CADE's Superintendence recommends condemning a cartel in bids to acquire orthotics, prostheses and special materials

CADE's Superintendence recommends condemning a cartel in bids to acquire orthotics, prostheses and special materials
Source: https://www12.senado.leg.br/noticias/materias/2018/02/02/comissao-de-assuntos-economicos-realiza-sabatina-de-advogada-indicada-ao-cade 26.08.2021 125

In an order signed on 24th of August, the General Superintendence of the Administrative Council for Economic Defense recommended to the Municipal Court the condemnation of four companies, 17 individuals and one representative entity for the formation of a cartel in public tenders for the acquisition of orthotics, prostheses and special materials (OPME), in the segment of implantable cardiac stimulators and accessory items.

The investigation began in November 2015. Based on materials sent to CADE by the Ministry of Justice and Public Security, an administrative inquiry was launched to investigate the facts presented. It resulted in two different processes in the autarchy, including examining illegal conduct in the segment of implantable cardiac stimulators (implantable cardioverter defibrillator, resynchronizer and pacemaker) and accessory items (electrodes, sets of introducers and catheters). These products are used in the diagnosis and treatment of heart disease.

According to the Superintendence's opinion, the cartel would have affected competition and caused losses that go beyond the market environment and harmful effects to the public purse. The illicit conduct, which involved companies that held the entire market share in this segment, may have resulted in fewer patients benefiting or even losing their lives, given the vital importance of the products sold.

According to the investigations, the cartel would have operated for more than a decade, between at least 2004 and 2015, based on the regular exchange of sensitive information from a competitive perspective and concerted actions to divide the market between competitors and direct bids. The opinion of the SG/CADE points out that the companies combined the details of the collusion mainly during meetings between their representatives.

Among the issues dealt with by the cartel participants, there are non-aggression agreements, spending on medical associations to benefit from the acquisition of their products, strategies to prevent the entry of new competitors in the market, in addition to monitoring mechanisms and retaliation against those who did not comply with what was agreed.

The case investigation included information presented in a partial leniency agreement signed between Medtronic and the General Superintendence. With the agreement of the antitrust agency, the company waived the confidentiality of the contract. In addition, the SG/CADE, with the support of the Federal Police, launched the 'Merchant of Venice' operation, with searches and seizures that gathered evidence that was used in the investigation of the case.

To identify evidence of collusion, in addition to traditional methods of gathering and analyzing information, algorithms for detecting behaviour patterns characteristic of cartels in bidding processes were used. The algorithms make up the investigation tool known as Brain, focused on investigating cartels in bidding and developed from 2015 onwards by the Superintendence.

The case now goes to trial by the Court of CADE, responsible for the final decision. If convicted, the represented companies may pay fines ranging from 0.1 to 20% of their gross sales in the year prior to the lawsuit's commencement.

Source: CADE website

CADE 

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