which may be estimated by the body and it will be the penalised company’s responsibility to challenge it, under penalty of a merely estimated value being set by the governmental body. These rules also differentiate the billing of a “specific unit” of the company or a “network of establishments”, which may significantly impact the amount of the fine to be imposed. It is also important to clarify that the quantification of the base penalty for the fine will be defined using the formula: (Gross Monthly Revenue) x (Nature and Group of Infringement) + (Value of Advantage Obtained). After the base penalty has been individually calculated for each infringement, if there is more than one infringement of the same nature, the concurrent form rule will be applied, adding 1/3 to the value of the penalty. Afterwards, if there are infringements of a different nature, the concurrent material rule will be applied, adding the penalties together.

Therefore, some recommendations are very important for businessmen when faced with a sanctioning process of this nature, such as (i) challenging, in a timely manner, the amount of the average monthly gross revenue estimated by Procon for the imposition of the fine; (ii) checking whether the infringement notice contains flaws in the procedures or rules for the quantification of the fine that make it null or voidable; (iii) whether the infringement notice contains information about the penalised establishment or about the network of establishments; and (iv) whether the value of the advantage obtained is appropriate, as all these issues must be evaluated for a timely administrative challenge and consequent reduction in the fine to be imposed on the company, with a view to curbing abuses and excesses by government bodies. In the event of failure in the administrative sphere, it is strongly recommended that a lawsuit be filed aiming to invalidate or re-examine the value of the fines imposed, in order to curb any unlawfulness committed by government entities.