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Brazilian industrial gases cartel to indemnify its victims

8 febrero, 2011

In my previous post of the 9th November, I wrote about SABESP’s plans to file a lawsuit against the members of the industrial gases cartel. I also wrote that the case would be an important precedent for the Brazilian private antitrust litigation scenario.

Given the long duration of private litigation in Brazilian courts, I must say I was surprised with the news about a precedent in the end of 2010. Although the case is still subject to review by the appeal courts and some of its nuances sound a bit odd for Brazilian standards, I found interesting to let you know about it.

The complaint was brought by a group of hospitals using industrial gases sold by the cartelists. As a matter of fact, 260 hospitals in the State of Minas Gerais brought a collective action based on the administrative decision issued by the Administrative Council of Economic Defense (CADE) – most of them were informed about the decision, because the CADE determined the cartelists should inform all the victims about its administrative decision.

The judicial decision ruled that the cartelists should compensate their clients in two different ways. First, the industrial gases companies should lower its prices, which are estimated to be 25% to 49% higher than what would be charged in a competitive market. Alternatively, the judge determined that an audit should be hired as to determine the extension of the damage suffered by the hospitals, so that each one of the 260 hospitals can be properly compensated for the exact amount of overpriced gas it bought.

The companies continued to deny the existence of the cartel and informed they would appeal to reform the decision. Although compensation is allowed under Brazilian legislation, it is not yet so common – all the other precedents referrred to smaller cartels operating regionally.

I will have to come back to this subject later.

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