CADE Condemns SKF for Retail Price Fixing

According to the Administrative Council for Economic Defense – CADE decision, in order for retail price fixing to be lawful, a company must prove economic efficiency gain1 . The council made this decision during trial of the administrative proceeding No. 08012.001271/2001-44, which held an investigation of the practice by the company SKF do Brazil Ltda., whom did the practice for seven months between the years 2000 and 2001. CADE’s Commissioners condemned the practice by five votes to two.

Trial started in 2009, when the reporting commissioner, César Mattos, voted in favor of filing the case based on the argument that the conduct did not generate anticompetitive effects. On occasion, commissioner Vinicius Marques de Carvalho - now president of Cade – asked for more time to assess the proceeding, and in January 2010, Carvalho voted for condemnation of the practice. For Carvalho, in a price fixing conduct the company has the burden to prove economic efficiency gain which did not happen in the case. His vote suggested applying a fine to SKF in the amount of 1% of company revenues.

In the votes that followed, Commissioner Ricardo Ruiz condemned the practice, commissioner Olavo Chinaglia voted for filing the case and the president of Cade at the time, Fernando de Magalhães Furlan for condemnation.

During last trial session on Wednesday (30/01), Commissioner Marcos Paulo Verissimo and Eduardo Ribeiro Pontual, both agreed with the vote of today’s president and in favor of condemnation of SKF. At the end of the trial session, CADE’s President stated that this decision generates an important reference for companies. "Any behavior that is a restriction directly related to price may be targeted by CADE, whereas there is certain skepticism related to efficiencies that outweigh the anticompetitive risks."

1 To generate positive effects on the market that are passed on to the consumer