Table of Contents

State-Initiated Restraints of Competition

State-Initiated Restraints of Competition

ASCOLA Competition Law series

Edited by Josef Drexl and Vicente Bagnoli

States influence competition in the market in various ways. They often act themselves as market participants through state-owned enterprises. They regulate markets and specific sectors of the economy such as public utilities in particular. In some instances, market regulation explicitly aims to promote competition in the market. In other instances, regulatory schemes and decisions may inadvertently distort competition or openly promote conflicting objectives and even anti-competitive goals. Furthermore, states can distort competition among firms when they act as purchasers of goods and services as well as when they grant subsidies to individual firms. This book assembles contributions by competition law scholars who present new insights on the diversity of problems and challenges arising from state-initiated restraints of competition in jurisdictions from all around the world, not only including the EU and the US, but also Latin American countries, China, India and Australia.

Chapter 2: Petrobrás: state monopoly and competition policy

Gilberto Bercovici

Subjects: law - academic, competition and antitrust law


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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