CARTEL DAMAGE IN CONTRACTS WITH PETROBRAS

Abstract

This paper studies the damage done to Petrobras (Brazilian oil exploration and production company) resulting from a contractor cartel. It aims to answer the question: How to quantify the difference between the amount charged for public bids in a cartel environment and the respective amount that should be charged in a competitive environment? Econometric techniques for impact evaluation (e.g. regression analysis, differences in differences and propensity score matching) were used on a new Petrobras refinery construction bidding database, conducted between 2002 and 2014. Empirical evidence was found that bids won by cartel companies have a lower discount than bids won by non-cartel companies by 17 percentage points. A group of companies participating in Petrobras biddings started to behave as Cartel after 2006. Cartelization in contracts with public entities or state-owned companies such as Petrobras has the potential to cause great economic damage to society, which reinforces the need for constant regulation and supervision of contracts by independent bodies.

Public procurement; collusion; oil and gas; Petrobras; impact evaluation