Industrial Gas Companies Face Brazilian Fine Muito Grande

The Brazilian antitrust authority, Conselho Administrativo de Defesa Econômica (CADE), is levying fines totaling about $1.7 billion against Air Liquide, Air Products, Linde, Praxair’s Brazilian subsidiary White Martins. It has also implicated seven managers of those companies. CADE says it found evidence, through wire taps and searches, of an elaborate arrangement to divvy up the market by assigning customers to particular industrial gas companies. “CADE understands the actions of those companies that were investigated resulted in grave damage to industry and the public health of Brazilians,” the regulator said in a statement. (Warning: I translated that myself.) White Martins faces the largest fine, $1,273 million. Air Liquide is on the hook for $143 million. Air Products is looking at $130 million. And Linde may be responsible for $137 million. The fines made Praxair mad. “Praxair strongly believes that the allegations of anticompetitive activity against our Brazilian subsidiary are not supported by valid and sufficient evidence,” the company said in a statement. “We further believe that the fine represents a gross and arbitrary disregard of Brazilian law.” The firm promises that it will “prevail on appeal.” To Laurence Alexander, an equity analyst that covers Praxair for Jeffries & Co., the fine isn’t a shocker. “The threat of potential sanctions has been apparent since 2004, when CADE announced an investigation into alleged price fixing on public tenders as part of a broader government initiative to ‘help tame inflation’,” he wrote to clients. Alexander expects appeals to drag out five to ten years.

Author: Alex Tullo

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