Brazil's competition watchdog has asked its decision-making tribunal to penalise a cartel that allegedly rigged bids in the supply of building maintenance services.
The Administrative Council for Economic Defence (CADE) has charged seven companies with rigging bids for both public and private building maintenance contracts, and has recommended fines against all of the companies involved. They are Alamo, Aruajo, Electrodata Instalaciones e Servicos, Projetos, MZE, Wechsel and WH.
A CADE spokesperson said: "The recommendations made by the General Superintendence demonstrates that CADE has a well-established policy of prosecuting cartels nationwide. It also demonstrates that the punishments are harsh for those engaged in cartel activities in Brazil."
Many of the affected customers were telecommunications companies, including Brazilian networks Viva and Clara, which both responded to information requests from CADE discussing their private bids. CADE has not issued information requests to any other telecoms.
The investigation started in 2006 under Brazil's former antitrust enforcer, the Secretariat of Economic Law, whose role is now assumed by CADE's General Superintendence. The enforcer opened administrative proceedings after carrying out raids at the premises of the accused companies.
The General Superintendence also recommended closing the investigations against one of the defendants, Emerson Sistemas de Energia, due to a lack of evidence. In October last year, Conbras Serviços Técnicos de Suporte signed a cease-and-desist agreement with the enforcer, acknowledging its role in the cartel and agreeing to pay fines totalling 9.5 million reais.
Conbras obtained an injunction from the 17th Federal District Court in 2011, which stopped CADE from using evidence relating to public bids, but CADE overturned the injunction in 2012 at the Federal Court of the 1st Region and secured access to all evidence.
The case returned to the General Superintendence in 2013 and it issued its technical notes earlier this month. CADE said the reason for the year delay between the revoking of the injunction and returning the case to the General Superintendence was "to evaluate if it could judge the case according to the existing evidence or if it was necessary to retrieve the files to the General Superintendence for a complementary instruction."
Ademir Antonio Pereira Jr, partner at Advocacia Jose Del Chiaro, said it is "very likely" that the tribunal will concur with the Superintendence recommendations and fine the accused companies.
Pereira explained that CADE is currently dealing with a backlog of cases which could explain why this matter has taken so long to resolve. He said "this case was back from a time when the competition system in Brazil was maybe too slow. CADE has reduced the investigating time to an average of five years now."
Leonardo Rocha Silva, partner at Pinheiro Neto Advogados, said the case shows how the General Superintendence is trying to "finalise old investigations and looking into the evidence, in a very meticulous way, so they can get a good recommendation."
The case will now to go to the tribunal and could take as long as two years for a final verdict to be reached.
Alamo and Electrodata Instalaciones E Servicos could not be reached. Araujo, Projetos, Wechsel and WH did not respond to requests for comment.
Counsel to Alamo
Pereira Neto | Macedo Advogados
Partner Caio Mario da Silva Pereira Neto and associate Ricardo Ferreira Pastore in São Paulo
Counsel to Eletrodata Instalações e Serviços
Douglas Leme de Riso in Brasilia
Counsel to Projetos Engenharia, Comércio e Montagens
Fontes & Tarso Riberio
Partner Paulo de Tarso Ramos Ribeiro and associate Evandro Martins in Rio de Janeiro
Counsel to Moreira Zappa Engenharia Energia Climatização e Redes
Zappa & Peluso Advogados
Partners Aurélio Câncio Peluso and Alexandre Millen Zappa in Curitiba
Counsel to Wechsel
Heidi von Atzingen and André Kesselring Dias Gonçalves in Cuiaba
Counsel to WH Engenharia RJ
Cleber Rangel de Sá
Daniel Santos Guimarães in São Paulo
Counsel to Araújo Abreu Engenharia
José Carlos Nespoli Louzada in Brasilia
Counsel to Emerson Sistemas de Energia
Trench, Rossi e Watanabe Advogados (in cooperation with Baker McKenzie)
Partner Francisco Ribeiro Todorov in Brasilia