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CADE, Federal Police and the Prosecution Service of the Federal District and Territories conduct joint operation to disrupt alleged fuel cartel

Dawn Raid

The warrants were fulfilled in Brasília and in Rio de Janeiro
published: Nov 24, 2015 12:00 AM last modified: May 11, 2016 03:04 PM

On 24 November 2015, the Administrative Council for Economic Defense – CADE is performing a joint dawn raid with the Federal Police and the Group of Fight to Organized Crime of the Prosecution Service of the Federal District and Territories (GAECO-MPDFT on its Portuguese acronym), for the fulfillment of 42 search and seizure warrants at homes and offices of individuals and companies related to an alleged fuel market cartel at the Federal District. 

In total, 40 CADE employees are working on the so-called Operation Dubai. 

The warrants are being fulfilled in Brasília and in Rio de Janeiro. In addition to the search and seizure warrants, 7 warrants of temporary arrest and 25 coercive bench warrants are being fulfilled. 

Since 2009, the former Secretariat of Economic Law of the Ministry of Justice, with functions currently absorbed by CADE, investigates, monitors and collects information about the fuel market at the Federal District in the Administrative Inquiry no. 08012.008859/2009-11. Since then, a considerable amount of economic evidence of cartel has been gathered, implicating fuel distributors and fuel resellers.

Parallel prices and resale and distribution margins for gasoline and especially for ethanol well above the national average are among the evidence found. In addition to high margins, there has been observed a great delay in passing on eventual price decreases to the final consumer, particularly during the harvest period of sugar cane, when the ethanol price should reduce. 

Another factor that has contributed for the deepening of the investigation is the role played by the Federal District Union of Resellers of Fuel and Lubricants – Sindicombustíveis-DF on the spreading of information about the price readjustments. According to the investigation, the union allegedly influences on an uniform commercial conduct among gas stations, creates constraints to the opening and functioning of gas stations in sports clubs, supermarkets and other locations with big flow of consumers, besides monitoring market prices. 
  
The results of the analysis developed by the technical staff of CADE were forwarded to the Federal Police and to GAECO-MPDFT, which has contributed to the opening of a Police Investigation in 2010 and to the granting by the First Criminal Division of Brasília, in 2015, of call interceptions required by the Federal Police. 

The call interceptions, shared with the General Superintendence of CADE, strengthen the evidence of cartel and support the judicial granting of the search and seizure warrants, temporary arrest warrants and coercive bench warrants fulfilled, which aim at gathering more evidence of the alleged cartel. 

The seized material will be shared with CADE and, together with the other proof obtained, will be included in the ongoing investigation at CADE’s General-Superintendence. The new evidence will be subject of an administrative proceeding, and, after granted the right to full defense, the Superintendence will issue opinion either for the condemnation or the filing of the case in relation to the individuals and companies which may eventually be indicted.

The final judgment on the administrative sphere is a responsibility of CADE’s Tribunal that may impose fines to the condemned companies up to 20% of their turnover. The individuals and the union involved, if condemned, are subjected to fines from BRL 50,000 to BRL 2 billion. The Tribunal can also adopt other measures that it eventually understands needed for the deterrence of the conduct.