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CADE investigates cartel in the national silicate market

Cartel

The conduct would have lasted from 1999 to 2012
published: Jul 03, 2015 09:00 AM last modified: May 11, 2016 03:20 PM
CADE’s General Superintendence opened, on 03 July 2015, an administrative proceeding to investigate the alleged cartel in the national market of production and supply of silicate (PA 08700.008985/2012-88). The investigated companies are DAV Quimica do Brasil, Manchester Quimica do Brasil, Pernambuco Quimica, PQ SIlicas Brazil, Unaprosil Ind. e Comércio de Produtos Químicos, and 24 individuals. The conduct would have lasted from 1999 to 2012.

Silicate is a chemical compound derived from silicon that, when added to other compounds, such as sodium and potassium, may have various usages. It is an essential product for the national economy, being a basic input for many sectors and industries, as water treatment, production of pigments and ink, textile industry, general chemical industry, soil strengthening, production of detergent, adhesives, cement, and ovenproof items, among others. 

The market share of the companies involved in the alleged scheme represents more than 90% on the silicate’s production and trading sectors. 
 
The Superintendence report points that there are strong evidence of anticompetitive conducts in agreements on client’s allocation, price-fixing and commercial conditions. In addition, evidence suggests that the companies also shared the market and commercially sensitive information, besides combining prices and advantages on public procurements. 

According to the Superintendence, the client’s allocation would have been done though an agreement about the prices to be practiced. Thus, each agent would have guaranteed to itself a certain number of buyers. In this way, the price to be charged by the company was fixed in relation to the specific customer it should supply. The other competitors practiced the “price of coverage”, which was defined to give the aspect of ongoing competition among them.  This conduct is showed in the records on tables that show the division of clients and the selling and prices of coverage.  
 
In addition, when the agreement was not fulfilled by one of the companies, the aggrieved party would do a form of retaliation. It consisted of capturing the clients originally allocated to the one that failed to comply with what was determined. 

The documents and information about the anticompetitive conduct were obtained by CADE through a dawn raid held in November 2012.

With the filing of the administrative proceeding, the parties will be notified to submit their defense within 30 days. At the end of the evidentiary stage, the General Superintendence will issue an opinion for the condemnation or filing of the proceeding and will submit the case to the judgment of CADE’s Tribunal, which is responsible for the final decision. 
 
Agreement – In the judgment session held on 24 June 2015, CADE’s Tribunal signed a Cease and Desist Agreement (TCC for its acronym in Portuguese) with Diatom Mineração Ltda. and four individuals connected to the company that were being investigated in this case. By signing the agreement, they have confessed their participation in the illicit conduct and committed to collect a pecuniary contribution in the amount of BRL 3.3 million.