Fed Keeps Key Rate Unchanged While Signaling Future Hikes

The Federal Reserve is leaving its benchmark interest rate unchanged while signaling further gradual rate hikes in the months ahead as long as the economy stays healthy.

The Fed’s decision left the central bank’s key short-term rate at 1.75 percent to 2 percent – the level hit in June when the Fed boosted the rate for a second time this year.

 

The Fed projected in June four rate hikes this year, up from three in 2017. Private economists expect the next hike to occur at the September meeting.

 

In a brief policy statement, the Fed notes a strengthening labor market, economic activity growing at “a strong rate,” and inflation that’s reached the central bank’s target of 2 percent annual gains. Officials see economic risks as roughly balanced.

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Social Media Bosses to Face US Lawmakers in September

Top executives from Facebook, Twitter and Google will face lawmakers on Capitol Hill next month to explain what the social media giants are doing to combat foreign information operations.

Senate Intelligence Committee Chairman, Republican Sen. Richard Burr, and ranking Democrat, Sen. Mark Warner, made the announcement Wednesday, at the start of a hearing on how Russia and other countries and actors have been manipulating social media.

The goal of the September 5 hearing will be “to hear the plans they have in place, to press them to do more, and to work together to address this challenge,” Warner said.

“They can do better to protect our democracy,” he added. “I’m concerned that even after 18 months of study we are still only scratching the surface when it comes to Russia’s information warfare.”

Burr called the foreign information operations, like those being carried out by Russia, “an intolerable assault on the democratic foundation this republic was built on.”

“It’s also important that the American people know that these activities neither began nor ended with the 2016 elections” Burr said. He warned that activities like those identified recently by Facebook have been going beyond just social media, “creating events on our streets with real Americans unknowingly participating.”

Facebook Tuesday announced it had shut down 32 Facebook and Instagram accounts because they were “involved in coordinated inauthentic behavior,” much of it targeting left-wing American political groups.

Facebook said it was too early to say whether the accounts were being run by Russia, but an analysis by the Atlantic Council’s Digital Forensic Research Lab found signs pointing to “the Russian-speaking world.”

In a blog post, the lab noted similarities to activity by Russia’s Internet Research Agency (IRA), including “language patterns that indicate non-native English and consistent mistranslation, as well as an overwhelming focus on polarizing issues at the top of any given news cycle with content that remained emotive rather than fact-based.”

Facebook’s announcement followed a warning issued by Microsoft less than two weeks ago, which said hackers had targeted the campaigns of at least Congressional candidates in the upcoming election.

Microsoft said the phishing attacks, similar to ones employed by Russian-linked operatives to target the Republican and Democratic campaigns during the 2016 election, were thwarted.

Late last week, The Daily Beast reported one of the targets of those attacks was Missouri’s Democratic senator, Claire McCaskill, who has been highly critical of Russia.

During Wednesday’s senate hearing, a number of senators cautioned the issue is much bigger than the 2016 or 2018 elections.

“It is about the integrity of our society,” said Sen. Burr. “This is about national security.”

“It would be a mistake to think this is just about elections,” added Republican Sen. John Cornyn, noting similar techniques could be used to destroy reputations or tank stock prices.

Experts say some of that already is happening.

“On the state actor front we have seen evidence of campaigns targeting energy and agriculture,” said Renee DiResta, director of Research at New Knowledge.

“In agriculture, that’s taken the form of spreading fear about GMOs [genetically modified organisms],” she said.

“There’s a commercial dimension to this that’s underreported. There’s a lot more going on in the commercial space,” Graphika Founder and CEO John Kelly told lawmakers.

“Sometimes they’re tied, these political attacks and attack on corporations where corporations will be basically punished with falsely amplified boycott campaigns, and similar measures for doing something, which is politically not what Russia wants to see.”

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Social Media Bosses to Face US Lawmakers in September

Top executives from Facebook, Twitter and Google will face lawmakers on Capitol Hill next month to explain what the social media giants are doing to combat foreign information operations.

Senate Intelligence Committee Chairman, Republican Sen. Richard Burr, and ranking Democrat, Sen. Mark Warner, made the announcement Wednesday, at the start of a hearing on how Russia and other countries and actors have been manipulating social media.

