Antitrust agency recommends conviction of 11 companies in international cartel

The Administrative Council for Economic Defense (CADE) issued a report Wednesday (Dec. 30) recommending the conviction of 11 companies implicated in the formation of an international cartel operating in Brazil's power transmission and distribution electrical and electronic equipment industry. The investigation was opened in 2006. In addition to the losses incurred by energy utilities and private companies, the cartel activities have impacted one of the items that factor into the price of electricity for consumers.

The following companies are in the cartel: Alstom Holdings S.A.; Alstom Hydro Energia Brasil Ltda; Areva T&D S.A.; Alstom Grid Energia Ltda; Japan AE Power Systems Corporation; Mitsubishi Eletric Corporation; Siemens AG; Siemens Ltda; Toshiba Corporation; VA Tech Transmission & Distribution GmbH & Co; and VA Tech Transmissão e Distribuição Ltda.

The companies marketed gas insulated switchgear (GIS) equipment used for protecting and insulating electrical equipment in power substations.

Investigations show that the cartel has caused losses to Brazil's power system and such energy utilities as Companhia de Transmissão de Energia Elétrica Paulista, Companhia Energética de Minas Gerais, Companhia de Eletricidade da Bahia, Companhia de Energia Elétrica do Paraná, Light Serviços de Eletricidade, Eletropaulo, Eletrosul, among others. Also hurt by the criminal activity were Petrobras, Vale, and Companhia Siderúrgica Nacional.

According to CADE, the cartel operated with “impressive skill”, fixing prices and splitting geographic areas among companies that were part of the crime syndicate with the aim of allowing its members to secure certain pre-fixed market shares.

“For 16 years, from 1988 to 2004, major manufacturers managed concession contracts for GIS projects on an international basis, based on agreed rules and principles, setting price levels and assigning cartel members with geographic areas,” an excerpt of the case read. According to CADE, the cartel has also operated in other countries and been prosecuted and convicted in such countries as New Zealand, Hungary, Israel, and Czech Republic.

CADE Court will now try the administrative case for a final decision. If convicted, the companies will incur fines up to 20% of their gross sales in the year before the case was filed for the relevant industry.

Translated by Mayra Borges