ASCOLA Competition Law series
Edited by Josef Drexl and Vicente Bagnoli
Chapter 2: Petrobrás: state monopoly and competition policy
In Brazil, the oil sector is a monopoly of the state, but the state-owned enterprise responsible for the Brazilian oil policy, Petrobrás, needs to act following the principles of Brazilian competition policy, in at least two sectors: first, the fuel distribution market, the only branch of the oil sector not monopolized by the state; and, second, when Petrobrás uses its purchasing power. Historically, we first notice a relevant interest in the market for oil and gas resources in Brazil by the time of the First World War. On the one hand, other countries experienced supply difficulties and a price increase as a result, especially in relation to coal, steel and fuel. On the other hand, in Brazil, there was a fear that foreign nations or economic groups would try to take control of such resources. Indeed, the fuel supply market in Brazil was controlled by five subsidiaries of large foreign companies, namely Standard Oil of New Jersey, Anglo-American (affiliated with Royal Dutch Shell), Atlantic Refining Company, Texas Company and Caloric Company. The fuel was imported from American and English refineries located at the Gulf of Mexico and Aruba, in the Dutch Caribbean. Elevated prices, as well as tax advantages and foreign exchange rates, which highly benefited the foreign distributing companies, gave rise to many conflicts throughout the 1930s. On the eve of World War II, the share of oil products in the imports composition was extremely elevated in Brazil.
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