Government’s bet to lower fuel prices, Cade’s opinion could take years

One of the main bets of the economic area of ​​the government to reduce the price of fuel may take much longer than imagined, with no effect until the election, a great concern of the surroundings of President Jair Bolsonaro.

The “solution” via the Administrative Council for Economic Defense (Cade), which currently has two open investigations, one on Petrobras’ conduct in the refining market and the other on possible “anti-competitive conduct” by the company, depends on a process that it can last for years.

The economic team’s bet still depends on Cade reaching the conclusion that Petrobras exercised abuse of economic power. Thus, the government’s thesis is that it would force the company to change its policy of price parity to the international market to consider the costs of fuel exports, not imports.

According to government technicians familiar with the discussions, this could cause fuel to drop by up to 15%. But both investigations are still in the initial phase and have a deadline of 180 days to close, counting from the 12th of January. This initial period can be extended numerous times by 60 days.

TozziniFreire’s partner in Competition Law, Guilherme Ribas, explains that the process is still very early and investigations into possible abuse of economic power are very complex and usually take years.

“That kind of investigation by Cade takes an average of six years. In cases of unilateral conduct, abuse of economic power. Cade may at some point put a preventive measure, some unilateral determination for companies to stop adopting a conduct or not, but in this specific case I think it’s very difficult, it would be very surprising – he said.

According to the lawyer, in these two cases, Cade is evaluating the price structure, but it is not part of the Council’s attributions to say whether the price is adequate or not.

— It’s not up to Cade to regulate the price, it’s not within its competence, it’s not in the law. The price is the market that gives, what you will look at is if there is any distortion, artificiality in the market, abuse of economic power, which may have some impact on competition and ultimately on the consumer – he explained.

Clarissa Yokomizo, partner in Souto Correa’s Antitrust and Competition department, also points out that processes like those at Cade tend to be lengthy, taking 5 to 7 years.

— The process involves sending an official letter to a competitor, client, whoever it is, and it always has a relatively long time to respond, so that the person can prepare a well-founded document, and this takes time, in addition to the investigation itself that takes time. It is a very serious investigation and in general very well done, it is something that certainly does not happen overnight – said the lawyer.

Lucas Griebeler da Motta, a partner in the same area at Souto Correa, points out that there are cases of Car Wash cartel in 2014 in which people came to confess, which to this day have not been defined. The specialist also says that there is another quicker way out if Petrobras makes a deal and decides to change its pricing policy, for example.

— Next week, Petrobras may decide to make an agreement with Cade and decide to change the pricing policy and it may be that the case takes 10 years at Cade and another judicialization that in the end the STF cancels everything — he said.

Yokomizo still understands that Cade would not have legal competence to impact the state-owned company’s pricing policy.

— CADE has several powers determined by law. He has an obligation to defend competition through various means, but we understand that this type of intervention is not one of them,” he said.

Second stage

After this investigation period, which can take years, the General Superintendence will decide whether to file or initiate an administrative proceeding. In the case of the second option, Petrobras will have the right to a full defense and SG will continue its analysis and investigation, including depositions and hearings.

At the end, the SG will produce a report giving an opinion on the filing or on the understanding that there was a violation of the economic order.

This report is sent to the president of CADE, who distributes the process by lot to a rapporteur-counselor and requests a statement from the Federal Public Ministry and the Specialized Federal Attorney’s Office with CADE. This process can take more than two months.

With this phase completed, the rapporteur-counselor must deliver the documents for judgment by the plenary of CADE, which may decide on sanctions, such as fines.

The inquiries

The first of the surveys is based on a report from the Federal Audit Court (TCU) that audited the performance of the National Agency for Petroleum, Natural Gas and Biofuels (ANP), the Energy Research Company (EPE), CADE, the Ministry of Mines and Energy (MME) and Petrobras for the development of the refining market.

Part of the court’s analysis was based on the Cessation Commitment Term (TCC) signed by Petrobras and Cade in 2019, in which the company committed to sell eight refineries, a process that is still ongoing.

Cade’s investigation aims to verify whether some companies in the sector face difficulties in accessing Transpetro’s infrastructure, such as pipelines, for transporting fuel.

In the TCU’s assessment in 2020, there are risk situations in this market transition process, with the sale of Petrobras refineries, as well as for fuel prices and companies’ adaptation to the new reality.

However, the rapporteur of the process, Minister Walton Alencar Rodrigues, understood that managers are already aware of the risks and sending a copy of the report to the president of the Senate, Rodrigo Pacheco (PSD-MG), would be enough at the moment, without recommendations. of tougher measures.

In the process, Levy & Salomão Advogados represented Petrobras. The company argued that the concerns assessed in the TCU report were already addressed in the TCC agreed with Cade in 2019, which led to a change in the format of some divestments.

“The TCU Audit Report does not contain any new elements in relation to concerns about possible anti-competitive practices, which were duly adjusted between CADE and Petrobras through the Refining TCC; aspect that raises concern that the present investigation constitutes a renewal of issues already investigated and dealt with by the competition defense authority in that context”, he said in the process.

The second process was also initiated in January 2022, but to address possible anti-competitive conduct in the market by Petrobras.

Among the documents used as a basis for the initiation of the process, there is a study by the MME on guidelines for promoting free competition in the market, as well as another study by the ANP on competition in the natural gas industry and a news item on the increase in the price of gasoline. made by Petrobras in January.

Petrobras’ defense argues again that the lawsuit would investigate the same issues covered by a 2019 TCC, when the company made behavioral commitments in the natural gas market and asset sales. In addition, he justified that it is not up to CADE to regulate market prices, but competition.

Source: The Globe