The regulator believes that the "Soy Moratorium" constitutes a collusion between competitors that harms soybean exports.
A unit of Brazilian competition authority CADE has ordered soybean traders in Brazil to end a program called "Soy Moratorium" or face hefty fines, according to a decision signed by CADE's General Superintendent Alexandre Barreto de Souza on Monday and seen by Reuters.
De Souza also recommended a full-blown investigation into the signatories of the program, which is a voluntary initiative under which exporters agree not to buy soy from farmers who cleared land in the Amazon rainforest after July of 2008. The agreement applies exclusively to soybeans and does not cover other types of agricultural crops.
Companies and trade groups Anec and Abiove, which represent global grain handlers like ADM, Cargill, Bunge, Louis Dreyfus and Cofco, have 10 days to comply, according to the document.
The moratorium signed by the world’s largest grain traders in 2006 protects old-growth tropical forests that have never been cleared before, but excludes many other types of vegetation that have regrown on previously cleared land.
Earlier, farming associations challenged the moratorium in courts and through legislative initiatives, seeking to weaken it. In April, a Supreme Court judge in Brazil allowed the state of Mato Grosso to revoke tax benefits for participants in the moratorium. According to advocacy groups, the moratorium has cost the state 20 billion reais (US$3.3 billion) in losses.
According to CADE's investigation, competing private companies formed a so-called Soybean Working Group with the purpose of monitoring the market and implementing an agreement that set the terms for purchasing soybeans in the country.
CADE determined that this agreement constitutes an anti-competitive collusion that harms soybean exports.
“In light of this situation, a preventive measure was adopted, ordering the Soybean Working Group to refrain from collecting, storing, sharing, or disseminating commercial information related to the sale, production, or purchase of soybeans, as well as from engaging in audit processes. Its members must also refrain from sharing reports, lists, and documents that support the agreement, and must remove the publication of documents related to the moratorium from their websites,”
said CADE in a press release.
Anec did not have an immediate comment.
Abiove said it was "surprised" with De Souza's decision to recommend a full-blown probe. Abiove added it would take measures to defend the legality of the moratorium in addition to collaborating fully and transparently with the authorities.
