BRAZILIAN COMPETITION AUTHORITY INVESTIGATES SUBWAY CONTRACTORS

On 21 March 2014 the Brazilian Conselho Administrativo de Defesa Econômica, (“CADE”), announced that its investigation into trains and subways in 5 Brazilian states had turned up evidence of cartel activity. The investigation is one of the largest ever conducted in Brazil and includes several multinational companies.

The investigation is focused on train and subway procurements between 1998 and 2013. 18 companies and 109 employees are accused of participation. A search and seizure operation in July 2013, carried out by CADE, produced evidence of possible bid-rigging in 15 public tenders worth a total of BRL 9.4 billion. The investigation arose from participation in a leniency programme by the German conglomerate Siemens.

In a 200-page report, CADE’s investigators claim the subway contractors divided the tenders among themselves by agreeing bids in advance. CADE has alleged that contractors accepted payments from rivals for not participating in the tenders.

The politically sensitive investigation has attracted more media attention than any previous cartel investigation in Brazil, due to suggestions that public officials were aware of the alleged conspiracy. Siemens’ voluntary disclosure surfaced just weeks before a contract for a 318-mile high-speed line between the cities of Sao Paulo and Rio de Janeiro came up for bidding. Under Brazilian law the companies involved could be fined 20% of their turnover. Balfour Beatty, Caterpillar, Alstom and Mitsui are included within the scope of the investigation, which has reportedly proceeded slowly due to the quantity of information seized in the July 2013 raids.

Public prosecutors in São Paulo have launched a parallel investigation into whether illegal kickbacks were paid to government officials to obtain lucrative contracts for the construction, fitting and maintenance of metro trains and lines. Observers have suggested that the case could lead to the first prison sentences for cartel activity in Brazilian history.

This entry was posted in Brazil, Europe, Leniency, UK by Jasvinder Nakhwal. Bookmark the permalink.

About Jasvinder Nakhwal

Jasvinder Nakhwal is a partner specialising in all aspects of business crime, in particular criminal cartel investigations, mutual legal assistance and extradition. Chambers UK 2013 quoted that "Jasvinder Nakhwal continues to impress clients with her extensive experience in cartel defence work"... and has a "thriving extradition practice". Jasvinder trained with Peters & Peters and qualified in 2002 as an Associate. She became a Partner in 2010, in the Business Crime team. Jasvinder has in-depth experience in advising both corporate and individual clients in fraud-related matters, with a firmly-established expertise in respect of criminal cartels, extradition, mutual legal assistance and corruption matters. Many of her cases have a strong international element. Jasvinder has acted for clients who simultaneously face investigation by the European Commission, the US Department of Justice, the Canadian Competition Commission and the Australian Competition and Consumer Commission. She also advises in respect of cash seizure and forfeiture cases brought under the Proceeds of Crime Act 2002, and has acted in cases involving allegations of corruption, money laundering, tax and duty evasion in professional disciplinary matters and in inquests and independent inquiries. Jasvinder is a regular speaker on her areas of expertise.

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