CADE finds three companies guilty of cartelisation in the distribution and resale of LP gas

On 3 August, the Administrative Council for Economic Defense (CADE) found the companies Nacional Gás Butano Distribuidora, Revendedora de Gás da Paraíba, and Frazão Distribuidora de Gás guilty of creating a cartel in the markets of distribution and resale of liquefied petroleum gas (LPG), used mainly in cooking equipment in Brazil. Moreover, 11 individuals connected to the companies will have to pay fines totalling more than BRL 1.9 million.

The case started in 2009 when ANP, the oil sector regulatory body, filed a complaint against the cartel. Following this, the Federal Police and several states' prosecution services launched investigations into the cartel.

In March 2010, the Federal Police, the Secretariat for Economic Monitoring, and the Prosecution Services of the State of Paraíba launched Operation Blue Flame, executing dozens of search and temporary arrest orders across the country. CADE obtained evidence of the alleged anticompetitive practices from a case heard by the state court of Paraíba, which included telephone tapping and documents seized from the offices of the investigated companies.

The enquiry concluded the defendants acted to restrain competition through price fixing and market allocation in the distribution and resale of LP gas. The authority found the resellers shared commercially sensitive information to control the LP gas market artificially and support the cartels.

The rapporteur of the case, Commissioner Luis Braido, said the evidence revealed the collusion affected the LP gas resale market in the state of Paraíba. The evidence showed the cartel also affected the distribution market of several states in the Northeast region of Brazil. According to Mr Braido, distribution and resale would mix up, whether because distributors and resellers would work together to monitor cartelists and punish non-compliant participants or because major resellers also supplied gas cylinders to smaller retailers.

In its decision, the Tribunal unanimously decided to dismiss the case against the following parties: Supergasbras Energia, Minasgas, Liquigás, Copagaz Distribuidora de Gás, Companhia Ultragaz, Bahiana Distribuidora de Gás, Chamas Gás Comércio de Gás, Super Comércio de Água e Gás, Sindicato dos Revendedores de Combustíveis, and Derivados de Petróleo do Interior da Paraíba (SINDIREV). Fourteen individuals also had their charges dismissed after entering into a cease and desist agreement with the authority and complying with the conditions set by Mr Braido.

Agreements

CADE executed four cease and desist agreements with some investigated companies and related individuals. The parties confessed to having engaged in the practice and committed to refrain from further participating in the cartel activity and collaborate with CADE to clarify the conduct and pay the financial contributions imposed.

The agreements resulted in sanctions of over BRL 193 million in financial contributions to the Fund for De Facto Joint Rights of the Ministry of Justice and Public Security. Expert opinions by the Office of the Attorney General at CADE ascertained their compliance with the legal obligations.

Access Case no. 08700.003067/2009-67.