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CADE’s General Superintendence sees anticompetitive conduct of car assemblers that prevent auto-parts replacement by independent manufacturers

Administrative Proceeding

The antitrust authority recommended the condemnation of Fiat, Ford and Volkswagen for abusive use of industrial property rights on the designing of automotive parts
published: Jun 20, 2016 06:00 PM last modified: Jun 20, 2016 06:25 PM

The General Superintendence of the Administrative Council for Economic Defense – CADE recommended, in an order published in the Federal Official Gazette on Thursday 16, the condemnation of the car assemblers Volkswagen do Brasil Indústria de Veículos Automotivos Ltda., Fiat Automóveis S/A and Ford Motor Company Brasil Ltda. for anticompetitive conduct at the national market of auto-parts reposition (Administrative Proceeding No. 08012.002673/2007-51).

The car assemblers have industrial property rights of their own designs of automotive supply parts, legally obtained, according to the Brazilian Industrial Property Law.

The Superintendence considered, however, that the imposition of these rights to the Independent Manufactures of Automotive Parts (FIAPs in its acronym in Portuguese), with aims of prohibiting them to commercialize their own auto-parts at the replacement market, would configure abuse of industrial property law with anticompetitive purposes.

The General Superintendence’s opinion shows that the conduct of the car assemblers’ would have caused the exclusion of thousands of independent manufacturers and competitors of the auto-parts replacement market in Brazil, giving to each of them a monopoly in the reposition of their respective parts. The action would generate increase of the prices and fewer options to cars’ owners who need to replace certain automotive parts, such as rear views, bumpers, lanterns and several others.

The arguments based on safety, quality and necessity of recovering the costs presented by the companies in order to impose the register of industrial property rights to the FIAPs, by prohibiting their action at the replacement market, were not considered sufficient to justify the massive exclusion of the competitors and to counterbalance the potential damage generated to consumers. The Superintendence also understood that there were no disincentives to the continuity of the investments in innovations by the manufacturers.

Now, CADE’s Administrative Tribunal, responsible for the final decision, will appreciate the case. If convicted, the companies may have to pay fines or suffer other sanctions foreseen by the Law, in addition to the cessation of the anticompetitive practice.