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CADE opens administrative procedure on the Angra 3 Public Procurement Cartel investigation

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Seven companies and 21 individuals are being accused of participating in the collusion
published: Nov 19, 2015 05:19 PM last modified: Apr 13, 2016 02:45 PM

The General Superintendence of the Administrative Council for Economic Defense – CADE opened an administrative proceeding to investigate alleged anticompetitive conducts of taxi drivers and taxi class associations. The investigated parties would have practiced abusive actions to exclude and block the entry of the rideshare online platform Uber in the market of paid individual transportation (Administrative Proceeding No. 08700.006964/2015-71). The decision was published in the Official Journal of 20 November 2015.

The investigation began out of a complaint presented jointly by Uber do Brasil Tecnologia Ltda., the Students’ Association of the University of Brasilia, and the Students’ Association of Centro Universitário de Brasilia.

According to the General Superintendence, while the current legal controversy about Uber legal status is not clarified by the Brazilian Executive, Legislative and Judiciary bodies, the company should be considered as being a normal competitor, protected by the Brazilian Competition Law against anticompetitive conducts.

In the preliminary evidentiary stage, the General Superintendence assessed alleged abuse of right to petition in three lawsuits opened by taxi class associations – a conduct known as sham litigation. The lawsuits presented the same object and were opened in different courts, possibly aiming at bypassing the judicial rules of distribution and trial in order to hinder Uber’s defense. In the lawsuits analyzed by the General Superintendence, the Brazilian Judiciary itself considered that the plaintiffs would have incurred in sham litigation.

According to the General Superintendence, other lawsuits analyzed were opened by the taxi class associations in a legitimate and non-abusive way.

CADE also identified that there is evidence that some taxi drivers would have used violence and serious threat against Uber drivers and passengers. Those actions would have created a threatening atmosphere against rivals, which may have caused anticompetitive effects by blocking the entry and the development of the new company in the market, besides limiting consumers’ choice. Evidence suggests that some taxi class associations and their directors would have contributed in a relevant manner to those conducts.

The General Superintendence did not accept part of the complaint, which argued that taxi drivers would have been abusively pressing public authorities to pass laws blocking the entry of the company in the market of paid individual transportation. The actions of taxi drivers to promote their interests in governmental instances have been considered legitimate in regards to competition.

The parties investigated in the Administrative Proceeding are: Sindicato dos Motoristas e Trabalhadores nas Empresas de Táxi no Estado de São Paulo – Simtetaxis-SP; Sindicato dos Permissionários de Taxi e Motoristas Auxiliares do Distrito Federal – Sinpetaxi-DF; Associação Boa Vista de Táxi – Ponto 1813 and its president, José Renan de Freitas; Sindicato dos Taxistas Autônomos de São Paulo – Sinditaxi-SP and its president, Natalício Bezerra Silva; Sindicato Intermunicipal dos Condutores Autônomos de Veículos Rodoviários, Taxistas e Transportadores Rodoviários Autônomos de Bens de Minas Gerais – Sincavir-MG and its president, Ricardo Luiz Faedda; Sindicato dos Taxistas do Distrito Federal – Sindicavir and Associação de Assistência aos Motoristas de Táxi do Brasil – Aamotab and its president, André de Oliveira.

With the opening of the Administrative Proceeding, the investigated parties will be notified to present their defenses. In the end of the evidentiary stage, the General Superintendence will issue an Opinion either for the condemnation or for the filling of the case, and will submit the case for judgment by Cade’s Administrative Tribunal.

Complaint of Associação Boa Vista de Taxi – On 20 November 2015, the General Superintendence filled the complaint made by Associação Boa Vista de Taxi – Ponto 1813 against Uber (Preparatory Proceeding No 08700.004530/2015-36),presented to CADE in May of 2015.

According to the association, Uber would have been practicing unfair competition by offering irregular taxi service, contrary to traffic, transportation and consumer laws. However, the General Superintendence considered that the analysis of this controversy is not in CADE’s competencies, once it does not refer to any anticompetitive conduct set out in the Brazilian Competition Law (Law No. 12.529/2011). It would be a competency of the Legislative body, regulatory agencies and the Judiciary body to assess legal concerns about Uber, as well as the arguments of regulatory asymmetry. Cade has the competency to punish practices that harm competition and consumers, which would not be the case, because the entry of a new rival tends to be pro-competitive and beneficial for consumers. The parties can appeal to the General Superintendent against the decision to file the case within five days.

Complaint of the Brazilian House of Representatives – On 20 November 2015, the General Superintendence opened an Administrative Inquiry to assess complaint of Commission of Consumer Defense of the Brazilian House of Representatives against Uber (Administrative Inquiry No. 08700.010960/2015-97) sent to CADE in November.

According to the House of Representatives, Uber would be illegally trying to dominate the market of paid individual transportation. This would have been occurring in cities in the United States, where the company operates for a longer time.

In attention to the new complaint, CADE’s General Superintendence opened an Administrative Inquiry to analyze the arguments brought to the agency and to proceed to the evidentiary stage.

Intervention in the Judiciary – With the discussions in the Judiciary body about the legality of Uber, CADE requested its participation as amicus curiae in unconstitutionality actions opened by Uber in São Paulo and Rio de Janeiro.