CADE fines Claro, Oi Móvel and Telefônica 783 million reais for antitrust violations in Correios' tender

On 11 May 2022, the Tribunal of the Administrative Council for Economic Defense (CADE) convicted the mobile phone operators Claro, Oi Móvel, and Telefônica Brasil. The firms had formed a consortium to participate in a reverse auction held by Empresa Brasileira de Correios e Telégrafos (ECT, or Correios). The Tribunal considered the association harmed the competitive environment and other market players' operations. The imposed fines totalled BRL 783 million.

Launched in 2015, after a complaint brought by BT Brasil Serviços de Telecomunicações, the investigation revealed the mobile phone operators coordinated to eliminate competition through a consortium named Consórcio Rede Correios, created to win online reverse auction no. 144/2015. The procurement aimed to purchase data transmission services to interconnect Correios' office buildings, located throughout Brazil, for a five-year term.

The antitrust authority considered the companies did not present reasonable economic grounds to form the consortium. They could have opted for less competitively restrictive means, such as subcontracting infrastructure, creating a consortium with smaller businesses or even one that only included Telefônica and one of the other two operators.

In his vote, CADE's President Alexandre Cordeiro stressed that although consortia are legal and can participate in public tenders, the competition authority has to investigate whether the involved players aimed at harming competition in the market or distorting competition in the procurement process.

"A consortium is a legal association with antitrust immunity in the Brazilian merger control regime. However, if the authority finds abuses of dominance, practices to foreclose the market, and coordinated behaviour, the conduct can be considered a violation", stated Mr Cordeiro.

For their anticompetitive practices, Claro was fined BRL 395,228,792.70; Telefônica, BRL 121,721,935.70; and Oi Móvel, BRL 266,115,266.00. The Tribunal also ordered the decision be submitted in an official letter to Correios to ensure the company is informed and takes the necessary measures.

Access Case no. 08700.011835/2015-02.