The goal of the September 5 hearing will be “to hear the plans they have in place, to press them to do more, and to work together to address this challenge,” Warner said.

“They can do better to protect our democracy,” he added. “I’m concerned that even after 18 months of study we are still only scratching the surface when it comes to Russia’s information warfare.”

Burr called the foreign information operations, like those being carried out by Russia, “an intolerable assault on the democratic foundation this republic was built on.”

“It’s also important that the American people know that these activities neither began nor ended with the 2016 elections” Burr said. He warned that activities like those identified recently by Facebook have been going beyond just social media, “creating events on our streets with real Americans unknowingly participating.”

Facebook Tuesday announced it had shut down 32 Facebook and Instagram accounts because they were “involved in coordinated inauthentic behavior,” much of it targeting left-wing American political groups.

Facebook said it was too early to say whether the accounts were being run by Russia, but an analysis by the Atlantic Council’s Digital Forensic Research Lab found signs pointing to “the Russian-speaking world.”

In a blog post, the lab noted similarities to activity by Russia’s Internet Research Agency (IRA), including “language patterns that indicate non-native English and consistent mistranslation, as well as an overwhelming focus on polarizing issues at the top of any given news cycle with content that remained emotive rather than fact-based.”

Facebook’s announcement followed a warning issued by Microsoft less than two weeks ago, which said hackers had targeted the campaigns of at least Congressional candidates in the upcoming election.

Microsoft said the phishing attacks, similar to ones employed by Russian-linked operatives to target the Republican and Democratic campaigns during the 2016 election, were thwarted.

Late last week, The Daily Beast reported one of the targets of those attacks was Missouri’s Democratic senator, Claire McCaskill, who has been highly critical of Russia.

During Wednesday’s senate hearing, a number of senators cautioned the issue is much bigger than the 2016 or 2018 elections.

“It is about the integrity of our society,” said Sen. Burr. “This is about national security.”

“It would be a mistake to think this is just about elections,” added Republican Sen. John Cornyn, noting similar techniques could be used to destroy reputations or tank stock prices.

Experts say some of that already is happening.

“On the state actor front we have seen evidence of campaigns targeting energy and agriculture,” said Renee DiResta, director of Research at New Knowledge.

“In agriculture, that’s taken the form of spreading fear about GMOs [genetically modified organisms],” she said.

“There’s a commercial dimension to this that’s underreported. There’s a lot more going on in the commercial space,” Graphika Founder and CEO John Kelly told lawmakers.

“Sometimes they’re tied, these political attacks and attack on corporations where corporations will be basically punished with falsely amplified boycott campaigns, and similar measures for doing something, which is politically not what Russia wants to see.”

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China Warns of Retaliation if US Takes More Trade Steps

China’s government has warned it will retaliate if Washington imposes new trade penalties following a report the Trump administration will propose increasing the tariff rate on an additional $200 billion of Chinese imports.

A foreign ministry spokesman, Geng Shuang, warned Tuesday that Beijing will “definitely fight back” to defend its “lawful rights and interests.” He gave no details of possible retaliatory measures.

Bloomberg News reported, citing three unidentified sources, the Trump administration would propose imposing 25 percent tariffs on a $200 billion list of Chinese goods, up from the planned 10 percent.

The two sides have imposed 25 percent tariffs on billions of dollars of each other’s goods in a dispute over China’s technology policy.

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China Warns of Retaliation if US Takes More Trade Steps

China’s government has warned it will retaliate if Washington imposes new trade penalties following a report the Trump administration will propose increasing the tariff rate on an additional $200 billion of Chinese imports.

A foreign ministry spokesman, Geng Shuang, warned Tuesday that Beijing will “definitely fight back” to defend its “lawful rights and interests.” He gave no details of possible retaliatory measures.

Bloomberg News reported, citing three unidentified sources, the Trump administration would propose imposing 25 percent tariffs on a $200 billion list of Chinese goods, up from the planned 10 percent.

The two sides have imposed 25 percent tariffs on billions of dollars of each other’s goods in a dispute over China’s technology policy.

