CADE convicts a cartel in procurements for PVC pipes and fittings

In the hearing of this Wednesday (30 June), the Administrative Council for Economic Defense convicted five firms and six individuals for a cartel in public procurements for PVC pipes and fittings. Such procurements were aimed at water, sewage, building, and construction works. Together, the fines applied to the convicted parties surpass BRL 190 million.

The case investigation was launched in 2016 when CADE signed a leniency agreement with the firm Tigre and its employees. Some of the anticompetitive conducts 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 anticompetitive agreements were agreed to mainly by e-mail and regular meetings of the members. The anticompetitive conduct has been evidenced by the explicit reference to the anticompetitive agreement in spreadsheets and files exchanged between competitors. Besides, the cartel was also confirmed upon the analysis of the procurements' minutes 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 procurements in the market.

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".

"The occurrence of a cartel in the building works sector is also ascertained by the participants' monitoring practice. 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," stated the rapporteur commissioner.

Agreements

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 sum BRL 104.4 million. As for the signatories of the cease and desist agreements, CADE decided for dismissing the case as the parties fully complied with the established commitments.

Furthermore, the Tribunal also annulled the signatories' criminal and administrative liability as a consequence of the complete fulfilment of the terms of the agreement.

Access the Administrative Proceeding no. 08700.003390/2016-60.