CADE will investigate Gemini Consortium for abuse of economic power

The Tribunal of the Administrative Council for Economic Defense – CADE determined, on December 4th, the opening of an administrative proceeding to investigate the abuse of dominant position by Gemini Consortium, a joint venture created by Petrobras, White Martins and GNL Gemini to sell liquid natural gas (GNL, for its acronym in Portuguese).

According to the Reporting Commissioner, Ana Frazão, a restriction applied by CADE to merger nº 08012.001015/2004-08, which authorized the creation of the consortium, was judicially suspended, harming the effectiveness of CADE’s decision.

At the time of the case judgment, held in 2006, the competition authority determined the publicity and wide transparency of information regarding prices, deadlines and commercial conditions adopted by Gemini Consortium as condition for the operation approval. According to Commissioner Frazão, the suspension of this restriction, caused by the consortium itself, rises major competition concerns.

“The high possibility of abuse of dominant position, either by the market structure or by the own actions of the consortium; the non-compliance of the restriction considered mandatory by CADE, due to judicial challenge; and the total lack of effectiveness of the Council’s decision to the merger, because of the absence of adequate monitoring of Gemini’s actions considering the new judicial decision, are sufficient to determine the opening of administrative proceeding to investigate violations to the economic order”, Commissioner Frazão affirmed.

In addition to determining the opening to administrative proceeding to investigate the abuse of dominant position, CADE’s Tribunal will review the decision that approved the merger.