On July 8th, the tribunal of the Administrative Council for Economic Defense (CADE), Brazil’s competition watchdog, fined 11 companies including Alstom Brasil Energia, Bombardier Transportation Brasil and Mitsui & Co. Brasil, R$515.6 million for rigging at least 26 public bids to manufacture subways and trains between 1999 and 2013 in the Federal District, Minas Gerais, Rio Grande do Sul and São Paulo.
The tribunal also ordered 42 physical persons accused of participating in the cartel to pay R$19.5 million, totaling R$535.1 million in fines. In addition, CADE banned Alstom from bidding in public auctions for five years in cities in which the cartel took place and banned Alstom, Bombardier and CAF Brasil Indústria e Comércio from receiving tax incentives or subsidies for the same period.
However, not all the investigated companies were ultimately found liable of the cartel charges. According to Eduardo Caminati, founding partner at Caminati Bueno Advogados and counsel to Balfour Beatty Group, CADE dropped the case against his client after recognizing it had been wrongly included as a party in the proceedings, adding: “At the time the investigation was launched, it was the largest cartel case in Brazil and it had unprecedented coverage by the press because of the many projects that were allegedly affected and, in part, due to the political sensitivity of the matter and allegations of corruption involving top officials of one of the most important parties in the country.”
While this may be considered the end of a cycle for CADE, which began investigating the cartel in 2013, when Siemens signed a leniency agreement with the council, Alstom recently published a statement which says the company will “assess all possible further administrative appeals as well as judicial options to protect the interests of the company,” so this imbroglio may not be over yet.
After all, the accused companies have always denied participation in the cartel and have pointed to the alleged lack of evidence in the case, with Alstom’s lawyer Sérgio Varella Bruna, partner at Lobo de Rizzo Advogados, stating Siemens “forged cartels where they did not exist only to make its leniency agreement more attractive.” At the same time, Vivian Fraga, partner at TozziniFreire Advogados and counsel to Caterpillar Brasil, which was dismissed from proceedings, as well as MGE Equipamentos e Serviços Rodoviários, praised certain aspects of the case, whilst recognizing there is still room for better rulings and that MGE intends to challenge the latest decision.