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CADE signs agreements with Andrade Gutierrez and UTC concerning cartel investigations in Petrobras and Eletronuclear public bids

TCC

By means of the cease-and-desist agreements (TCCs for its acronym in Portuguese), the signatories acknowledge their involvement in the conduct, agree to collaborate with the investigations and to pay a pecuniary contribution totaling BRL 195 million.
published: Feb 02, 2017 03:37 PM last modified: Feb 08, 2017 12:03 PM

The construction companies Andrade Gutierrez and UTC – as well as current and former employees from both companies – signed separate TCCs regarding proceedings conducted by CADE’s General Superintendence investigating a cartel within the scope of the so-called “Car Wash Operation”.  

Both companies signed agreements concerning two administrative proceedings. The first proceeding investigates a cartel in Petrobras’ public bids in the onshore engineering services, construction and industrial assembly markets (Administrative Proceeding 08700.002086/2015-14). The second proceeding investigates collusion in public bids conducted by Eletronuclear regarding electronuclear assembly works from the Angra 3 power plant (Administrative Proceeding 08700.007351/2015-51).  

CADE’s Administrative Tribunal approved all four TCCs in the judgment session held on 18 January 2017. The agreements foresee a pecuniary contribution totaling BRL 195,160,775.95.

Andrade Gutierrez will pay BRL 56,007,013.53, amount derived from the two TCCs signed by the company. UTC will pay BRL 139.153.762,42, due to its two cease-and-desist agreements. It is worth mentioning that the agreement signed with UTC concerning the cartel in Petrobras’ public bids, which corresponds to BRL 129,232,142.71, is the biggest pecuniary contribution ever negotiated between CADE and a company.

The agreements foresee that the signatories will terminate their involvement in the anticompetitive conducts, acknowledge their participation in the infraction and collaborate effectively with the investigations, besides paying the referred pecuniary contributions to the Fund for the Defense of Diffuse Rights (FDD, for its acronym in Portuguese).

The benefits provided by the TCCs to the signatories (both natural and legal persons) are restricted to CADE’s administrative proceedings. The agreements do not entail benefits in the criminal sphere.

Investigations regarding the public bids in Petrobras

Within the scope of the “Car Wash Operation”, the administrative proceeding concerning the cartel in Petrobras’ public bids was opened on 22 December 2015 after the signature of a leniency agreement signed between the General Superintendence and Setal Engenharia e Construções, SOG Óleo e Gas and employees of the group Setal/SOG in March 2015. CADE and the Federal Prosecution Service, through its section in the state of Paraná (MPF/PR, for its acronym in Portuguese), jointly signed the leniency agreement with the parties, within the so-called “Car Wash Operation” task force. The collaboration resulting from the leniency agreement provided information of a cartel in Petrobras’ public bids involving several construction companies, including Setal/SOG and Camargo Correa.

As a result of the TCC approved today, UTC’s signatories collaborated with the investigations by presenting information and documents that widened the scope of the investigations, consolidated in the Anticompetitive Conduct’s Records. Nearly 30 new documents that evidence the conduct were presented and 10 new public bids were identified as being affected by the cartel. The pecuniary contribution to be paid by UTC (including the company, current and former employees) totals BRL 129,232,142.71, the biggest pecuniary contribution ever negotiated between CADE and a company.

The TCC signed with Andrade Gutierrez resulted in the signatories’ collaboration where they have presented information and documents that expanded the ongoing investigations, consolidated in the Anticompetitive Conduct’s Records. Around 20 new documents that evidence the conduct were presented and six additional public bids were affected by the conduct. The pecuniary contribution to be paid by Andrade Gutierrez (including the company, current and former employees) totals BRL 49,854,412.72.

Andrade Gutierrez obtained an additional reduction in the final amount of the referred pecuniary contribution set out in the TCC, since it signed a leniency plus agreement with CADE. In this agreement, the company reported a cartel in the market of construction, modernization and/or renovation of sportive facilities in the context of the 2014 World Cup in Brazil (Leniency Agreement 8/2016, signed on 6 October 2016). 

