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Suspected price-fixing in Sao Paulo metro to be probed

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(Globalpost/GlobalPost)

Prosecutors in Brazil said they had launched a criminal investigation on Friday after uncovering "strong indications" of price-rigging during bidding for Sao Paulo's metro rail systems.

"Based on documents from CADE (the Brazilian antitrust authority), there are strong indications of criminal cartel formation in bids called by the Sao Paulo commuter rail company CPTM and the Sao Paulo Metro company from 1999 to 2009," said prosecutor Marcelo Mendroni.

Prosecutors did not name companies targeted but press reports in recent years have named them as Germany's Siemens, Spain's CAF, Japan's Mitsui, Bombardier of Canada and France's Alstom.

In a recent deal with Brazilian authorities to avoid criminal proceedings, Siemens voluntarily gave details of the price-fixing cartel during bidding for construction and maintenance of metro trains in Sao Paulo and Brasilia, according to local media reports.

"The (price-rigging) scheme involved millions of dollars, maybe billions of dollars," Mendroni, who is coordinating the criminal probe, told a press conference.

The alleged price-fixing occurred under the rule of the Brazilian Social Democratic Party (PSDB) in Sao Paulo state.

The PSDB, which still governs Sao Paulo state but is in opposition to President Dilma Rousseff's ruling Workers Party nationally, has denied any wrongdoing.

Thursday, the daily Estado de Sao Paulo reported that French power company Alstom paid millions of dollars in bribes to secure lucrative contracts in Sao Paulo state in 1998.

It cited federal police documents as saying Alstom executives were among 10 people facing charges in connection with the scandal.

Alstom did not comment directly on these specific allegations but insisted the firm continued to "follow a rigid code" of ethics.

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http://www.globalpost.com/dispatch/news/afp/130809/suspected-price-fixing-sao-paulo-metro-be-probed