Office of the Superintendent-General of CADE recommends conviction of cartels in public procurements

On 13 July, the Office of the Superintendent-General of CADE issued an opinion suggesting the conviction of parties involved in two case investigations of cartels in public procurements. The practices regarded the market of graphic production in the state of Rio Grande do Norte and the market of outsourced services in the state of Espírito Santo.

The first case investigated an alleged collusion in procurements that municipalities of the state of Rio Grande do Norte held to purchase graphic materials. The scrutiny began in September 2016 based on a complaint brought by the Prosecution Services of the State of Rio Grande do Norte substantiated by considerable evidence seized during a search and seizure held in the state’s municipality of Caraúbas.

The Office of the Superintendent-General of CADE found the cartel occurred from 2012 to 2014, consisting of agreements among competitors to fix prices, conditions and advantages and divide the market. To this end, competitors would prepare price quotes jointly and share documents and competitively sensitive information. Their coordinated actions aiming to harm competition in municipalities’ procurements were also observed in electronic reverse auctions.

Therefore, the investigative arm of CADE recommended that ten companies and 11 individuals be convicted for the anticompetitive conduct.

The second case investigated alleged collusion in procurements of the state of Espírito Santo aimed at purchasing outsourced building preservation services and school meal-related services. The scrutiny began in April 2019 based on evidence brought by the Prosecution Services of the State of Espírito Santo.

According to the investigation, the anticompetitive conduct occurred from 2009 to 2018, consisting of rivals’ agreement on allocating slots of the Electronic Reverse Auction no. 037/2016 and purchases made by the municipality of Cariacica. Evidence shows involved parties divided the market and submitted cover biddings to fake competition among participating companies.

Therefore, CADE’s investigative arm recommends convicting four companies and four individuals related to the case,

which is now submitted to the Tribunal of CADE for a final decision. If convicted, companies are subject to fines of up to 20% of the revenue the firm obtained from the specific line of activity in the year before the launching of the administrative proceeding. Individuals are subject to fines ranging from BRL 50,000 to BRL 2 billion.

Access Case no. 08700.003826/2015-30 and Case no. 08700.000413/2021-41.