Car manufacturers in Brazil to be investigated for cartel formation

The Brazilian Council for Economic Defense has approved an investigation into alleged monopolistic practices by the country’s four large car manufacturers. Volkswagen, Fiat, GM and Ford must answer for alleged practices, including coordinated price increases, inadequate reimbursement for labour under warranty claims, and 300 per cent mark-ups on parts.

The Brazilian Council for Economic Defense (CADE) has approved an investigation into alleged monopolistic practices by the country’s four large car manufacturers, Volkswagen, Fiat, GM and Ford.

The CADE, in conjunction with the National Association of Automobile Manufacturers of Brazil (ANFAVEA) adopted a unanimous resolution to investigate the manufacturers last month.

Hugo Maia, President of the National Federation of Automobile Dealers of Brazil originally brought the case before CADE last year for a series of 12 alleged practices, including coordinated price increases, inadequate reimbursement for labour under warranty claims, and 300 per cent mark-ups on parts.

The investigation will be carried out by SDE, the Secretariat of Economic Rights in the Ministry of Justice, the Brazilian equivalent of the US Justice Department’s anti-trust division.

“We are gratified that CADE has agreed to pursue the case against these major players in the Brazilian automotive industry,” said Maia. “We believe that this case will have repercussions for the industry not only in Brazil, but in many auto manufacturing countries.”

Brazil is one of the leading manufacturers of cars in the world, producing around 1,6-million vehicles per year. The manufacturers cited in the case represent 85 per cent of Brazilian production.