CADE investigates algorithmic pricing in fuel market

On 19 November, the Office of the Superintendent General of CADE (SG) launched an administrative proceeding to examine if the use of algorithms influences the adoption of concerted practices in the Brazilian fuel market. The anticompetitive practices stem from an algorithmic pricing tool used at petrol stations in a number of Brazilian cities.

CADE investigates a software developer company that introduces a technological solution to petrol station owners. The tool uses algorithms that generate dynamic prices based on cost, volume, and prices charged for higher profit margins of its users. According to the company, the adoption of the software prevents individual decision-making by petrol station owners, avoiding purchase price dispute or sharp drops in fuel prices. Besides the software company, CADE also investigates a fuel retailer trade union that allegedly recommended the software to its members.

Thus, the SG examines if the algorithmic pricing could promote collusion in the Brazilian fuel market.

After the administrative proceeding is launched, the defendants are to be notified to file answers. Following the discovery phase, the Office of the Superintendent General will either find the defendants guilty or dismiss the case before submitting it to the Tribunal of CADE for a final decision.

If convicted, the companies are subject to fines ranging from 0.1% to 20% of their turnover, besides additional penalties.

On the subject - The use of pricing algorithms is a matter of international debate. In addition to pro-competitive factors, they also draw the attention of CADE and other international antitrust authorities to potential anticompetitive conducts.

It is worth noting that while it is not illegal to use pricing algorithms, the concern lies in using such technology to enable concerted practices that could lead to antitrust violations.

Access Case no. 08700.006280/2024-60