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CADE’s General Superintendence recommends condemnation in the market of air and maritime international freight

Cartel

The case was forwarded to the analysis of CADE’s Administrative Tribunal
by Assessoria de Comunicação Social published: Oct 04, 2017 11:23 AM last modified: Oct 04, 2017 11:23 AM

The General Superintendence of the Administrative Council for Economic Defense – CADE recommended, in an opinion published in the Federal Official Gazette on 2 October, the condemnation of seven companies, the association Associação Brasileira das Empresas de Transporte Internacional (ABRETI in its acronym in Portuguese) and eight individuals, for cartel practices in the market of air and maritime international freight forwarder (Administrative Proceeding No. 08012.001183/2009-08).

The freight forwarding consists in renting storage in the transporting companies, ensuring to these companies more safety regarding remuneration and the guarantee of the resale of the storage space to the firms which need to transport its products.

The anticompetitive conduct occurred in Europe and Brazil. The practice was investigated and condemned in the European Union, United States, Japan, Australia, Canada and New Zealand. At CADE, the administrative proceeding was initiated in August 2010, after dawn raids conducted in 2009 in the offices of three companies and ABRETI.

The evidence obtained showed that the companies agreed to transfer to clients, simultaneously, the prices of surplus tax and interests, with direct consequences in the prices of fees linked to cargo transport. They also coordinated their participation in at least one Petrobras’ public bid and constrained VarigLog, when this company tried to actuate directly with its clients, without the intermediation of the freight forward companies.

The anticompetitive activity is similar to the implementation of fees following the 9/11 terrorist attacks in the United States. The international dynamic was replicated and extended in Brazil.

The proceeding concerns adjustments linked to the Freight Forward Europe – FEE activities (which became the Freight Forward International – FFI in 2004). According to the investigations, the adjustments carried out in Europe potentially affected the freight costs to the Brazilian companies.

In addition, the executives of the agencies with activities in Brazil coordinated adjustments through ABRETI and elaborated a mechanism called “Term of Commitment” aiming to establish conditions to clients as it was standardized to all the market. This coordination restricted the possibility of negotiation of prices.

The merger was forwarded to CADE’s Administrative Tribunal, which is responsible for issuing a final decision. If condemned, the companies will have to pay a fine ranging from 0.1 per cent to 20 per cent of their gross turnover in the year preceding the initiation of the Administrative Proceeding. For the individuals, the fines range from BRL 50,000 to BRL 2,000,000,000. The Tribunal can also adopt other measures considered necessary to the deterrence of the conduct.

TCC

During the instruction of the Administrative Proceeding, CADE signed eight Cease and Desist Agreements (TCC in its acronym in Portuguese) regarding this proceeding. In total, BRL 46,000,000 will be collected to the Fund for the Defense of Diffuse Rights (FDD in its acronym in Portuguese), as a result of these agreements.