President of Cade increases pressure and threatens sanctions against Petrobras

The president of CADE (Administrative Council for Economic Defense), Alexandre Cordeiro, once again put pressure on Petrobras after announcing a new increase in fuel prices and again signaled the possibility of sanctioning the company because of the rise in prices.

THE Sheet, Cordeiro said that “Petrobras doesn’t seem too concerned about its image”. According to him, who is linked to the Chief of Staff, Ciro Nogueira (PP), there is market concentration in the sector and this may lead Cade to curb “abuse of a dominant position”.

“The importance of fuels in the life of Brazilian consumers is undeniable. This market in Brazil is extremely concentrated and a significant portion is in the hands of Petrobras,” he said.

“Cade, in the fulfillment of its institutional mission, will not shy away from curbing any abuse of a dominant position. We already have an open administrative inquiry at an advanced stage,” he added.

The legal deadline for completing an administrative proceeding is 180 days, which may be extended until CADE has the necessary information. These processes typically take two to three years, so these investigations do not bring relief on fuel prices in the short term.

If the conclusion is that Petrobras abuses its dominant power, the sanction ranges from the imposition of a fine to the determination for divestment, that is, sale of part of the company to end the monopoly.

In an interview with Folha in May, CADE’s general superintendent, Alexandre Barreto, stated that the body is not competent to regulate Petrobras’ pricing policy, but that it may take action against the company if it concludes that there are anti-competitive practices, including in logistics and fuel-related activities.

In the administrative inquiry opened in January, the restriction of access to means of transport, cross-subsidies in sales and strategies to prevent the product from being sold to certain companies are pointed out as possible acts of the company.

The antitrust agency also mentions Petrobras’ “high profitability”. In 2021, the profit was BRL 106.6 billion. With the good performance, the company announced the distribution of another R$ 37.3 billion in dividends to its shareholders, raising the amount paid in return for last year’s results to R$ 101.4 billion.

This Friday (17), Petrobras announced increases of 5.2% in the price of gasoline and 14.2% in the price of diesel, on the grounds that the oil market has undergone structural change and that it is necessary to seek convergence with international prices.

The day before, the company’s board of directors rejected the government’s request to avoid readjustments, arguing that the definition of prices is the responsibility of the executive board. The company’s command argues that the maintenance of lagged prices creates a risk of diesel supply in the country.

The meeting was a last gambit by the government to try to avoid the increase amid an effort to pass a package of tax relief measures to try to reduce fuel prices.

The new Petrobras adjustment was called by President Jair Bolsonaro (PL) a “betrayal to the Brazilian people”. The chief executive, who has been suffering weariness four months before the election due to high fuel prices, said he was articulating with the Chamber of Deputies the creation of a CPI (Parliamentary Commission of Inquiry) to investigate the direction of Petrobras.

The company was also attacked by Ciro Nogueira and the president of the Chamber of Deputies, Arthur Lira (PP-AL), who told the Sheet that “goes to the dick” to “review all prices” of fuel. Lira also defended the resignation of the president of Petrobras, José Mauro Ferreira Coelho, and said that he will work to tax the oil company’s profit.