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CADE’s General Superintendence concludes opinion on discriminatory conduct in the gas market

Anticompetitive conduct

Comgás made the investigative request against Petrobras
published: Aug 31, 2016 12:17 PM last modified: Aug 31, 2016 05:59 PM

The General Superintendence of the Administrative Council for Economic Defense – SG/CADE has concluded the investigation of an Administrative Proceeding concerning the assessment of a potential anticompetitive conduct in the service of gas supply provided by Petrobras (PA 08700.002600/2014-30). By means of an opinion published in the Official Gazette on August 8,  CADE’s General Superintendence understood that the alleged conduct of the state company has the potential of promoting its own distributors to the detriment of Companhia de Gás de São Paulo – Comgás. For this reason, the General Superintendce recommended the condemnation of Petrobras.

According to the complaint submitted to CADE by Comgás, the alleged discriminatory conduct perpetrated by Petrobras began in 2011, when the state company started a discount program for natural gas prices, and terminated in 2015. Petrobras has two types of contracts for natural gas supply: the first one, called Nova Política de Preços (NPP for its acronym in Portuguese),includes the national gas, the Bolivian gas and the gas imported; the second one is the Transportation Capacity Quantity (TCQ), which is exclusively related to the Bolivian source. However, Petrobras has only granted the discount benefit to NPP contracts.

Comgás, which operates in the cities of São Paulo, Santos, Campinas and  its surroundings, obtains its natural gas through the two existing types of contracts. Therefore, the company stated that the Petrobras’ discount policy would favor distributors that obtain gas only through NPP contracts, e.g., the company Gás Brasiliano Distribuidora, property of Petrobras and located nearby Comgás, in the western region of the state of São Paulo.

Furthermore, Comgás  has indicated  the exclusively the Bolivian contract, which was not contemplated by the discount,  imposed a severe burden on the final price of its product, which made the final gas fare in the region more expensive for consumers.

After consultations with the market and regulatory agencies, the General Superintendence understood that the existence of a discriminatory conduct, and the absence of the discount in the Bolivian contract exclusively may have damaged competition in the distribution of gas in the areas supplied by Comgás. The Gas sold exclusively in places where only the NPP contract was adopted was potentially benefitted, keeping its competitiveness.

The Superintendence also stated that the practice might have harmed competition due to the possible increase of gas fares in the region where Comgás operates and the consequent displacement of industries to artificially favored locations, distorting the allocation of industrial parks.

After the General Superintendence’s opinion , the latter is forwarded to Cade’s Tribunal, where it will  be assigned to a Reporting Commissioner and judged by the Plenary, which is responsible for the final decision.