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A Special Type of 3D Printing

3D printers are being used extensively in industry, research, teaching and hobbies, printing with metal, plastic and even edible material such as dough. Researchers at Carnegie Mellon University, in Pittsburgh, are experimenting with another kind of 3D printing – with yarn. VOA’s George Putic reports.

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A Special Type of 3D Printing

3D printers are being used extensively in industry, research, teaching and hobbies, printing with metal, plastic and even edible material such as dough. Researchers at Carnegie Mellon University, in Pittsburgh, are experimenting with another kind of 3D printing – with yarn. VOA’s George Putic reports.

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Building a Musical Organ is No Simple Task

Thousands of dollars worth of parts, more than a year of hard work, attention to hundreds of intricate details — this is what it takes to build a musical organ. A small company in Tennessee has been building these grand musical instruments for nearly 30 years and recently walked VOA’s Lesia Bakalets through the fascinating and complicated process. Anna Rice narrates this report.

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Building a Musical Organ is No Simple Task

Thousands of dollars worth of parts, more than a year of hard work, attention to hundreds of intricate details — this is what it takes to build a musical organ. A small company in Tennessee has been building these grand musical instruments for nearly 30 years and recently walked VOA’s Lesia Bakalets through the fascinating and complicated process. Anna Rice narrates this report.

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Saltwater Treatment Plant Brings ‘Tasty Tea’ to Indian Island

Each morning, Kamarunisa Poovummada sips her cup of tea while watching waves from the Arabian Sea crash around a water treatment plant opposite her house on Kavaratti island, off India’s southwest coast.

She links the taste of her perfectly brewed cup to the desalination plant that has brought potable water to the doorsteps of islanders, and almost erased the memory of the brackish tea she hurriedly swallowed down until a decade ago.

“We first noticed the difference when we saw the golden color of the tea as we strained it into our cups,” Poovummada recalled. “And then we tasted the tea and it was magical.”

The “tasty” tea is celebrated daily by residents of Kavaratti, the capital of India’s smallest Union Territory Lakshadweep, an archipelago of 36 islands, of which only 10 are inhabited.

Surrounded by pristine beaches, lagoons and coral reefs, the islanders have for decades battled a shortage of clean water – a challenge facing many island inhabitants globally.

Over the years, the sea’s clear blue waters seeped into the islands’ limited groundwater reserves, making every sip saline.

Limited land availability also resulted in groundwater sources being too close to sewage sumps, causing contamination and making water unsafe for drinking, cooking or even bathing.

“The water system was a mess,” said Hidyathulla Chekkillakam, who grew up on the island and is an employee of the public works department that runs the desalination plant.

Different options were tried, from open wells to rainwater harvesting, he said – but they were either ineffective or too expensive.

“Good drinking water was a prized commodity,” he added.

Piped Dreams

When Purnima Jalihal and her team from the Chennai-based National Institute of Ocean Technology (NIOT) first arrived on Kavaratti in 2004, they were armed with blueprints for a desalination plant and cartons of bottled water.

They found themselves in the midst of a fragile ecosystem, with clear instructions from the island administration to “not destroy” anything. They were also warned about the tea, and soon found even a sip made them queasy.

“The salinity in the water was unbearable, and the people knew it was not good for their health. But they had no choice,” Jalihal said.

The project – and the fact it was headed by a woman – drew curious islanders to the site, where Jalihal’s team had to improvise designs to ensure construction did not harm the ecosystem.

“It was a struggle to get things going,” the scientist said. “There was no infrastructure and we couldn’t bring in heavy machinery. Everything had to be done manually.”

The team built floating structures and towed them into the sea, including an underwater pipeline.

In less than a year, the water treatment plant was up and running, producing 100,000 liters of potable water a day.

Pipelines were laid along the streets, with a community tap set up every 25 meters (82 ft). And in 2005, the water supply started.

“It was almost like a revolution,” housewife Rahiyanath Begum told the Thomson Reuters Foundation as she watched her children play on the beach.

“Tea is a part of our life. We drink it without milk and so the color and taste are important. If the tea is good, it means the water is good,” she said.

