CADE condemns bid-rigging cartel for refuse collection in Rio Grande do Sul

The Administrative Council for Economic Defense (CADE) condemned three companies and six employees connected to them for big-rigging cartel intended to hire garbage collection services in the cities of Santa Rosa, Bozano, São Paulo das Missões, and Estância Velha, in the state of Rio Grande do Sul (RS). The fines amount totalize BRL 1.2 million.

Four individuals that were also in the process were acquitted for lack of evidence. 

According to Commissioner Eduardo Pontual Ribeiro, the companies Coletare Serviços Ltda., Simpex Serviços de Coleta Transporte e Destino Final de Resíduos Ltda., and Wambass Transportes Ltda. received letters of invitation from city halls to compete in bidding processes for urban or hospital refuse collection. However, they previously agreed how they would act or who would win the bid. In the investigation, anticompetitive conducts were detected, such as price-fixing between the companies that disputed the bidding process to prevent that the prices presented did not fall below a determined basis.

The Commissioner highlighted that the “severe competition violation” caused losses to municipal treasuries and directed to the companies the resources that could be used in other public expenses. He reminded that, according to the Organization for Economic Co-operation and Development (OCDE), cartels generate waste of resources, inefficiency and cause harm to consumers. 

The evidence that lead to the condemnation of the cartel were obtained through phone calls interceptions, in addition to search and seizures at the company’s headquarters, performed by the Rio Grande do Sul State Prosecutor’s Office (MP/RS) in 2008. 
The Administrative Proceeding (08012.011853/2008-13) was opened in 2009 after a complaint made by the MP/RS. Last year CADE’s General Superintendence rendered an opinion asking for the condemnation of the three companies and the six individuals and sent the case to be judged by CADE’s Tribunal.

All the fines applied by CADE are destined to the Ministry of Justice’s Federal Fund for the Defense of Collective Rights (FDD for its acronym in Portuguese) that transfers the raised resources to projects that aim at the recovery of collective rights and goods, such as the environment, the historical and cultural heritage, the consumer protection, among others.