CADE fines over 60 million reais for a cartel in the sodium silicate market

In the hearing of 9 November, the Administrative Council for Economic Defense (CADE) convicted the companies Manchester Química, Unaprosil, and Perquímia, in addition to 13 related individuals, for creating a cartel in the Brazilian market of production and supply of sodium silicate. The authority imposed fines amounting to more than BRL 60 million.

The case affects the market of sodium silicate in Brazil, a chemical compound derived from silicon that is a substantial input for several industries and sectors: water treatment, textiles, chemicals, soil consolidation, and the production of toners and inks, cleaning agents, stickers, cement, refractories, amongst others.

The Office of the Superintendent General of CADE launched an administrative proceeding in 2015, but the investigations began in 2012, upon the signing of a leniency agreement intermediated by the Federal Prosecution Services and the State Prosecution Services of the State of São Paulo.  

The authority investigated the practices of fixing prices and trading conditions, sharing competitively sensitive information, customer discrimination, market allocation, quote allocation, and price rises. The cartel occurred from at least 1999 to 2012, and the involved companies held over 90% of market share in the sector of production and selling of silicate in 2011—the year before the start of the investigations.

Commissioner Sérgio Ravagnani, rapporteur of the case, stated the evidence collected in the investigation was sufficient to prove the existence of a cartel and identify its participants, who caused harm to the Brazilian economy, free competition, consumers, and third parties. According to him, the violation, which took over a decade, negatively affected competition since the cartelist companies had substantial market power.

Documents and information were collected in down raids carried out in November 2012 and through leniency and cease and desist agreements signed with the parties.

The companies guilty of cartel activity face fines accounting to nearly BRL 54.8 million. Additionally, CADE levied fines of circa BRL 6.3 million on the convicted individuals.

During the investigation, the Tribunal of the authority entered into a cease and desist agreement with three companies and eight connected individuals. However, one of the companies and two individuals failed to fulfil the agreement; hence, the authority resumed the investigation and eventually found against them. The signatories admitted to participating in the illegal practice and agreed to incur a financial contribution of over BRL 5.1 million to the Brazilian government.

The Tribunal of CADE decided to dismiss the case against PQ Sílicas Brasil and seven individuals as they fully met the obligations of the leniency agreement and properly cooperated with the investigations of the Office of the Superintendent General.

Moreover, due to fulfilling their cease and desist agreements, the companies DAV Química do Brasil, Diatom Mineração and a number of natural persons also had their charges dismissed.

The members of the Tribunal also ordered the convicted companies should pay for the publication of the ruling in three newspapers of general circulation for two consecutive days in two consecutive weeks.

Access Case no. 08700.006681/2015-29.