Poovummada, Begum and the 11,200 residents of Kavaratti – a tiny island measuring just 5.8 km (3.6 miles) long and 1.6 km wide – neatly line up buckets around the water taps for an hour each day.

Tourist Attraction

Abdul Latif is used to islanders visiting the plant to show it off to their children, and guests from the mainland.

“It’s almost like a tourist spot,” the 43-year-old operator said, smiling.

From walking visitors across the bridge to see the underwater pipeline to urging everyone to drink a glass of treated water, Latif has become a poster boy for the plant, which has withstood storms, including Cyclone Ockhi in 2017.

“It rarely breaks down, and the real challenge is when big jellyfish get stuck in the underwater pumps,” he said.

Built at a capital cost of about 50 million Indian rupees ($727,400) with government funding, the plant technology is robust, environmentally friendly and requires little effort to operate and maintain, Jalihal said.

Developed by the NIOT, it utilizes the temperature difference between sea-surface water and deep-sea water to evaporate the warmer water at low pressure and condense the vapour with the colder water to obtain fresh water.

Buoyed by its success, the NIOT set up two plants on Agatti and Minicoy islands in 2011, providing more than 15,000 residents with clean water. Construction of six more desalination plants is now underway on other inhabited islands.

Only one other water treatment plant in India, off the coast of Chennai city, uses the same home-grown technology. Others purify water with reverse osmosis, a costlier imported method.

Latif and his team work shifts to keep the motors of the plant running, to supply nine liters of water per day for each resident, including three for drinking and five for cooking.

“We discourage people from using it for a bath or washing clothes because we don’t want even a precious drop wasted,” said Chekkillakam. “Everyone understands because we have seen how quickly clean water sources dry up or get contaminated.”

Going Green

A decade after the Kavaratti desalination plant became operational, Jalihal is back at the drawing board, this time working on a new plant for the island that will draw power from the sea instead of running on diesel generators as now.

“It will be completely green, using ocean thermal energy to run. Then the system will be perfect,” she said.

Khadeeja Lavanakkal cannot wait for the second plant. She lives at the end of the pipeline, and sometimes gets only a trickle of clean water because others have filled extra buckets.

“We have an open well, but when officials come to check the water they tell us it is more saline than sea water. We could do with a little more clean water to drink.”

Nonetheless, Lavanakkal is grateful to the scientists.

“It’s not just the tea but even the curries we cook are so much tastier,” she said.

“And the best part is that we can close our eyes and drink a glass of water without worrying about falling ill.”

($1 = 68.7400 Indian rupees)

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Saltwater Treatment Plant Brings ‘Tasty Tea’ to Indian Island

Each morning, Kamarunisa Poovummada sips her cup of tea while watching waves from the Arabian Sea crash around a water treatment plant opposite her house on Kavaratti island, off India’s southwest coast.

She links the taste of her perfectly brewed cup to the desalination plant that has brought potable water to the doorsteps of islanders, and almost erased the memory of the brackish tea she hurriedly swallowed down until a decade ago.

“We first noticed the difference when we saw the golden color of the tea as we strained it into our cups,” Poovummada recalled. “And then we tasted the tea and it was magical.”

The “tasty” tea is celebrated daily by residents of Kavaratti, the capital of India’s smallest Union Territory Lakshadweep, an archipelago of 36 islands, of which only 10 are inhabited.

Surrounded by pristine beaches, lagoons and coral reefs, the islanders have for decades battled a shortage of clean water – a challenge facing many island inhabitants globally.

Over the years, the sea’s clear blue waters seeped into the islands’ limited groundwater reserves, making every sip saline.

Limited land availability also resulted in groundwater sources being too close to sewage sumps, causing contamination and making water unsafe for drinking, cooking or even bathing.

“The water system was a mess,” said Hidyathulla Chekkillakam, who grew up on the island and is an employee of the public works department that runs the desalination plant.

Different options were tried, from open wells to rainwater harvesting, he said – but they were either ineffective or too expensive.

“Good drinking water was a prized commodity,” he added.

Piped Dreams

When Purnima Jalihal and her team from the Chennai-based National Institute of Ocean Technology (NIOT) first arrived on Kavaratti in 2004, they were armed with blueprints for a desalination plant and cartons of bottled water.

