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Brazil alleges two cartels in auto parts

Por: Global Competition ReviewImprimirVisualizar em PDF

Brazil's competition authority has recommended the conviction of five companies and nine individuals allegedly involved in two separate cartels in the automotive parts industry.

The country's Administrative Council for Economic Defence, known as CADE, said in a statement yesterday that its general superintendence was recommending the convictions in relation to alleged collusion in the markets for anti-friction bearings and vehicle cladding.

Anti-friction bearings are used in the automobile manufacturing sector, as well as in production processes in industries such as mining, petrochemicals and agriculture. Vehicle cladding is a coating that synchronises a vehicle's engine speed with its transmission case by reducing the oscillation and rotation of the engine.

CADE said participants in the alleged anti-friction bearings cartel fixed prices, divided up customers and shared sensitive information to restrict competition in the domestic market. They coordinated by meeting face-to-face, as well as through emails and handwritten notes, the agency added.

The three companies that the general superintendence has recommended convicting in the bearings cartel are SKF Brazil, Timken do Brasil Comércio e Indústria and SNR Rolamentos do Brasil. The authority is also pursuing three individuals.

The authority previously settled with Schaeffler Brasil and Ina Holding Schaeffler GMBH & CO.KG for 60 million Brazilian reais (€13.49 million), JTEKT Automotiva Brasil and Koyo Rolamentos do Brasil for 3.1 million reais (almost €700,000) and Nachi Brasil Nachi-Fujikoshi for 3.14 million reais (almost €706,000).

The alleged cartel in the vehicle cladding market also fixed prices and trading conditions, shared markets and shared sensitive information with competitors, the enforcer said. The effects felt by the Brazilian market were from both domestic collusion and imported goods, it added.

The agency has accused Fras-le and Termolite, as well as six individuals, of being involved. It previously settled with Schaeffler Friction Products for 699,200 reais (€157,000).

The authority launched the investigations in 2012, before initiating an administrative proceeding in the bearings case in 2014 and in the cladding case in 2015. CADE's general superintendence will now present its evidence before the agency's own tribunal, which will determine whether the accused companies infringed the country's competition law.

If found guilty, they may pay fines of up to 20% of their gross billing. Individuals can be fined anywhere between 50,000 (€11,250) to 2 billion reais (€449.8 million)

A spokesperson for Timken confirmed the company had received the competition authority's report, but said it disagreed with the conclusions and would continue to make its case before the tribunal.

A spokesperson for SKF noted that the authority's announcement was a non-binding recommendation, and that while it had recommended the case against SKF Brasil be pursued, it had dropped the case against Swedish parent company AB SKF.

SNR Rolamentos do Brasil, Fras-le and Termolite did not respond to requests for comment.

Leonardo Rocha e Silva, a partner at Pinheiro Neto Advogados in Brasilia, noted that the auto parts sector has been a focus for the competition authority since at least 2014, when the agency received various leniency applications. The enforcer is equally concerned about the impact of home-grown collusion and collusion affecting imported products, he said.

"Sometimes it is easier for CADE to get access to evidence when dealing with home-grown collusion," he said, but this depends on factors involved in a specific case, including the cooperation of leniency applicants.

Rocha e Silva said he expected the bearings and cladding cases to be decided within two years, but he noted that there is no deadline for this administrative review process to be completed. Various factors can impact the tribunals' timeframe, such as delays in nominating new members to the board, he added.

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