CADE’s General Superintendence investigates a national cartel of exhaust systems and their automotive components

The General Superintendence of the Administrative Council for Economic Defense – CADE initiated, on 19 May, an Administrative Proceeding to investigate the practice of cartel in the national market of exhaust systems and their automotive components (Administrative Proceeding 08700.001486/2017-74).

According to the opinion of CADE’s General Superintendence, there is evidence that three companies would have fixed prices and commercial conditions, agreed to divide markets and exchanged commercial and competitive sensitive information. Such practices would have occurred in the context of purchase orders made by car manufacturers, price adjustments requested by suppliers or in the attempt to divide the supply of exhaust systems and their automotive components sold to car manufacturers. In addition, these adjustments may have been conducted by, at least, nine individuals linked to the companies.

The practices could have been established by e-mails, phone calls and, in few occasions, face-to-face meetings. These anticompetitive conducts would have happened between 2003 and 2014. The investigation started from a leniency agreement signed between CADE’s General Superintendence and Tenneco Automotive Brasil. With CADE’s consent, Tenneco dismissed the confidentiality of its identity as the signatory of the agreement.

Competition authorities from several countries adopt leniency programs, as a tool to unveil cartels. By means of the leniency agreement, the participants of a cartel can report the conduct and collaborate with the investigation of the case, being entitled to receive full administrative and criminal immunity. In Brazil, the leniency program is foreseen by the Competition Law – Law 12,529/11. Since 2003, CADE has signed more than 60 leniency agreements.

After the initiation of the Administrative Proceeding, the defendants will be notified in order to present their defenses. Once the procedural instruction is concluded, the General Superintendence will issue an opinion and forward the case to CADE’s Tribunal, responsible for the final decision.

Others investigations in this sector

Between 2014 and 2017, the General Superintendence initiated ten administrative proceedings in order to investigate cartels related to this sector. These investigated cartels were in the following markets: sparking plugs (Administrative Proceeding 08700.005789/2014-13); anti-friction bearings (Administrative Proceeding 08012.005324/2012-59); clutch facings (Administrative Proceeding 08700.010321/2012-89); thermal systems – that includes radiators, capacitors and heating systems, ventilation and air conditioning (Administrative Proceeding 08700.010323/2012-78); windshield wipers (Administrative Proceeding 08700.010320/2012-34); safety devices for automobiles – such as safety bells, airbags and steering wheels (Administrative Proceeding 08700.004631/2015-15); dampers (Administrative Proceeding 08700.004629/2015-38); ceramic substrates for automobiles (Administrative Proceeding 08700.009167/2015-45); and automotive spare parts (Administrative Proceeding 08700.006386/2016-53).

Other four markets have already been investigated by means of dawn raids conducted by the General Superintendence on August 2014, and can still result in the initiation of new administrative proceedings. The relevant markets of these cases are: automotive lighting (headlights, lanterns and brake lights); emergency switches (hazard lights and turning signal); access mechanism (cylinders kits, handles, locks and steering locks); and, automotive clutches markets. There are other ongoing investigations in the auto parts sector.