CADE and the Federal Police carry out dawn raid in basic sanitation public works cartel investigation

The “Vinil” Operation was sparked on 27 November, at the state of São Paulo. The operation is the result of a cooperation between the Administrative Council for Economic Defense – CADE, the Federal Prosecution Service (Group of Cartel Fighting of the Attorney General’s Office in the State of São Paulo), and the Federal Police. The action investigates an alleged cartel in public bids for the acquisition of connections of polypropylene and polyvinyl chloride, used in basic sanitation public works.

Twenty officials from CADE supported the diligence, authorized by the Federal Justice.

A potential bid-rigging, between 2004 and 2015, in at least 100 public bids from 14 Brazilian States is investigated. The companies allegedly submitted cover proposals and jointly defined the winning bidders.

Cartels

Cartels seriously harm consumers by raising prices and restricting the supply, making goods and services more expensive or unavailable. Cartels also reduce the incentives to innovate and thus prevent other competitors to improve their productive processes and to release new and better products in the market. It results in a loss of the consumer’s welfare and, in the long term, decreases the competitiveness of the economy as a whole.