Brazil investigates price-fixing by alleged train cartel

SAO PAULO, March 21 Fri Mar 21, 2014 5:09pm EDT

SAO PAULO, March 21 (Reuters) - Brazil's antitrust agency has begun investigating several major international companies for allegedly fixing prices in contracts to build and maintain trains and subway lines in five Brazilian cities.

The alleged price-fixing involved bids for 15 contracts worth 9.4 billion reais ($4.05 billion)for subways and urban railway lines built in Sao Paulo, Rio de Janeiro, Belo Horizonte, Brasilia and Porto Alegre between 1998 and 2013.

CADE announced the legal proceedings on Thursday in a statement that said 118 officials from 18 companies, including Germany's Siemens AG, Canada's Bombardier Inc , France's Alstom SA, Japan's Mitsui & Co Ltd and Spain's CAF SA, were under investigation.

Other international and local engineering and railway equipment companies are also being investigated, including U.S. -based Caterpillar Inc, South Korea's Hyundai Rotem Co and DaimlerChrysler Rail Systems, which was acquired by Bombardier in 2001.

The agency said evidence was collected in July when authorities raided offices in Sao Paulo and seized documents that, CADE said, indicated the existence of a cartel.

"The members of the cartel apparently divided up the tenders between themselves and pretended there was competition, but had agreed previously on the prices of their bids," CADE said.

Siemens voluntarily self-reported its alleged involvement in the price-fixing scheme to Brazilian authorities last year in a plea bargain agreement to lessen its responsibility.

Some of the companies denied the accusations and said they would cooperate with Brazilian authorities.

"We strongly believe that Bombardier Transportation in Brazil and our employees have always acted in compliance with the laws and our code of ethics," a spokesman for the Bombardier unit, Marc Laforge, said by email on Friday.

"We have fully cooperated with the investigation and intend to continue to do so."

Siemens said in a statement, "We believe the investigations will lead to a more ethical and transparent business environment in Brazil."

Alstom said it would provide clarifications to the Brazilian authorities as soon as it had access to the legal documents.

CADE said the cartel allegedly began in 1998 during bidding for Sao Paulo's Lilas metro line and price-fixing continued with the city's CPTM metropolitan railway projects, a subway in Brazil's capital Brasilia in 2005, and contracts for subway cars for Porto Alegre, Belo Horizonte and Rio de Janeiro in 2012. (Additional reporting by Solarina Ho in Toronto; Writing by Anthony Boadle; Editing by Marguerita Choy)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article