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Sat July 31 2021

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Brazil issues big fines over pipe cartel

2 Jul Members of a Brazilian cartel involving PVC pipes and fittings have been fined a total of more than BRL190m (£27m) after leaving a trail of evidence in spreadsheets and files.

The government’s Administrative Council for Economic Defense (CADE) has convicted five firms and six individuals for the cartel in public procurement of pipes and fittings for water, sewage, building and construction works.

 The case investigation was launched in 2016 when CADE signed a leniency agreement with the firm Tigre and its employees. Some of the anti-competitive conduct carried out by the members of the cartel were artificial price-fixing, division of public procurements in lots, non-participation in procurements, exchange of competitively sensitive information among competitors and allocation of private customers.

 According to the rapporteur commissioner of the proceeding, commissioner Luiz Hoffmann, evidence showed that the anti-competitive agreements were agreed to mainly by e-mail and regular meetings of the members.

The anti-competitive conduct has been evidenced by the explicit reference to the anti-competitive agreement in spreadsheets and files exchanged between competitors, said CADE. In addition, the cartel was also confirmed through analysis of the minutes for the procurements which, in most cases, proved a lack of competition, including the submission of bids and cover bids.

Regarding the cartel in the sewage works sector, which operated between 2006 and 2013, it was possible to ascertain that the practice affected at least 15 contracting parties responsible for the procurements and around 25 procurement processes in the market.

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 As to building and construction works, the cartel occurred at least from 2007 and 2014. The firms Tigre and Amanco (current Mexichem) stood out as market leaders and, as a result, had their operations noticed by the second group of firms called "lower floor", said CADE

 "The occurrence of a cartel in the building works sector is also ascertained by the participants' monitoring practice,” said Hoffmann. “As observed, the exchange of e-mails among different competitors containing mutual complaints and demands on how a certain firm was not complying with the agreement was a common practice, perceived as a 'gap' of the defined price adjustment.”

Three cease and desist agreements were signed during the process. The companies BR Plásticos Indústria and BRP Indústria Plástica, in addition to two individuals, signed the first agreement. Nicoll Indústria Plástica and one individual signed the second agreement, and Amanco Brasil (current Mexichem) and four individuals signed the third one.

 In total, the financial contributions paid to the Fund for De Facto Joint Rights come to BRL104.4m. As for the signatories of the cease and desist agreements, CADE decided on dismissing the case as the parties fully complied with the established commitments.

In addition, the tribunal also annulled the signatories' criminal and administrative liability as a consequence of the complete fulfilment of the terms of the agreement.

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