Evonik Degussa action could test Brazilian regulator’s report on cartel losses

31 January 2017 9:56am

30th August 2016. Carolina Guerra

An ongoing damage claim against Evonik Degussa in a São Paulo court could test the value of a report by the Brazillian competition authority estimating how much customers lost due to a hydrogen peroxide cartel.

Last week, the Administrative Council for Economic Defense, or CADE, released a study that concluded a hydrogen peroxide cartel set up by Degussa (now Evonik Degussa) and Peróxidos do Brasil cost customers from 75 million to 151 million reais ($23.2 million to $46.7 million) from 1995 to 2004.

Evonik Degussa blew the whistle on the cartel and escaped fines. But it now faces a damages action brought by one of its distributors, Arc Sul Indústria e Comércio de Produtos, in a São Paulo court.

The regulator’s study could help Arc in its quest for compensation — and the agency has indicated that it wants to produce more such studies with the intent, in part, of helping private litigants. Calculating damages is a complex and time-consuming endeavor, and Arc is already struggling to pay for the court challenge because it’s facing bankruptcy proceedings, according to court documents seen by MLex.

On Aug. 17, a São Paulo judge denied the company’s request for a waiver of court fees.

CADE’s study may help Arc determine the amount it can claim, though it is understood that Arc has not yet examined the study.

The company, however, still has to prove it suffered directly from the cartel and calculate the exact amount. CADE’s study focuses mainly on the impact of the cartel on prices and doesn’t specify how much each cartel victim potentially lost.

Also, as a distributor, Arc will have to prove it didn’t pass on the additional costs of the cartel to end-buyers. If it did, Evonik Degussa could argue that the company didn’t suffer a loss.

There is also the matter of the CADE report being the first of its kind. Evonik Degussa lawyers could argue that the regulator should refrain from calculating damages as it could prompt insecurity for companies, which could be liable to pay damages several years after a case is closed.

CADE is hoping to train staff to produce similar reports more often. Even though such studies have their limitations and won’t alone win cases, they could still prove useful to motivate more victims to launch a claim in the first place.

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