There is no way to do magic with Petrobras prices, says Cade superintendent

There is no way to do magic with Petrobras prices, says Cade superintendent

Barreto says he cannot interfere in company policy, contrary to the expectations of the economic team

The general superintendent of CADE (Administrative Council for Economic Defense), Alexandre Barreto, says that there is no magic to be done by the body on Petrobras’ pricing policy.

In an interview with Sheet, he contradicts the expectation created in the Bolsonaro government that investigations about Petrobras underway in the antitrust body could lead to changes in fuel prices. Barreto denies that there are political pressures for the council to adopt a measure.

“Cade is not competent to regulate Petrobras’ price policy and cannot determine it or any company that practices A or B prices”, he says. “Cade will not interfere in Petrobras’ pricing policy,” he says.

CADE’s general superintendent, Alexandre Cordeiro, during an interview in his office at the agency’s headquarters – Pedro Ladeira/Folhapress

Barreto says that Cade may even take action against the company if it concludes that there are anti-competitive practices, including in logistics and fuel-related activities. But, in general, processes like this take two to three years.

“It is impossible to have any reaction, any short-term response that will impact fuel prices from these investigations”, says the superintendent-general.

After holding the presidency of the autarchy for four years, he was appointed in April to the superintendence, after approval of his name by the Senate for a two-year term. In an exchange of positions, the former superintendent Alexandre Cordeiro now occupies the presidency of the council. With the musical chairs, the command of the general superintendence passed an interim period of nine months.

Barreto also talks about the government’s plan to privatize the company, citing a possible private monopoly as a result, and says he is open to discussing the issue with the government. “What interests us is that we have more competitors,” he says.

What type of investigation is there on Petrobras and how long will it take to reach a conclusion?
We have two administrative inquiries opened in January to investigate the possibility of abuse of a dominant position by Petrobras in the pricing of fuels and cooking gas. They are in progress, are confidential, and the legal deadline for completion is 180 days. They may be extended until CADE has all the information necessary for the conclusion.

Based on them, can Cade take measures that affect Petrobras’ pricing policy in the short term?
Impossible to have any short-term reaction or response that will impact fuel prices from these investigations. If CADE understands that Petrobras committed some type of abuse of a dominant position, the investigation is converted into an administrative proceeding with contradictory and full defense. Due to the absence of legal grounds, CADE is not competent to regulate Petrobras’ pricing policy and cannot determine it or any company that practices A or B prices.

In other words, even if it identifies problems in Petrobras’ price formula, couldn’t Cade act to stop it? Cade will not interfere in Petrobras’ pricing policy. In theory, Cade can come to the conclusion that fuel pricing is abusive. But for that, there are several steps, including considering the impacts of a possible response to this possible abusiveness in the market itself.

So it’s not that Cade won’t act, but that there’s a long process… There is no magic in antitrust law. Cade has always been characterized by treading a very technical and responsible path in its performance and will continue to act in this way. Due process of law must be respected before reaching a conclusion

When should this conclusion occur? In the next five months? Any attempt at estimation is an exercise in mere futurology. But statistics show that processes of this nature take an average of two to three years to complete.

what mr. do you think about the change in the PPI (international parity price) to consider the value for export? I became aware of this proposal by the press. It’s none of our business. The way to solve this problem is not by controlling price, it is by opening up the market.

In addition to the pricing policy, there are accusations against Petrobras about anti-competitive acts in logistics and related activities to fuels. In these cases, can Cade do something?Any activity carried out with a dominant position is under Cade’s close scrutiny. Attention is redoubled when there is a de facto monopoly, as in this case. In general, there are several regulatory and legislative actions and this is the way to insert competitiveness.

Does the superintendence already have an assessment of the existence of indications that point to a real anti-competitive conduct by Petrobras? Investigation phases run in secrecy and any evaluation, even if it were possible to disclose it, would be premature at this time.

Is CADE preparing an opinion at the General Superintendence that could lead Petrobras to review its practices? Could this lead to a reduction of up to 15% in prices? This is disinformation. There is currently no consideration of sending any message to Petrobras of any nature determining a change in the fuel pricing methodology.

Has Petrobras signaled to Cade any kind of acknowledgment of flaws or abuses in the pricing policy? There are no signs of any kind in this regard.

There is a political and electoral context when talking about fuel prices, with a concern from President Bolsonaro about the effects for the elections. Is Cade being pressured to take action?No way. Cade has never received any kind of pressure from the government or any other agent to act in any direction. Despite the political sensitivity of the issue, Cade’s actions are eminently technical. CADE is characterized by its independence, the autonomy of its directors and the technical nature of its operations. Factors external to the defense of competition do not interfere in Cade’s day-to-day activities. I repeat: we do not receive any kind of pressure to act in this or any other sector. What we have, inside and outside the government, are constructive dialogues.

Mr. was contacted by the government about this Petrobras case? Not.

Are they putting the bomb in your lap on this matter? I wouldn’t say that. I think that in some sectors of society there is a misperception about the role of Cade, a feeling on the part of the population that it would be up to Cade to control prices. But it is not our assignment.

One might think ‘but is Cade not going to do anything?’. How would you respond to that kind of comment? CADE is recognized as a rigorous and technical, yet responsible, body. There is no magic in the investigative process or in the antitrust environment. Cade continues to act with the rigor that has always characterized him. At the end of this process, if problems are identified that require action, we will act firmly. But without irresponsibility.

What can Cade do if there is a view that there is a problem competitive? At the end of an investigative process, if any infraction is identified, the possibilities provided for in the legislation are a fine of up to 20% of the company’s revenue. In addition, there are other penalties. For example, determination to adopt certain practices or to cease any conduct.

Also thinking about the actors involved in this discussion, such as the Ministries of Economy, Mines and Energy, the Civil House, in addition to the Planalto Palace, what can Cade suggest in terms of actions to be taken in this case? Within its competence, CADE can contribute to the discussions in general. Being called upon to collaborate to bring its view on the competition issue, CADE is permanently open to dialogue.

THE new minister of mines and energy took over with the banner of privatization of Petrobras. Is it the best way? From a competitive point of view, it makes no difference whether the activity is operated by a private or state agent. What interests us is to have more competitors. For CADE, it would continue to be a sector that demands enormous attention, regardless of whether it is private or state-owned. We would have a private monopoly. If there is an invitation to participate now [das discussões sobre a privatização]we will be totally open to this cooperation.

How do you assess the result of the refinery sale agreement in 2019, as there are criticisms about the measure not having had an effect? And could the current inquiries lead to a new asset sale deal? It is too early to assess the outcome of the process. And, if an agreement is offered to resolve the matters under investigation, CADE is permanently open.

Source: Leaf

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