CADE opens Administrative Proceeding to investigate an alleged cartel in the market of resins

The General Superintendence of the Administrative Council for Economic Defense – CADE has opened, on Friday, 13 May, an Administrative Proceeding in order to investigate an alleged cartel in the national market of resins’ production and distribution (Administrative Proceeding No. 08700.003718/2015-67).

The companies under investigation are: Akzo Nobel Ltda., Águia Química Ltda., Ashland Polímeros do Brasil S/A., Brampac S/A, CCP Composites e Resinas do Brasil Ltda., Elekeiroz S/A., Novapol Plásticos Ltda., Royal Química Ltda., SI Group Crios Resinas S/A, Reichhold, Inc., Reichhold Industries, Inc., Reichhold do Brasil Ltda. and TCA Consultores (Cempre Conhecimento e Educação Empresarial & Editora Ltda.), besides another 54 individuals related to these companies.

According to the opinion on the case, there is evidence that the accused have made agreements to restrict competition through fixing resins’ prices and the exchange of sensitive information. The difficulties imposed to the functioning of the companies that were not aligned to the alleged cartel orientations have been already confirmed.

The alleged cartel affects the market of coating resins and composites. Coating resins are used for the manufacture of products such as paint for architectural use. Composites are used in the production of water tanks, pools and flat-rolled products for the marine and automotive industries.

The case started in 2014, when CADE performed dawn raids in the investigated companies’ offices.

Between the dawn raids and the opening of the Administrative Proceeding, the companies Ashland Polímeros do Brasil S/A, CCP Composites e Resinas do Brasil Ltda., Novapol Plásticos Ltda., Elekeiroz S/A and Águia Química Ltda. spontaneously showed up at CADE’s General Superintendence to negotiate Cease and Desist Agreements – TCC in its acronym in Portuguese.

CADE’s Tribunal homologated these agreements. They have resulted in a pecuniary contribution of BRL 50 million, which were reverted to the Federal Fund for the Defense of Diffused Rights – FDD in its acronym in Portuguese and in the suspension of the Administrative Proceeding, until the final judgment by CADE’s Tribunal, in relation to these five companies and the 25 individuals related to them.

With the opening of the Administrative Proceeding, the investigated parties will be notified to present their defenses. At the end of the discovery phase, the General Superintendence will issue an opinion that will recommend either for the condemnation or for the closing of the case. Then, the case will be forwarded to CADE’s Tribunal in order to be judged.

If condemned, the companies may have to pay fines comprised in a range between 0,1% to 20% of their income and the individuals may pay fines from 1% to 20% of the value applied to the companies.