They found themselves in the midst of a fragile ecosystem, with clear instructions from the island administration to “not destroy” anything. They were also warned about the tea, and soon found even a sip made them queasy.

“The salinity in the water was unbearable, and the people knew it was not good for their health. But they had no choice,” Jalihal said.

The project – and the fact it was headed by a woman – drew curious islanders to the site, where Jalihal’s team had to improvise designs to ensure construction did not harm the ecosystem.

“It was a struggle to get things going,” the scientist said. “There was no infrastructure and we couldn’t bring in heavy machinery. Everything had to be done manually.”

The team built floating structures and towed them into the sea, including an underwater pipeline.

In less than a year, the water treatment plant was up and running, producing 100,000 liters of potable water a day.

Pipelines were laid along the streets, with a community tap set up every 25 meters (82 ft). And in 2005, the water supply started.

“It was almost like a revolution,” housewife Rahiyanath Begum told the Thomson Reuters Foundation as she watched her children play on the beach.

“Tea is a part of our life. We drink it without milk and so the color and taste are important. If the tea is good, it means the water is good,” she said.

Poovummada, Begum and the 11,200 residents of Kavaratti – a tiny island measuring just 5.8 km (3.6 miles) long and 1.6 km wide – neatly line up buckets around the water taps for an hour each day.

Tourist Attraction

Abdul Latif is used to islanders visiting the plant to show it off to their children, and guests from the mainland.

“It’s almost like a tourist spot,” the 43-year-old operator said, smiling.

From walking visitors across the bridge to see the underwater pipeline to urging everyone to drink a glass of treated water, Latif has become a poster boy for the plant, which has withstood storms, including Cyclone Ockhi in 2017.

“It rarely breaks down, and the real challenge is when big jellyfish get stuck in the underwater pumps,” he said.

Built at a capital cost of about 50 million Indian rupees ($727,400) with government funding, the plant technology is robust, environmentally friendly and requires little effort to operate and maintain, Jalihal said.

Developed by the NIOT, it utilizes the temperature difference between sea-surface water and deep-sea water to evaporate the warmer water at low pressure and condense the vapour with the colder water to obtain fresh water.

Buoyed by its success, the NIOT set up two plants on Agatti and Minicoy islands in 2011, providing more than 15,000 residents with clean water. Construction of six more desalination plants is now underway on other inhabited islands.

Only one other water treatment plant in India, off the coast of Chennai city, uses the same home-grown technology. Others purify water with reverse osmosis, a costlier imported method.

Latif and his team work shifts to keep the motors of the plant running, to supply nine liters of water per day for each resident, including three for drinking and five for cooking.

“We discourage people from using it for a bath or washing clothes because we don’t want even a precious drop wasted,” said Chekkillakam. “Everyone understands because we have seen how quickly clean water sources dry up or get contaminated.”

Going Green

A decade after the Kavaratti desalination plant became operational, Jalihal is back at the drawing board, this time working on a new plant for the island that will draw power from the sea instead of running on diesel generators as now.

“It will be completely green, using ocean thermal energy to run. Then the system will be perfect,” she said.

Khadeeja Lavanakkal cannot wait for the second plant. She lives at the end of the pipeline, and sometimes gets only a trickle of clean water because others have filled extra buckets.

“We have an open well, but when officials come to check the water they tell us it is more saline than sea water. We could do with a little more clean water to drink.”

Nonetheless, Lavanakkal is grateful to the scientists.

“It’s not just the tea but even the curries we cook are so much tastier,” she said.

“And the best part is that we can close our eyes and drink a glass of water without worrying about falling ill.”

($1 = 68.7400 Indian rupees)

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Wintour Erases Exit Rumors at Vogue

Anna Wintour, the influential editor of Vogue magazine, is remaining in her job “indefinitely,” publisher Conde Nast said Tuesday, refuting rumors that she was on her way out after 30 years.

