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General Superintendence recommends condemnation in international electrodes market

Anticompetitive conduct

Conduct happened between 1992 and 1998
published: Oct 07, 2014 10:00 AM last modified: May 03, 2016 04:10 PM

The General Superintendence of the Administrative Council for Economic Defense – CADE recommended, in an opinion published on 7 October 2014, the condemnation of the companies Graftech International Ltd., Graftech Brasil Participações Ltda, Mitsubishi Corporation, Nippon Carbon Co., Ltd, SEC Carbon Ltd, SGL Carbon SE, Showa Denko K.K. and Tokai Carbon Co., Ltd. for cartel formation in the international graphite electrodes market, which had effects in Brazil.

The graphite electrode is a fundamental input for the production of steel in electric arc furnaces, used in large industries.

According to the investigation, between 1992 and 1998 the companies – main graphite electrodes producers in the world and responsible for more than 80% of the product supply – coordinated prices and shared the global market. The cartel developed sophisticated strategies for communication and monitoring of anticompetitive agreements, discussing, region by region, commercial strategies that would be adopted worldwide, including Latin America.

As a result, there was an increase of prices of 90% in Canada and of around 50% in Europe, United States and South Korea. In Brazil, CADE’s General Superintendence verified that graphite electrodes imports totalized approximately USD 161 million in the mentioned time period of the alleged illicit, and that the prices of the electrodes traded between January 1993 and June 1997 increased around 30%.

The administrative proceeding started in 2009 after the former Secretariat of Economic Law (SDE) received a complaint of the Secretariat for Economic Monitoring (SEAE) of the Ministry of Finances. SEAE became aware of the conduct after accessing documents published by the authorities of the United States, European Union, Canada and South Korea. The companies were already condemned in the United States and Europe for the same conduct.

The case (Administrative Proceeding no. 08012.009264/2002-71) is to be judged by CADE’s Administrative Tribunal, which is responsible for rendering a final decision. In case of condemnation, the companies could pay fines up to 20% of their respective annual gross revenue in the market in which the infringement happened.