Friday, 3rd September 2010

Brazil′s Council for Economic Defence (CADE) issued its highest ever fine yesterday of 2.9 billion reais (US$1.8 billion) to five industrial gas manufacturers for alleged long-term cartel activity.

Linde Gases, White Martins Gases Industriales, Air Products Brasil, Air Liquide Brasil and Industria Brasiliera de Gases (IBG), were accused of customer allocation, bid rigging and price fixing dating back to at least 1998 in the industrial gas market. Six company executives have also been fined.

Marcio de Carvalho Silveira Bueno, at Lino Beraldi Bueno e Belluzzo Advogados in São Paulo, says the record fines are extremely significant. ′As the fines are so large, it is very likely that companies in other sectors will become more aware of the liability for antitrust violations,′ he says.

′That the fines were based on total revenue is, in my understanding, not consistent with the fining guidelines,′ he adds.

The companies′ products are used in several industries, particularly health care, and CADE says many hospitals and businesses have been affected by the anti-competitive behaviour.

CADE′s investigation began in 2003, when the country′s Secretariat for Economic Law (SDE) was tipped off anonymously about the cartel. The investigation included telephone wiretaps and dawn raids in which the agency seized documents.

White Martins received the largest fine in the country′s competition enforcement history – 2.2 billion reais– because it was also penalised for recidivism. The company was previously fined in 1997 for cartel activity. Air Liquide was fined 249 million reais, Linde was fined 238 million reais, Air Products was fined 226 million reais and IBG was fined 8 million reais.

The fines are based on 25 per cent of the companies′ gross revenues in 2003, when the investigation started, rather than turnover from the relevant markets. A White Martins executive was fined 4.5 million reais, a Linde executive, an Air Liquide executive and three Air Products executives were fined around 500,000 reais each, and an IBG executive was fined 85,000 reais.

Leonardo Rocha e Silva, at Pinheiro Neto Advogados in Brasilia, says an appeal before the country′s Federal Court would be keenly contested. ′CADE will almost certainly insist on the need for the defendants to post a bond for the effects of the decision to be suspended. The defendants will most likely challenge the reasonableness of the decision and also the violation of the right to full defence during the investigation.′

Caio Mario da Silva Pereira Neto, at Brasil Pereira Neto Galdino Macedo Advogados, says that CADE is increasing fines for cartel behaviour. ′The reporting commissioner expressly stated that the decision is another step in this trend,′ he says. ′The first fine applied by CADE concerning this sort of conduct was equivalent to 1 per cent. Now, with the case decided yesterday, it has increased to 25 per cent.′

A statement from White Martins and its parent company, Praxir, says the companies are "shocked by the fine and absolutely reject all claims". It adds that they are confident they ′will prevail on appeal and have the fine overturned."

A spokesperson for Linde says: ′We will carefully examine CADE′s findings as reported in the decision and decide in due course how to respond appropriately. We will consider all options, including appealing the decision before the courts.′

Counsel to White Martins Gases Industriales

·         Cascione Pulino Boulos & Santos Advogados 

Partner Aurélio Marchini Santos

Counsel to Linde Gases

·         Grinberg Cordovil & Barros Advogados

Partner Mauro Grinberg 

Counsel to Air Liquide Brasil

·         Advocacia José Del Chiaro

Partner José Del Chiaro Ferreira da Rosa 

Counsel to Air Products Brasil

·         Machado, Meyer, Sendacz e Opice Advogados

Partner Tito Amaral de Andrade 

Counsel to Industria Brasiliera de Gases

·         Magalhães, Nery e Dias Advocacia

Partner Gabriel Nogueira Dias 

(Latin Lawyer 03.09.2010)

(Notícia na Íntegra)