Publicação

The Brazilian sector of liquefied petroleum gas (LPG) underwent major changes in the last decades. The fact that LPG price is very important for a large number of households in Brazil has implied that the market of this product has been historically under close supervision by governmental authorities. After having been a heavily regulated sector, it was deregulated at the time of liberalization reforms in the 1990 s. Thereafter, it became essential to enforce competition policy protecting consumers’ welfare. This paper analyzes the evolution of the LPG markets in Brazil under a historical and institutional perspective, considering factors such as the effects of competition policy, regulatory issues and market structure. The establishment of a competitive environment for LPG faced a highly concentrated market. However, the market continued to expand after liberalization with the dissemination of LGP in Brazilian households. Mergers between dominant firms potentially increased the risk of abuse of market power and cartel formation. The recent antitrust cases attest to the effectiveness of Brazilian competition laws concerning the LPG industry.