CADE celebrates agreements to stimulate the competition in the markets of building maintenance and of electronic means of payment

The Tribunal of the Administrative Council for Economic Defense – CADE signed, on 28 June 2017, three Cease and Desist Agreements (TCC in its acronym in Portuguese). One is related to a cartel in the building maintenance market. The other two are regarding anticompetitive practices in the Brazilian means of payment market (credit and debit cards).

The agreement regarding the building maintenance market (Request  nº 08700.001785/2017-17) was signed with WH Engenharia RJ Ltda. and one individual linked to the company. By means of the agreement, the WH is committed to pay  BRL 8,5 million as pecuniary contribution for  the Fund for the Defense of Diffuse Rights (FDD, in its acronym in Portuguese) and the individual, BRL 85,2 thousand.

The company and the individual acknowledged their involvements in the cartel with other several building maintenance companies,  in the public and private markets, carrying out, among other anticompetitive conducts, price fixing and market division during the last years.

The company Álamo Engenharia S.A. that have also initiated negotiations with CADE to settle an equal agreement, withdrew its request (Request nº 08700.002633/2017-23).

Both cases were reported by the commissioner Paulo Burnier.

The agreement signed with WH Engenharia represents the fourth approved TCC regarding the Administrative Proceeding nº 08012.006130/2006-22. Previously, CADE had signed agreements with the companies Conbras Serviços de Suporte Ltda., Araújo Abreu Engenharia S.A. and Wechsel Ltda.

Credit and debit cards

Futhermore,  in the judgment session of 28 June 2017, other two TCCs were approved by CADE’s Tribunal. Reported by the commissioner Gilvandro Araújo, the agreements signed with Cielo S.A. (Request nº09700.003613/2017-70) and Elo Serviços S.A. and Elo Participações S.A. (Request nº 08700.003614/2017-14) are related to investigations  carried out by the General Superintendence to analyze anticompetitive practices in the Brazilian means of payment market.

The first TCC was signed  with Elo aiming to end the current exclusivity between itself (payment brand/payment arrangement) and the accreditor Cielo for the transactions of electronic payment with Elo’s credit and debit cards.

 According to the investigation carried out by the General Superintendence (Administrative Inquiry nº 08700.003614/2017-14), there are some exclusivity relations between  payment brands and specific accrediting financial institutions that do not allow the transaction, in the same equipment, of all debit and credit card payment brands. This conduct compels business premises to hire Cielo´s services in order to be able to use Elo cards as a payment system.

Aiming at promoting the competition within this market, the TCC determines that Elo will have to allow Cielo´s competitors to operate their credit and debit card transactions through its payment brand, ending Elo and Cielo exclusivity.

The second TCC was signed with Cielo in order to end the current exclusivity of Cielo and Rede S/A and enable transactions and the insertion of cryptographic keys of other accrediting brands ratherthan Rede in its Pinpad equipments – machines that enable credit and debit cards transactions in the retail market.

Pinpad equipments allow the operation of several accreditors within the same machine. In other words, a business premise may contract the services from several accreditors and still use one single equipment, reducing costs. On the contrary, if the equipment does not have the key of a specific accreditor, the business premise will only be able to use this accreditor’s services through a second equipment’s acquisition, generating more costs to business and discouraging the devices’ substitution. 

By means of the the Administrative Inquiry nº  08700.003613/2017-70, CADE’s General Superintendence verified that Cielo and its main competitor, Rede, inserted reciprocally their respective cryptographic keys, which means that one can use the other’s pinpad. Nevertheless, both companies refused to provide the same access to smaller competitors, hindering their entry and development within this market. 

By means of the TCC, Cielo is committed to provide access, in its Pinpads, to all accreditors, i without discriminations,  as long as the  these companies allow it the same treatment in their own devices.  

A similar agreement has also been settled with Rede S/A  in  the judgment session of 5 April 2017. CADE expects that this  action will enable a larger insertion of smaller accreditors in the market, promoting more competition and more options, and reducing costs to shopkeepers and consumers. 

Investigations

The agreements’ signature results in the suspension of the investigation regarding the TCC’s signatories, until the parties have fulfilled the agreements’ obligations. The Administrative Inquiry remain opened, however, regarding the other defendants.