Cade expresses concern about freight pricing

The Administrative Council for Economic Defense (CADE) expressed concern about the freight pricing policy, in a petition sent to the Federal Supreme Court (STF), this Monday (18/06). The entity points to the risk of harm to Brazilian society and violates the Principle of Free Competition, expressed in the Federal Constitution. 

Letter number 2547/2018 signed by Cade's president, Alexandre Barreto de Souza, general superintendent Alexandre Cordeiro Macedo and chief prosecutor Walter de Agra Júnior was forwarded to minister Luiz Fux, rapporteur of the Direct Action of Unconstitutionality (ADI) 5.956 proposed by the Brazilian Road Freight Transport Association against Provisional Measure (MP) 832/2018, which establishes minimum freight prices. 
“An important issue to be highlighted is that, according to the text of MP 832/2018, although ANTT is the Agency that regulates the minimum freight price, it is understood that the process of setting minimum prices will, from now on, involve with the participation of several competitors in the sector, that is, representatives of cargo transport cooperatives and unions of transport companies and independent cargo transporters, thus increasing competition concerns arising from such minimum price tables. Competitors, sitting at the table, to debate common sectoral costs, represents an affront to the Principle of Free Competition, expressed in the Federal Constitution of Brazil”, says an excerpt from the demonstration.
The letter also points out risks of loss of competitiveness for truck drivers themselves. “In a still superficial analysis of the content of the attacked standard, CADE understands that there is a real risk of the table generating a risk for the truck drivers themselves, either because the risk of the customer deciding to internalize the freight service increases, depending on the minimum costs imposed via the table, or because it creates the possibility that, in a scenario with excess supply, some truck drivers decide, of their own volition, not to follow the table, creating distortions of competitiveness within the class of transporters itself, in which those who comply with the standard will lose competitiveness”.
Cade recognizes that “there are specific and exceptional situations in which the need for a state public policy can supersede (and therefore mitigate) competition analysis”. However, the entity's position in the specific case is that “the pricing, with the establishment of minimum prices, does not present benefits to the proper functioning of the market and to the final consumer, who will bear the price increases resulting from such a measure”.

Preliminary hearing 

A preliminary hearing for the consideration of the ADIs' precautionary claim on the issue being processed by the STF is scheduled for next Wednesday (20/06). The Attorney General of the Union must appear; the Minister of Transport; the Director of the National Land Transport Agency (ANTT); representative of the Brazilian Road Freight Transport Association (ATR Brasil); representative of the Brazilian Agriculture and Livestock Confederation (CNA) and the Attorney General of the Republic

The full statement from Cade to the STF can be consulted in PDF format.