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CADE's Department of Economic Studies launches an economic study to detect bid rigging cartels

The analysis, written in English, sought to demonstrate the effectiveness of the Moran's I statistic applied to a specific case of alleged cartel in market for cardiac implant devices.


On December 20, the Department of Economic Studies of the Administrative Council for Economic Defense (DEE/CADE ) launched its 5th Working Paper in 2019, available only in English, entitled "Operationalization Guide for Technical Cooperation with Persecution and Control Agencies”.


The study aims to present an economic filter methodology for the detection of bid rigging cartels, based on the statistical I-Moran model.


The model proposes the use of statistics to identify collusive behaviors in electronic bids. As such, the applied model verifies if the bids offered by companies during the first phase of electronic bidding have positive and statistically significant autocorrelation among themselves - which could indicate the formation of a cartel.


According to Guilherme Mendes Resende, Economist-Chief of DEE/CADE and one of the study’s authors, said that “It is noteworhty that this type of tool is extremely useful for improving CADE's final performance, as it allows proactive and preventive detection and fight against bid rigging cartels ”[1] .


In order to demonstrate the effectiveness of the proposed filter, the work has already applied the tool to a specific case involving an alleged cartel in the implantable cardiac devices market.


Finally, the paper also discusses the main practical advantages and disadvantages for the implementation of the filter based on I-Moran statistics.


Read the study Using the Moran's I to Detect Bid Rigging in Brazilian Procurement Auctions (English only).





Other DEE Studies


CADE’s Department of Economic Studies (DEE) has been preparing and making available to the public several Working Papers and Opinions. Only in 2019, the agency has so far managed to produce 5 Working Papers.


The studies developed by DEE aim to offer technical assistance to the decisions issued by the General Superintendence and by CADE’s Tribunal in Merger Review Procedures and in Investigations, as well as to foster debate and research in the society on economic tools related to the antitrust policy.


See below the 10-year retrospective of Working Papers already published by DEE:


2019


Working Paper No. 05/2019 - Using the Moran's I to Detect Bid Rigging in Brazilian Procurement Auctions

This paper evaluates if there is systematic correlation between the bids that are placed by competitors in the sealed phase of procurement auctions, which is a situation that may suggest coordinated and fraudulent behavior. By applying Moran's I statistically to the residuals of controlled bid regressions and using a novel and public database, we show that the bids that were placed by the investigated companies have positive and statistically significant autocorrelation .


Working Paper No. 04/2019 - Measuring the Benefits of Fighting Cartels: The Case of the Federal District Fuel Cartel

Evaluates the benefit generated by combating the fuel cartel operated in the Federal District (DF). Investigations of the case of cartel in the resale of fuels in the DF began after complaint of the conduct on November 6, 2009.


Working Document No. 03/2019 - Ex- post merger assessment : the Sadia-Perdigão case

It evaluates the competitive impacts of the merger involving Sadia and Perdigão, a merger that led to BRF Brasil Foods , in the frozen products market in Brazil from 2008 to 2013.


Working Document No. 02/2019 - Probability of investigation and application of anti-dumping measures for Brazilian industry: Effects on competition

It addresses the relationship between market competition and policy measures aimed at granting domestic companies an exemption from external competitive pressure.


Working Paper No. 01/2019 - Measuring the benefits of fighting cartels: the case of the gravel cartel

It evaluates the benefit generated by the fight against the crushed stone cartel that occurred in the metropolitan region of São Paulo.

2018


Working Paper No. 02/2018 - Competition Policy Assessment: Estimation of Damage to the Londrina Gas Station Cartel

It seeks to estimate cartel damage at gas stations in southern Brazil using both a reduced equation and a structural model of demand and supply.


Working Paper No. 01/2018 - Competitive Effects of the Sharing Economy in Brazil: Has Uber's Entry Affected the Taxi App Market between 2014 and 2016?

Analyzes the competitive impacts of Uber's entry into the taxi application market.

2017


Working Paper No. 03/2017 - Cooperation for Innovation: The Role of Antitrust and Public Policy in Different Countries

It addresses the phenomenon of business-to-business cooperation for innovation and joint research and development (R&D).


Working Paper No. 02/2017 - Competition Indicators: Conceptual Discussion and Empirical Tests

Discusses the adoption of competition indicators to compare market power across sectors of the manufacturing industry.


Working Paper 01/2017 - Antidumping and Competition in Brazil: An Empirical Assessment

Evaluates anti-dumping actions applied to foreign firms that have been petitioned by domestic companies.

2016


Working Paper No. 02/2016 - Optimal Cartel Prevention: The Case of Peroxides in Brazil

It assesses Cade's ability to prevent Brazilian cartels using data from a tried and convicted case: the Peroxides Cartel.


Working Document No. 01/2016 - Identification of the Relevant Geographic Market for Hospitals in Brazil

It analyzes the definition of relevant geographic market of hospitals and the current location of private hospitals in the main cities of Brazil.

2015


Working Paper 03/2015 - Rivalry upon Entry: The Immediate Impact of the Uber App on Taxi Races

Evaluates the immediate economic impacts of Uber application entry in the cities of Sao Paulo, Rio de Janeiro, Belo Horizonte and the Federal District during the first half of 2015.


Working Document No. 02/2015 - Cement Input Market: Structural Aspects and Empirical Exercise

It describes the cement and concrete production chain, analyzing structural aspects that may influence free competition in the sector.


Working Paper No. 01/2015 - The Individual Passenger Transport Market: Regulation, Externalities and Urban Balance

It addresses the regulatory and economic aspects of the individual passenger transport markets, more specifically for the taxi and paid passenger markets.

2014


Working Paper No. 01/2014 - Competition Indicators

Discusses the adoption of competition indicators to guide antitrust practice in Brazil.

2010


Working Document No. 01/2010 - Relevant Market Delimitation

It presents a synthesis of the quantitative methods that can be used for relevant market delimitation, making a review of the methods used in the SBDC and, at the end, makes use recommendations and trends identification and method application suggestions.

2009


Working Paper No. 01/2009 - Demand Analysis

It sets out the most important set of methodologies for the empirical analysis of demand and presents the use of these methods in selected acts of concentration and, in the end, makes recommendations for the practical use of the described methods.

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[1] Available at: http://bit.ly/EstudoMoransI . Access on 22.12.2019.

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