Brazil Probes GOL and Latam for Damaging Cartel Behaviour

On November 9, 2023, Brazil’s Council for Economic Defense (Cade) initiated an inquiry focusing on airlines GOL and Latam.

They are under suspicion for possibly coordinating airfare prices. If found guilty of cartel behavior, these airlines could face significant fines.

The Prosecutor General’s Office (PGR) initiated this action. On November 8, the PGR reported to Cade about the airlines’ pricing practices.

They noted identical prices on key domestic air routes since at least 2019. Before this, the Federal Public Ministry (MPF) had raised concerns.

However, Cade initially did not start an inquiry due to a lack of clear evidence.

In its investigation, the PGR examined airfare prices on various dates. They looked at tickets for flights the next day and six days later.

The main focus was on the busy São Paulo-Rio de Janeiro route. Other routes studied included São Paulo-Brasília, São Paulo-Belo Horizonte, and São Paulo-Curitiba.

The findings revealed at least three instances of both airlines setting the same prices. The PGR suspects these similar fares might come from pricing algorithms.

These algorithms use diverse data to determine flight prices. The Public Ministry believes this pricing strategy might violate economic regulations.

This is especially concerning due to GOL’s and Latam’s large shares in Brazil’s domestic aviation market.

Background

This inquiry into GOL and Latam is not the first of its kind in the aviation industry. Historically, the airline sector has faced scrutiny for pricing practices.

In Brazil, the aviation market has grown rapidly, with GOL and Latam becoming dominant players. Their influence raises concerns about competitive practices.

Globally, airfare pricing has often been a subject of regulatory interest. Authorities regularly monitor airlines to ensure fair competition.

This is crucial for protecting consumers from inflated prices due to potential collusion among major carriers.

In the past, similar investigations in various countries have led to substantial fines and changes in how airlines set prices.

Such actions are important for maintaining a healthy, competitive aviation market. They ensure that travelers have access to fairly priced air travel options.