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CADE's Office of the General Superintendent recommends the conviction of cartel members in tenders of orthoses, prostheses, and medical devices

Administrative Proceedings

Together, the collusive firms controlled the entire market of implantable cardiac pacemakers used in heart disease treatments
published: Sep 03, 2021 09:41 AM last modified: Sep 03, 2021 09:41 AM
by International Unit

On 24 August, CADE's Office of the Superintendent General (SG) signed a direction suggesting the agency's Tribunal convict four companies, one business association, and seventeen individuals in the market of implantable cardiac pacemakers and supplementary items. The defendants formed a cartel in the public procurement of orthoses, prostheses, and high-cost medical devices.

After a complaint filed by the Ministry of Justice and Public Security, CADE's investigation started in November 2015, with an administrative enquiry that scrutinised the alleged practices. The investigation resulted in the institution of two proceedings at the agency; one of these to examine anticompetitive conduct in the field of implantable cardiac pacemakers (implantable cardioverter defibrillator, cardiac resynchronization, and pacemakers) and devices (electrodes, tear-away introducers, and catheters) used in the diagnosis and treatment of heart diseases.

According to the SG's opinion, the cartel harmed competition and caused damages that went beyond the market and Treasury. The conduct, which involved companies that together had the entirety of that market, may have prevented a number of patients from using the marketed devices, possibly leading to their deaths, since the devices are life-saving products.

According to the investigations, the cartel existed for longer than a decade – at least from 2004 to 2015 – regularly sharing competitively sensitive information and allocating the market and contracts. The SG's opinion indicates bid-rigging details were primarily discussed in meetings between company representatives.

Members of the cartel would discuss issues such as non-aggression pacts, shady deals with medical associations with the intention of obtaining future benefits via their own products, strategies to prevent new competitors from entering the market, and mechanisms to monitor and punish non-complying firms.

The case investigation was supported by information presented in a partial leniency agreement signed by the SG and company Medtronic. With CADE's consent, the company waived the confidentiality of the agreement. Additionally, supported by the Brazilian Federal Police, the SG carried out operation Merchant of Venice, consisting of search and seizures that gathered evidence used in the analysis of the case.

To obtain evidence of the collusion, in addition to the regular methods for data collection and analysis, the SG employed algorithms to detect characteristic patterns and behaviours of cartels in tenders. The algorithms are part of a screening tool named Cérebro – developed by the SG in 2015 – which aims at investigating cartels in procurement processes.

The case has been submitted for a hearing, in which the agency's tribunal will make the final decision. If convicted, the defendant companies will be imposed fines ranging from 0.1% to 20% of their gross revenue in the year before the administrative proceeding was initiated.

 Access Administrative Proceeding nº 08700.003699/2017-31.