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CADE condemns fuel cartel in the state of Espírito Santo

Cartel

Fines imposed sum approximately BRL 65.7 million.
published: May 25, 2015 09:34 AM last modified: Apr 08, 2016 11:09 AM

The Tribunal of the Administrative Council for Economic Defense (CADE) condemned, during its public hearing on 20 May 2015, 27 gas stations and nine individuals for cartel formation in the fuel market in the metropolitan area of Vitória, in the state of Espírito Santo (Administrative Proceeding no. 08012.008847/2006-17). The anticompetitive practice occurred between 2006 and 2007. In total, fines imposed sum approximately BRL 65.7 million.

According to Reporting Commissioner, Márcio de Oliveira Júnior, the colluded companies organized themselves in order to discuss their business strategies before implementing any innovations in the region’s competition market. In this sense, the condemnation was based on both the economic evidence demonstrating the parallelism of fuel resale prices in the region, and the evidence of coordinated action among competitors to fix prices and share sensitive information.

As proof for condemnation telephone interceptions required by the Public Prosecution Service of the State of Espírito Santo and shared with CADE were used, among other proofs collected during the investigatory stage of the case at CADE. The recorded conversations demonstrated the coordination among the competitors to charge equal or almost equal prices.

“The fuel resellers’ cartels are well known in CADE’s Tribunal, for they have been a recurring anticompetitive practice in the country. In the real situation, it is not a mere parallelism of prices. Telephone interceptions confirmed that the parallelism was not random or natural, but coordinated among the resellers of the metropolitan area of Vitória/ES in order to harm competition”, explained Oliveira Júnior.

The 27 gas stations condemned by CADE shall pay a total of approximately BRL 60.5 million and the nine individuals a total of approximately BRL 5.2 million. The proceeding was filed with relation to Posto Divino Ltda., Posto Mclaren Ltda., and Posto América Ltda. Furthermore, CADE will issue a recommendation to the competent authorities to prevent tax installments from being granted to the condemned parties and recommending the withdrawal of fiscal incentives or public subsidies given to the condemned parties.

The fines imposed are collected to the Diffused Rights Fund (FDD, in its acronym in Portuguese) of the Ministry of Justice, reverted to projects that aim at recovering diffuse goods and rights, such as environment, historic and cultural heritage, consumer protection, among others.