Cade agrees pardon package with construction companies caught in infrastructure cartel

Cade (Administrative Council for Economic Defense) approved, this Wednesday (8), 19 agreements on cessation of conduct involving companies that participated in cartels in infrastructure bids.

The so-called TCCs (Terms of Commitment to Cessation) refer to 12 cartel investigations conducted by the body that defends free competition in the country and which culminated in 19 agreements with the companies and employees involved.

The Carioca Christiani-Nielsen Engenharia, Construtora Norberto Odebrecht, Construtora OAS and Construtora Andrade Gutierrez agreements were signed, in addition to employees and former employees linked to the companies. There are also state and state-owned companies such as Petrobras.

In order to close such an agreement, the companies need to take part in the cartel, collaborate with the investigations and commit to no longer committing violations of the economic order, under penalty of the process being processed again at CADE and being judged – which, in thesis, would result in a fine greater than the amount to be paid with the TCC.

According to CADE, together, the companies will have to collect R$ 454.9 million to the FDD (Fund for the Defense of Diffuse Rights).

If the companies decide to return the amounts referring to the damages caused by the illicit practice, they will get a 15% discount on the value of the pecuniary contributions.

With this round of approved TCCs, Cade has accumulated R$ 1.7 billion in pecuniary contributions so far. Although it is considered a kind of pardon by the lawyers who militate with the body, the president of Cade, Alexandre Cordeiro de Macedo, considers the TCCs an effective weapon in the fight against cartels precisely because it presupposes the confession of the scheme by those who took part.

The TCC, however, only applies to illicit acts investigated in each process. It does not mean a general pardon.

In the case of the construction company Carioca Christiani-Nielsen Engenharia, for example, the agreement covers only the infringement verified in the formation of a cartel in the bidding of works by Seobras (Secretariat of State for Works of Rio de Janeiro).

Basically, it encompasses road construction, maintenance and repair works of highways of the Arco Metropolitano Rodoviário do Rio de Janeiro (Arco do Rio).

Carioca and four of its employees at the time will have to pay R$ 10.58 million. The company and an individual also agreed another TCC that investigated a cartel in infrastructure works and related road transport that carried forward the southern section of the Mario Covas Rodoanel, in a bidding by Dersa (Empresa Desenvolvimento Rodoviário S/A). The contribution amounted to R$ 5.7 million.

The construction company Odebrecht signed three TCCs, which totaled R$ 121.2 million.

One of them involved tenders for the construction, maintenance and repairs of the “Arco do Rio”. The contribution, for this case, was R$ 67.2 million.

The second agreement dealt with public tenders for civil construction and industrial assembly of fuel storage, distribution and resale bases in eight works by BR Distribuidora (Petrobras Distribuidora S/A). The agreed contribution was R$ 32.3 million.

The third TCC covered the supply, assembly and installation of the CAMG (Administrative Center of the State of Minas Gerais), carried out by Codemig (Companhia de Desenvolvimento Economico de Minas Gerais). The amount defined was R$ 21.4 million. Codemig informed that it “provided to CADE all the information requested on the works of the Administrative City, within the scope of the bidding carried out by the Company, and remains at the disposal of Organs competent bodies”.

The construction company OAS also closed three agreements, which totaled R$99.6 million and included public tenders for works destined for the federal rural electrification program Luz para Todos in Minas Gerais (R$5.4 million); expansion of the Conjunto Pituba building, used under a lease agreement as the administrative headquarters of Petrobras, in Salvador (BA) (R$ 71.6 million); urban renewal and implementation of road corridors (R$ 22.6 million).

The construction company Andrade Gutierrez signed ten of the 19 agreements and committed to pay R$ 223.5 million.
Among the cases are works promoted by the Department of Roads and Highways of São Paulo in bids by Dersa and Emurb (Municipal Urbanization Company).

The construction company also signed agreements in other cases that investigate a cartel in the bids for the Arco Metropolitano do Rio de Janeiro, Rodoanel de São Paulo, and for the works of BR Distribuidora, Orla de Salvador and the Administrative Center of Minas Gerais.

Through its advisory, Andrade Gutierrez said it would manifest itself. Odebrecht and Petrobras did not respond until the publication of this report. The report seeks contact with other companies.