With the approval of the TCCs this Wednesday, UTC becomes the second company and Andrade Gutierrez the third company that have signed TCCs in the administrative proceeding that investigates cartels in Petrobras’ public bids. On 19 August 2015, CADE’s Tribunal had already approved a TCC signed with Camargo Corrêa and its former employees within the scope of this investigation – by means of which a pecuniary contribution of BRL 104 million was set.

Investigations in Eletronuclear’s public bids

The investigation of the cartel in Eletronuclear’s public bids, which also lies within the scope of the “Car Wash Operation”, consists in the Administrative Proceeding 08700.007351/2015-51, initiated on 18 November 2015.  The proceeding was subsidized by the Leniency Agreement 06/2016 jointly signed, in July 2015, by the General Superintendence, MPF/PR and Camargo Correa, within the so-called “Car Wash Operation” task force. An additive term to the Leniency Agreement was signed on 3 October 2015.

The signatories of Andrade Gutierrez, which was the first company to sign a TCC in this proceeding, collaborated by presenting additional information and documents that widened its scope, consolidated in the Anticompetitive Conduct’s Records.

The documents provided suggest that the conducts began in 2010, meaning a three-year expansion in the estimated duration of the conduct. Andrade Gutierrez’s pecuniary contribution in this TCC (including the company, current and former employees) sums BRL 6,152,600.81.

Andrade Gutierrez has also received an additional reduction in the amount of its pecuniary contribution due to the signature of a leniency plus agreement in which the company reported the existence of a cartel in the national construction market of the Belo Monte hydroelectric power plant (Leniency Agreement 07/2016, signed in September 2016) 

UTC’s signatories have also collaborated with the investigations by presenting documents and information, which are available in the Anticompetitive Conduct’s Records. The total amount of UTC’s pecuniary contribution (including the company, current and former employees) is BRL 9,921,619.71. UTC was the second applicant to sign a TCC in this proceeding. The company’s collaboration consisted in confirming the information presented in the administrative proceeding and in providing documents that widened the duration of the conduct in five years – the conduct began in 2008, and not in 2013, as previously assumed by CADE.

Next Steps

The information and documents provided by the approval of the TCCs will be added to those that have resulted from previous leniency agreements and to the additional evidence that is being collected and analyzed by the General Superintendence. After the analysis of all the documents, at the end of the instruction stage, the General Superintendence will issue an opinion either in favor of the condemnation or of the filing of the case regarding each defendant. The conclusions will be forwarded to CADE’s Tribunal, which is responsible for the final decision.

Leniency and TCC

Foreseen in Article 86 of the Brazillian Competition Law (Law 12,529/2011), the leniency program is only available for the first applicant, which must terminate its involvement in the conduct, confess the wrongdoing and collaborate effectively and permanently with the investigations, identifying other agents involved and providing evidence and relevant information that prove the infraction. The leniency program may benefit the signatories with immunity in the administrative sphere, within CADE’s scope, and is jointly signed with the Federal Prosecution Service, also enabling total or partial immunity in the criminal sphere. Within the scope of the “Car Wash Operation”, seven leniency agreements signed with CADE have been disclosed.    

Cease-and-desist agreements are set forth in the Article 85 of Law 12,529/2011 and in the Article 185 of CADE’s Internal Regulation (RICADE, for is acronym in Portuguese). The instrument is available for other agents involved in anticompetitive conducts that have not qualified for the signature of a leniency agreement. Under the TCCs, in cartel cases, the commitment required from the signatories is similar to that of the leniency program: they must terminate their involvement in the conduct, acknowledge their participation and collaborate effectively with investigations.

It is worth noting that TCCs do not provide immunity in the criminal sphere and do not completely extinguish the sanction in the administrative sphere, therefore being mandatory the payment of a pecuniary contribution to the Fund for the Defense of Diffuse Rights – FDD. According to RICADE’s Article 187, the signatories may benefit from a reduction in the administrative fine, as long as they fulfill the requirements set forth in the agreement. In this case, other aspects may also be taken into account, such as the stage of the proceeding and the scope of the collaboration.

Between 2014 and 2016, CADE has signed 116 TCCs in cartel investigative proceedings, which resulted in the reduction of administrative costs, avoided the judicialization of the decisions, brought relevant contributions to investigations and resulted in more than BRL 1 billion in pecuniary contributions collected to the Fund for the Defense of Diffuse Rights.