The ANP (National Petroleum Agency) decided to break a law that obliges it to automatically cancel the operating authorization of companies in the sector that have been condemned by CADE (Administrative Council for Economic Defense) for forming a cartel and other infractions against the economic order in fuel market.
The measure benefits the largest distributors in the country —Vibra (BR), RaÃzen (Shell) and Ipiranga—, which in recent years have been punished by the competition defense body.
In an opinion that supports one of its decisions and also in private conversations with members of Cade, the ANP alleges that complying with the law would harm the supply of gas stations in the country.
Despite the ANP’s stance, the three companies claim that they appealed to the courts against Cade’s convictions and managed to suspend the decisions. Together, they supply about 65% of the Brazilian market, according to data from the agency.
The law that provides for the inspection of national fuel supply (9,847/99) determines the cancellation of the authorization of companies convicted of cartel or any infraction of an economic nature recognized by CADE.
“The penalty for revocation of authorization for the exercise of activity will be applied when the authorized legal entity […] practice, in the exercise of activity related to the national supply of fuel, an infraction of the economic order, recognized by the Administrative Council for Economic Defense – CADE or by judicial decision”, states the law.
The three largest distributors have already been condemned by Cade. The most recent case — and also the biggest — was closed in July and resulted in a joint fine of R$105 million for Ipiranga and Vibra for forming a cartel in the metropolitan region of Belo Horizonte (MG).
The convictions were notified by CADE in official letters to the ANP.
In conversations with representatives of Cade, the oil agency says that it is impossible to remove the three largest distributors from the market and that, according to a legal opinion from the AGU (Advocacy-General of the Union), it would be necessary to modulate the law. For that, however, it would have to send a project to the National Congress, which is still under evaluation.
At CADE, the assessment of directors is also that the law needs to be reviewed. The companies, according to the council, were punished at the administrative level and withdrawing them from the market would be an excessive penalty, especially when those sentenced are the three largest in the country.
Also according to the assessment of members of Cade and ANP, even Petrobras —which holds the monopoly—could be withdrawn from the market if it were convicted of anti-competitive practices.
Cartels often raise average prices of products and services by up to 30%, harming consumers.
During the government of former President Michel Temer, the then Minister Moreira Franco (General Secretary) asked for a task force by Cade and the Federal Police to end fuel cartels as a way to bring down prices and prevent truck drivers from being paralyzed in 2018
The cases involving Ipiranga, Vibra and RaÃzen have already completely ended their processing at CADE, with no further possibility of administrative appeal.
The ANP, however, in one of Cade’s lawsuits that resulted in RaÃzen being sentenced to a fine of R$31.7 million (in 2015), informed the antitrust agency that it would not apply the punishment provided for in the sector’s law.
The board informed that it decided to “approve the automatic non-revocation of the company RaÃzen CombustÃveis”. That answer, however, only reached Cade more than two years after the conviction.
To the council, the ANP compared the situation of distributors with that of large banks, considered “too big to fail”.
The agency considered that the Petroleum Law defines it as the regulator’s responsibility to “guarantee the supply of petroleum derivatives” throughout the country. That is, for the ANP, there is conflict between the laws.
In the other three cases in which the large distributors were convicted of cartel and other violations of the economic order, the ANP has been acting slowly, without having marked a position.
In a process that resulted in Ipiranga being sentenced to a fine of R$ 8.1 million, for example, Cade informed the ANP about the conclusion of the administrative process, in August 2017.
There has been no manifestation from the agency to Cade since then, including the request for additional information.
In the most recently concluded case, which resulted in the imposition of R$ 105 million in fines for Ipiranga and BR Distribuidora (currently Vibra), Cade communicated to the ANP the position of the rapporteur of the case still in June 2019, when the judgment was accomplished.
The regulatory agency responded to Cade two months later, indicating that it would proceed with the case — despite its position against repeal in the RaÃzen case the previous year.
In a letter sent to Cade, the ANP even requested a series of complementary information, all of which were provided below. However, the process at the ANP, which is being processed in secrecy, has been paralyzed since June 2020 at the Superintendence of Distribution and Logistics, which precisely monitors fuel distributors.
The ANP’s stance in relation to cases concluded at CADE contrasts with the spirit of a technical cooperation agreement signed in 2013 between the agency and the antitrust agency. The objective was precisely to ensure that information, including confidential information, was passed on between the institutions.
Through its advisory, the ANP informed that it suffered a hacker attack and that, therefore, it could not provide clarification on the specific cases. THE Sheetthen requested a statement about the alleged conflict of laws, but the agency did not respond.
Cade, via advisory, said that its position on the cases is included in the processes that resulted in conviction. They contain notifications to the ANP.
Vibra and Ipiranga stated that they had appealed to the courts against Cade’s convictions, which, according to the companies, would be suspended.
Ipiranga reinforced that its conviction in Cade’s decision was not characterized as a cartel. “In the assessment of the regulatory body, there is an anti-competitive conduct of inducing uniform behavior, a fact that was judged to be justified through isolated inappropriate conduct of two company employees,” he said in a statement.
Vibra said his conviction was “alleged to have influenced ‘the adoption of uniform or concerted business conduct among competitors'”. “The effects of this conviction are suspended by the Judiciary”, he said via advising.
When contacted, RaÃzen declined to comment.
Fines imposed by Cade on companies
Value reaches R$ 174 million
​Vibra (BR) and Ipiranga
Fines: BRL 105 million, of which BRL 64.4 million applied to Vibra and BRL 40.7 million to Ipiranga
Infractions: combination and monitoring of prices practiced between competitors
Location: Belo Horizonte, Betim and Contagem (MG)
Period: at least between late 2007 and early 2008
Ipiranga
Fine: BRL 8.1 million
Infringement: influence of uniform pricing behavior between competitors
Location: Joinville (SC)
Period: at least between the months of June and November 2013
root
Fine: BRL 31.7 million
Infraction: the then distributor Shell induced price coordination in the market by controlling the prices of its dealers
Location: Sao Carlos (SP)
Period: at least between 2000 and 2003
root
Fine: BRL 26.4 million
Violation: influence the adoption of uniform commercial conduct in the resale markets of regular gasoline
Location: Bauru and MarÃlia (SP)
Period: at least between January 2001 and April 2003
Source: Cade’s records.
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