MercoPress. South Atlantic News Agency

Brazil investigating collusion and price fixing at the fuel pump: largest distributors targeted

The firms targeted are Petrobras Distribuidora SA; Ipiranga, a unit of Ultrapar Participacoes SA; and Raizen, a Cosan SA and Royal Dutch Shell Plc joint venture

Brazil’s three largest fuel distribution companies are under investigation for fixing prices at the pump, police said on Tuesday, reigniting debate over potential collusion among gas station owners in Latin America’s largest oil producer.

 The firms targeted by the probe are Petrobras Distribuidora SA, a subsidiary of state oil company Petroleo Brasileiro SA; Ipiranga, a unit of Ultrapar Participacoes SA; and Raizen, a Cosan SA and Royal Dutch Shell Plc joint venture.

Police in the southern state of Parana were serving eight arrest warrants and 12 search and seizure warrants in connection with the probe in the city of Curitiba, the state capital, according to police.

The probe comes two months after Brazil’s economy was paralyzed by a trucker strike over soaring diesel fuel prices. While the government resolved that protest with new subsidies and other measures, antitrust regulators also raised concerns about a lack of competition in the highly concentrated sector.

Police said they were targeting managers and sales representatives of the three firms in the investigation, which has been underway for over a year. They accused the fuel distribution companies of dictating the prices at the pump charged by individual gas station owners, a violation of Brazilian market rules that the owners should have freedom to set prices freely.

To make sure the dictated prices were being applied by the gas station owners, the distribution companies hired people to ride motorbikes around the city of Curitiba to take pictures of the gas stations and their pricing banners, according to police.

Petrobras Distribuidora, also known as BR Distribuidora, said in a statement that it follows “the best commercial, competitive and ethical practices toward the consumer”and demands the same behavior from its partners and workforce.

Raizen said in a statement fuel prices were set by individual gas station owners with no interference from the distributor. “The company operates in total conformity with applicable legislation and always acts toward the consumer in a competitive way and in favor of free competition,” it said in a statement.

In a statement late on Tuesday, Raizen said it had access to the probe late in the day and was considering information provided by the investigation reports.

Ipiranga said that it “does not incentivize illegal practices,” and that it operates in compliance with competition regulations.

The three companies under investigation together control more than two-thirds of the national fuel distribution market, according to data from oil regulator ANP.