The mere observation of price proximity between competitors is not enough to constitute cartel formation , since price fixing can result from various factors.

Credits: Conjur

For a crime to be proven, unequivocal evidence is required that the similarity in values ​​resulted from an agreement or collusion.

With this reasoning, Judge Alex Ricardo dos Santos Tavares, of the 9th Civil Court of Ribeirão Preto (SP), rejected the conviction of six gas stations accused of forming a cartel. The magistrate also denied the request for compensation for collective moral damages and approved an agreement signed by 37 other legal entities.

The lawsuit was filed by the Public Prosecutor’s Office of São Paulo against a specific company, but upon identifying another 135 companies with the same subject matter, they were all consolidated into a single trial, using the São Paulo Public Prosecutor’s Office case as a pilot.

The agency accused the company of forming a cartel and charging abusive prices in the resale of regular gasoline and ethanol. Therefore, it requested that the resale margin be limited to between 17% and 20% of the purchase price, in addition to compensation for collective moral damages of at least R$ 300,000.

Before the trial, 37 of the accused companies decided to reach an agreement with the Public Prosecutor’s Office, which requested that the requests of the remaining companies be upheld.

Lack of coordination

The judge, however, rejected the charge. According to him, the proximity of prices between competitors is not enough to constitute a crime. Proof of a prior agreement between the companies to commit the act is necessary.

“In a free-market pricing system, the proximity of prices charged by competitors does not, in itself, constitute a cartel. Homogeneous products, similar acquisition costs, common suppliers, ease of knowing the prices charged by competitors, and rapid reaction from economic agents can generate parallelism without prior agreement,” the judge stated.

He emphasized that producing expert evidence would not resolve the issue either. According to the magistrate, the expert analysis would only be able to ascertain the similarity of the values, the gross resale margin, and the temporal evolution, but would not demonstrate the existence of a cartel.

Therefore, he rejected the requests and simply ratified the agreement made before the trial.

The law firm  Cabral, Gonzalez e Marcondes Sociedade de Advogados handled the case.

Click here to read the judgment
in Case No. 1000637-12.2016.8.26.0506