Automobile Manufacturers in Brazil to be Investigated for Cartel Formation.

Automotive Writers

SAO PAULO, Brazil--(AutomotiveWire)--June 29, 2001

The Brazilian Council for Economic Defense (CADE) approved an investigation into alleged monopolistic practices of the country's four largest automobile manufacturers, Volkswagen, Fiat, GM and Ford, together with ANFAVEA, the National Association of Automobile Manufacturers of Brazil, in a unanimous resolution on June 20.

The investigation will be carried out by SDE, the Secretariat of Economic Rights in the Ministry of Justice, the Brazilian equivalent of the U.S. 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 Hugo Maia, President of Fenabrave, the National Federation of Automobile Dealers of Brazil. "We believe that this case will have repercussions for the industry not only in Brazil, but in many auto manufacturing countries."

According to Mr. Maia, Fenabrave originally brought the case before CADE on January 18, 2000 for a series of twelve practices, including coordinated price increases, inadequate reimbursement for labor under warranty claims, and 300 percent mark-ups on parts.

Brazil is one of the leading manufacturers of automobiles, producing around 1.6 million vehicles per year. The manufacturers cited in the case represent 85 percent of Brazilian production.