Brazilian antitrust watchdog Cade will begin an investigation on Wednesday that may result in mandatory sales of refineries by state-controlled oil company Petroleo Brasileiro SA, Cade said in a statement.
According to the Cade statement, the watchdog will investigate the influence of Petrobras on fuel prices given that it controls 98 percent of Brazil’s refining capacity.
Petrobras earlier this year proposed selling a 60 percent stake in four refineries as part of a wider effort to reduce debt. The company said it would retain about 75 percent of its domestic refining capacity after the privatization.
But it stopped the process in July after a decision by the Supreme Court that privatizations must be approved by Congress and after buyers were spooked by a truckers strike in May that forced the company to cut diesel prices.
Cade revived the issue on Wednesday, and cited a previous analysis concluded by its technical body, adding that the “partial sale of the assets may not be enough to create independent competitors” and that “the company should sell the assets completely.”
The analysis by the technical body said that Petrobras should include in the refineries sale units that are close to each other to reduce distribution costs and increase competition.
Petrobras should also sell assets in Brazil’s richest region, the Southeast, the technical body said. The refineries the oil company initially intended to offer to investors were in other regions.
In a statement, the oil company said it will prove during the investigation it does not have anti-competitive practices. “Petrobras does not have a monopoly on refining since the 1990s. But more competition in the sector depends on a regulatory framework that attracts new investors.”
