The Brazilian competition watchdog launched an investigatory proceeding to examine whether Banco do Brasil violated the competition law by allegedly tying the granting of rural credit to the contracting of rural insurance, according to a complaint by the agribusiness association Abdagro.
Brazil’s competition authority has taken a step forward in probing one of the country’s largest public banks, Banco do Brasil, for alleged tied selling behavior reported in a complaint by an agribusiness institution.
The Superintendence of the Administrative Council for Economic Defense, or CADE, opened an administrative inquiry on Sept. 30, six months after initiating an investigatory proceeding, following a formal complaint submitted by the Brazilian Association for Agribusiness Defense (Abdagro). The private association accuses Banco do Brasil of tied selling by imposing its own rural insurance as a condition for granting rural credit to farmers.
Abdagro submitted to CADE a series of legal actions in which former employees reported alleged coercion by superiors forcing them to tie Banco do Brasil products in order to meet sales targets. The Brazilian bank told the watchdog that it does not require the purchase of agricultural or livestock insurance policies as a condition for granting loans, adding that rural producers are free to contract any insurances they want.
However, CADE’s Superintendence concluded that this case is within its competences, justifying the advancement of the case to a probe examining possible violations of the economic order.
“It must nevertheless be acknowledged that the facts described and the evidence presented point to a possible violation of economic order, which has the potential to harm competition,”
CADE’s investigative body said in a technical note.
In the next stage of inquiries, the watchdog may request information from the Superintendence of Private Insurance, or Susep, a federal institution tied to the Ministry of Finance which responsible for regulating and supervising the insurance markets in Brazil, as well as Brazil’s Central Bank, among others.
"For the producers, the simple acknowledgment of antitrust authority and the formalization of the investigation break the inertia, increase the visibility of the issue and level the playing field in rural credit negotiations,"
said Abdagro in a statement.
CADE will have 180 days, plus an additional 60-day period if necessary, to decide whether to escalate the inquiry into an administrative process or to terminate it. An administrative process is initiated when there are strong indications of harmful practices to competition presented during the administrative inquiry.
Abdagro also requested a preventive measure — a temporary action taken to prevent harm to competition as a probe moves on — but CADE rejected it. On the original claim, the agribusiness association explained that such a penalty would only reinforce enforcement of the law.
CADE’s Superintendence stated that the current sectoral regulation already imposes on Banco do Brasil the set of obligations being sought, noting that even Abdagro itself had acknowledged this.
Source: MLex
