CADE fines cartel in market of projectors and interactive whiteboards BRL 7.9 million

On 12 April, the Tribunal of the Administrative Council for Economic Defense (CADE) convicted 18 companies and 20 individuals for alleged cartel in public and private procurements for projectors and interactive whiteboards. The imposed fines amount to BRL 7.9 million.

The case investigation started upon evidence brought to the former Secretariat of Economic Law about the suspicious behaviour of companies that participated in an online reverse auction of the Federal University of Rio Grande do Norte (UFRN) in 2009. The probe resulted in the launching of an administrative proceeding in 2012.

Based on scrutiny, evidence points to an existing anti-competitive agreement amongst resellers of interactive whiteboards and projectors of the Smart Board brand, whose products were first distributed by Scheiner Solution and later by Conesul Plus Tecnologia Educacional when the former lost its accreditation as a distributor.

The practice aimed to restrain competition in the market, both in public and private procurements, the latter held by schools, universities and companies of different sectors. The anti-competitive behaviour occurred from 2009 to 2011 and affected many Brazilian regions.

Commissioner Luiz Hoffmann, the rapporteur of the case, stated it regards a hub-and-spoke cartel—where firms (spokes) limit competition with the help of an upstream supplier (hub)—considering the supplier intended to facilitate resellers’ collusion. 

Thus, by a majority, the Tribunal of CADE found Conesul had a central role in Smart Board resellers sharing competitively sensitive information as they participated in biddings acquiring the whiteboards and projectors. Thus, Conesul helped with the coordination of resellers.

Structure of the cartel

The anti-competitive agreement happened in three stages. First, a Smart Board reseller would identify a potential customer and email Conesul with information about the purchaser and the intended price quotation to request an alleged “consumer protection” which regarded other bidding participants submitting cover biddings with higher prices per product to simulate competition.  

Then, Conesul would share that information via email with the other Smart Board resellers, making official the request for cover biddings in the procurements the requiring reseller aimed to win. Finally, the exchanged electronic messages made clear all involved parties knew the practice characterised anti-competitive behaviour, as they actively acted to restrain competition in public and private procurements by collaborating in mapping customers and proposing fake budgets.

"Based on the analysed evidence, the business policy is not regarded illegal due to the distributor prioritising the reseller that prospected client. It is due to the sharing of competitively sensitive information that aimed at fixing the price of a specific product above the market price—through cover biddings defined in advance with other resellers, which forged market competition", explained Mr Hoffmann.

The Tribunal of CADE determined that involved companies are subject to pay fines amounting to over BRL 7.7 million, whilst individuals should pay BRL 254,200.

Access Case no. 08012.007043/2010-79.