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CADE condemns blood derivatives’ cartel

Bid rigging

Three companies and two individuals were fined BRL 1 million. The charges against the others represented were filed.
published: Apr 15, 2016 11:06 AM last modified: Apr 15, 2016 11:07 AM

 

In the judgment session of 13 April 2016, the Administrative Council for Economic Defense – CADE condemned three companies and two individuals for bid rigging on tenders conducted by the Ministry of Health in 2004 to buy blood derivatives. The total fines sum up to BRL 1 million (Administrative Proceeding No. 08012.003321/2004-71).

CADE condemned the companies The American National Red Cross - ARC, Octapharma AG and Octapharma Brasil S.A., and the individuals Jaisler Jabour (Octapharma’s representative) and Marcelo Pitta (ARC’s representative). The charges related to the other individuals represented were filed.

The case started with ex-officio investigations promoted by the former Economic Law Office (SDE in its acronym in Portuguese) in 2004. SDE analyzed economic violations during the “Vampire Operation” – an investigation conducted by the Brazilian Federal Police, which discovered a group responsible for bid rigging Ministry of Health’s tenders in order to buy blood derivatives.

According to CADE, there are several economic irregularities on these tenders. Among them, there is the combination between bidders for the division of their plots; price fixing, in order to prevent proposals under certain value; private targeting of biddings, through the definition of who would win certain auction; and division of market of products between the cartel’s members.

“The evidence shows that the collusion between competitors was effectively implemented, resulting in price fixing, market division and fraud to the competing character of public biddings. On this case, at least five auctions were influenced by the cartel”, said the reporting commissioner for this Administrative Proceeding, Gilvandro de Araújo.
According to him, bid riggings are by themselves harmful, because they impair the provision of public services and they represent deviations of government funds, harming taxpayers. “Moreover, the gravity of this case is even higher. The conduct of raising prices has affected lives of hemophiliacs all over the country, increasing the total cost of production and resulting in a smaller offer of medicines for the population”, he concluded.