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    Cartel involving the Belo Monte power plant affected competition


    August 5, 2022 - CE Noticias Financieras

     

      Six years after the beginning of the investigation, the General Superintendence of the Administrative Council for Economic Defense (SG/CADE) recommended to the court the conviction of the companies Construções e Comércio Camargo Corrêa and Construtora Norberto Odebrecht S.A, as well as three individuals, for cartel formation in public tenders for the construction of the Belo Monte Hydroelectric Plant (Belo Monte HPP), located in the Xingu River basin in the State of Pará,

      The investigation began in September 2016, after a leniency agreement was signed, through which the SG/CADE became aware of the possible practice of anticompetitive conduct, when an administrative investigation was opened to investigate the facts presented.

      According to the Superintendency's opinion, the cartel would have affected competition and caused harmful effects to the Public Treasury, since it involved one of the largest construction projects ever carried out in Brazil. The conduct refers to the year 2005, when large engineering companies joined forces to finalize technical feasibility studies, which had been carried out in the federal public administration since the 1970s.

      According to investigations, the cartel operated more intensively between 2009 and 2011, immediately prior to the auction for the granting of the concession for the exploration and construction of Belo Monte HPP, based on intense exchange of information considered sensitive from a competitive standpoint and agreements, adjustments and concerted actions to divide the market among competitors, in order to share the contracting for the construction of the hydroelectric plant. The SG/CADE's report indicates that the companies agreed on the details of the collusion mainly during meetings between their representatives.

      The case will now be judged by CADE's Tribunal, which will be responsible for the final decision, which may impose fines of up to 20% of the companies' individual revenues in their field of activity in the year prior to the administrative proceeding. Individuals are also subject to fines ranging from R$ 50 thousand to R$ 2 billion, and, in the case of managers directly or indirectly responsible for the violation committed, the applicable fine is from 1 to 20% of that applied to the company.

      Agreements

      Under Law 12,529/2011, the leniency agreement aims at obtaining information and documents that prove a cartel, as well as identifying the other participants in the conduct. The agreement may be executed in cases in which, at the time it is proposed, CADE still does not have enough evidence to ensure the conviction of those involved.

      Leniency is signed only with the first leniency applicant company (or its economic group), which must cease its involvement in the conduct, confess the wrongdoing and cooperate fully and permanently with the investigations, identifying the other participants and presenting relevant evidence and information. Leniency benefits the signatories with the extinction or reduction of one to two-thirds of CADE's punishment.

      The agreement is signed jointly with the Public Prosecution Service and benefits the signatory with criminal immunity in relation to the cartel crime. The leniency agreement is an instrument used by competition authorities in several countries to uncover cartels.

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