Brazil high court suspends minimum freight fines

Brazil's supreme court suspended the issuing of fines to companies that fail to pay regulated freight rates, giving agribusiness a victory in its six-month battle against the trucking industry over the controversial minimum rates policy.

The high court justice overseeing appeals against the rates, Luiz Fux, late yesterday stripped the country's highway regulator ANTT of its power to issue fines to companies for paying rates below those set by the regulator.

Although the rates remain in place, the removal of any penalty for lack of compliance leaves them with little practical effect. This could have the effect of lowering costs for grains and fertilizers in the domestic market.

The national agricultural confederation (CNA), which filed the lawsuit, said the decision brings more legal security to the sector. The CNA estimates that the new freight rates raised costs by as much as 145pc on some routes.

Truckers' unions are already threatening to stage another strike in response to the court decision.

The minimum freight rates policy was implemented in June by the government of outgoing president Michel Temer as a concession to the trucking industry to end an 11-day nationwide strike in late May. The strike blocked major highways across Brazil.

The rates were quickly challenged in the courts by at least 60 different industry groups including the main agricultural associations. Brazil's antitrust agency Cade also came out strongly against the rates, saying it essentially created a trucking cartel in the country.

To break the strike, Temer also agreed to a diesel price subsidy, which will expire on 31 December.

Brazilian state-controlled oil company Petrobras reduced wholesale diesel prices by 15.28pc on 29 November, which means the ANTT will need to adjust the minimum freight rates in response. The ANTT had already cut the rates on 22 November because of falling diesel prices.