Office and school suppliers found guilty of bid rigging in Pernambuco

In the hearing of this Wednesday (18 August), the Administrative Council for Economic Defense (CADE) found ten companies and five individuals guilty of bid rigging in public procurement of office and school supplies conducted by municipal governments in the state of Pernambuco. Combined, their fines amount to BRL 1.5 million.

The administrative proceedings, launched in 2016, arised from a complaint brought by the Regional Superintendent Office of the Pernambuco State Federal Police.

According to Commissioner Luiz Hoffman, rapporteur of the case, the investigation revealed that cartel members divided the market amongst themselves, allocating tenders according to areas of activity; fixed prices; and shared competitively sensitive information to collude in public procurement processes. As part of their collusive strategy, winning bidders also compensated other cartel members for their support in tenders with checks.

Evidence collected includes conversations recorded through telephone tapping and documents gathered in search and seizure operations stemming from Operation Invictus, covering emails, written notes on amounts owed to other cartel members, spreadsheets with tender information, and a company's bids found on another bidder's main office.

"A great amount of essentially confidential information – due to the competitive nature of procurement processes – has been widely shared amongst representatives of these companies, as shown by the conversations and other collected evidence", said Mr Hoffman.

The cartel negatively affected the school and office supplies market in Pernambuco, and was in place from at least 1999 to 2014.

The following companies were found guilty of the conduct: Comercial Armarinho Oliveira, Inforecife Comércio de Informática e Papelaria, T. E. Papelaria Comercial, L. de Oliveira Logística, Livraria e Papelaria Boa Vista, Livraria e Leal Dantas, Sr. De Carvalho Dandas Comércio – ME, Artshop Comércio, EC Organização de Empresas e Contabilidade Ltda., and Paulo Sérgio Costa da Purificação – ME.

In addition to the fines, CADE imposed ancillary penalties for five years, such as a prohibition on executing business contracts with government financial institutions and on participating in procurement processes conducted by governments of the federal, state, and local levels, and of the Federal District. In parallel with these penalties, the individuals involved were forbidden to carry on trade on their own behalf and as a firm's representative for the same period of five years.

Access the Administrative Proceedings 08700.004455/2016-94.