Brazil's competition enforcer has opened an investigation into alleged bid rigging on tenders for the installation of coffee shops at airports across the country.
The General Superintendence for Brazil's Administrative Council for Economic Defence (CADE) claims the coffee companies shared commercially sensitive information and submitted identical documents for tenders, including having the same formatting and spelling mistakes in them.
The enforcer said the companies used a blocking strategy when submitting bids for the tenders. The companies colluded to ensure they passed the first bidding phase, which shortlists three potential bidders, and then would refrain from bidding or submit cover bids in favour of the company that it was agreed would win, CADE said.
CADE also alleges that the same person represented more than one company in the bidding process.
State-owned company Infraero, which is responsible for operating the main airports in Brazil, proposed the tenders. CADE said Infraero alerted the competition authority to the conduct in 2015; the company's risk and compliance management team carried out its own investigation into the cartel and sent CADE a letter with documents relating to suspected irregular bids.
A CADE spokesperson said the case is important as passengers and consumers often complain about high prices in the coffee sector and lack of choice at airports. The spokesperson said as the case was detected through a procurement officer at Infraero, it also shows the success of the authority's competition advocacy and training efforts.
The suspected rigged bids were for the installation of coffee shops at airports in São Paulo, Florianópolis, Recife, Campo Grande, Curitiba and Maceió.
In a statement on 9 August, CADE said the companies under investigation are Alimentare Serviços de Restaurante e Lanchonete, Boa Viagem Cafeteria, Confraria André, Delícias da Vovó, Ventana Manutenção e Serviços. Delícias da Vovó did not respond to a request for comment. Alimentare Serviços de Restaurante e Lanchonete, Boa Viagem Cafeteria, Confraria André and Ventana Manutenção e Serviços could not be reached for comment.
CADE is also investigating eight directors or owners of the companies. The individuals named in the note from CADE's General Superintendence are Cesar Giacomini Evangelista Kinaki, Christian dos Santos Marques Motta, Fabiano Luis Gusso, Gustavo Locks de Pauli, Hugo Evangelista Kinaki, Jean Diego Brunetta, Juliana Osorio Saul and Victor Hugo dos Santos.
The companies could be fined up to 20% of turnover for the year prior to the start of the investigation. The individuals could face fines of up to 20% of the total fine imposed on their respective company.
Daniel Oliveira Andreoli, a partner at TozziniFreire Advogados, said the individuals may also face a criminal investigation if CADE refers them to the public prosecutor.
He added that Infraero's role in alerting CADE shows that in the wake of the Petrobras case, state-owned companies are also conscious of cartels.
Vicente Bagnoli, a partner at Vicente Bagnoli Advogados, said every time a bid is rigged the state ends up paying more for a product or service. Consumer well-being is also compromised, he said, because in smaller airports - those apart from São Paulo - the lack of competition among coffee shops tends to increase prices and decrease quality.
Leonardo Peres da Rocha e Silva, a partner at Pinheiro Neto Advogados, said CADE continues to see bid-rigging investigations as a priority. He said it is important CADE is able to distinguish "legitimate" business decisions not to participate in bids from illegal, explicit or tacit agreements between competitors.