CADE investigates a gas station cartel in Joinville, Santa Catarina state

The General Superintendence of CADE recommended, in an opinion published on 02 October 2015, the conviction of 3 companies, 2 cooperatives, 1 labor union and 10 individuals for cartel activity in the market of type C milk, in the region of Pelotas, state of Rio Grande do Sul (Administrative Proceeding nº 08012.007155/2008-13).

The companies are: Elegê Alimentos S/A (current BRF Brasil Foods S/A); Indústria de Laticínios Santa Silvana Ltda ME; and Thurmer & Leitzke Ltda., besides of Cooperativa Sul-Rio Grandense de Laticínios Ltda. and the Cooperative of Small Farmers and Milk Producers of the South Region (COSULATI and COOPAL on their Portuguese acronym, respectively). The 11 individuals are employees, former employees and owners of the companies. Finally, the Superintendence suggested the conviction of the Dairy Industry and Derived Products Union of the state of Rio Grande do Sul (SINDILAT on its Portuguese acronym), for influencing and facilitating the conduct.

The investigation began in 2004, when a local producer went to the Federal Police in order to report the practice of price adjustment between producers of type C milk of the city of Pelotas and its neighbor cities. The complaint pointed influence of the largest local producers, Elegê and COSULATI, which have carried out a sharp price reduction in the year before the conduct and have utilized this factor as a threat to the establishment of a minimum price.

In order to investigate the reported facts, the Federal Police recorded a meeting held in August of the same year, in which the representatives of Elegê and COSULATI strengthened to the other producers of the region of Pelotas that it would be a “great idea” to maintain the minimum price adjustment at BRL 1, 00. The records show that the producers that attended the meeting were aware of the essentiality of the product and the harmfulness of the conduct. In an excerpt of the records, one of the producers says, “the man that will buy the type C milk is from a humble family (…) 5 or 10 cents for him is the difference that he will use to buy one more bread”.

From the evidence gathered by the Federal Police and from additional instructions conducted by CADE, the General Superintendence concluded for the cartel activity, which would have occurred for at least one year, and for the irregular behavior of SINDILAT, which, by hosting the meetings, would have influenced the adoption of the activity.

The administrative proceeding follows now to trial by CADE’s Tribunal, responsible for the decision. If found guilty, the companies must pay fines that might reach up to 20% of their income in the year before the opening of the proceeding. The involved individuals are subject to the payment of fines from 1% up to 20% of the fines applied to their corresponding company. The union and the cooperatives may be convicted to the payment of fines that vary between BRL 50.000 and BRL 2 billion.