CADE's General-Superintendence recommends conviction of underground and submarine power cables cartel

CADE's General-Superintendence (SG/CADE) recommended, in an opinion signed last Friday (02/08), the conviction of six companies and two individuals for international cartel, with effects in Brazil, in the market of underground and submarine power cables. The products are applied in the transmission of electric energy between the generating and distribution unities and the end-use consumer of their services.

According to SG/CADE, the cartel would have operated between the early 90s until, at least, July 2004. The conduct would have affected the international market, causing damage in Brazil to companies that acquired those cables, especially to electric power production and distribution companies. The end-use consumer would have also been affected by the anticompetitive conduct, since the cartel affects the essential component for power transmission, which would have resulted in higher costs to this service.

Still according to SG/CADE, the companies Exsym Corporation, LS Cable LTD, Nexans, Prysmian S.p.A, Taihan Electric Wire and Viscas Corporation - main worldwide manufacturers of those products - would have allocated territories and projects, as well as colluded to fix prices quoted for specific projects, which would also include the Brazilian market.

The investigation pointed out that the collusion was characterized by the regular exchange of information considered sensitive under the competition point of view (such as the production capacity, supply shortage, requirements of client quality, data regarding the release of new products, etc.) which affected the market negatively.

SG/CADE also verified the occurrence of bilateral deals among the companies regarding the position they would achieve in public biddings and other competitions, which would have granted to the involved parties access to specific data regarding the activities of the other competitors and the market conditions. Thus, it would have been possible that those companies took decisions on the costs and quantities offered to the worldwide cable market, besides sharing among themselves the territories upon which each cartel participant would have preference during the investigated period.

The administrative proceeding now follows to CADE's Tribunal, which is responsible for the final decision. If convicted, the companies may be fined up to 20% or their gross income. The individuals, on the other hand, are subject to fines that range from BRL 50 thousand to BRL 2 billion.

Other jurisdictions

The international cartel in the market of underground and submarine power cables was also prosecuted recently in other jurisdictions. Europe, Australia and Japan issued final decisions, condemning, even if partially, the involved companies for anticompetitive practices.