“Anna Wintour is an incredibly talented and creative leader whose influence is beyond measure. She is integral to the future of our company’s transformation and has agreed to work with me indefinitely in her role as @voguemagazine editor in chief and artistic director of Conde Nast,” Conde Nast Chief Executive Bob Sauerberg said in a statement on the company’s Twitter feed.

Wintour, 68, known for her large sunglasses, pageboy haircut, and aloof public profile, has been editor in chief of the fashion magazine since 1988.

Rumors that she was about to step down or be pushed aside have been swirling in the fashion industry for weeks. Women’s Wear Daily wrote earlier this month that speculation about her exit “has reached a crescendo louder than a tea kettle on full boil.”

London-born Wintour has a towering influence in the fashion world, which was only boosted by 2006 movie The Devil Wears Prada starring Meryl Streep as a formidable magazine editor thought to be based on her.

Wintour was promoted to artistic director of Conde Nast, Vogue’s publisher, in 2013.

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Wintour Erases Exit Rumors at Vogue

Anna Wintour, the influential editor of Vogue magazine, is remaining in her job “indefinitely,” publisher Conde Nast said Tuesday, refuting rumors that she was on her way out after 30 years.

“Anna Wintour is an incredibly talented and creative leader whose influence is beyond measure. She is integral to the future of our company’s transformation and has agreed to work with me indefinitely in her role as @voguemagazine editor in chief and artistic director of Conde Nast,” Conde Nast Chief Executive Bob Sauerberg said in a statement on the company’s Twitter feed.

Wintour, 68, known for her large sunglasses, pageboy haircut, and aloof public profile, has been editor in chief of the fashion magazine since 1988.

Rumors that she was about to step down or be pushed aside have been swirling in the fashion industry for weeks. Women’s Wear Daily wrote earlier this month that speculation about her exit “has reached a crescendo louder than a tea kettle on full boil.”

London-born Wintour has a towering influence in the fashion world, which was only boosted by 2006 movie The Devil Wears Prada starring Meryl Streep as a formidable magazine editor thought to be based on her.

Wintour was promoted to artistic director of Conde Nast, Vogue’s publisher, in 2013.

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Shell, Petrobras Units Probed for Brazil Price-fixing

Brazil’s three largest fuel distribution companies are under investigation for fixing prices at the pump, police said on Tuesday, reigniting debate over potential collusion among gas station owners in Latin America’s largest oil producer.

The firms targeted by the probe are Petrobras Distribuidora SA, a subsidiary of state oil company Petroleo Brasileiro SA; Ipiranga, a unit of Ultrapar Participacoes SA; and Raizen, a Cosan SA and Royal Dutch Shell Plc joint venture.

Police in the southern state of Parana were serving eight arrest warrants and 12 search and seizure warrants in connection with the probe in the city of Curitiba, the state capital, according to police.

The probe comes two months after Brazil’s economy was paralyzed by a trucker strike over soaring diesel fuel prices.

While the government resolved that protest with new subsidies and other measures, antitrust regulators also raised concerns about a lack of competition in the highly concentrated sector.

Investigation  a year old

Police said they were targeting managers and sales representatives of the three firms in the investigation, which has been underway for over a year.

They accused the fuel distribution companies of dictating the prices at the pump charged by individual gas station owners, a violation of Brazilian market rules that the owners should have freedom to set prices freely.

Shares in Petrobras Distribuidora, Ultrapar, and Cosan all tumbled at least 3.5 percent in late morning trade, dragging Brazil’s benchmark Bovespa index down some 1.3 percent.

To make sure the dictated prices were being applied by the gas station owners, the distribution companies hired people to ride motorbikes around the city of Curitiba to take pictures of the gas stations and their pricing banners, according to police.

Petrobras, Raizen offer statements

Petrobras Distribuidora, also known as BR Distribuidora, said in a statement that it follows “the best commercial, competitive and ethical practices toward the consumer”and demands the same behavior from its partners and workforce.

Raizen said in a statement fuel prices were set by individual gas station owners with no interference from the distributor.

“The company operates in total conformity with applicable legislation and always acts toward the consumer in a competitive way and in favor of free competition,” it said in a statement.

In a statement late on Tuesday, Raizen said it had access to the probe late in the day and was considering information provided by the investigation reports.

Ipiranga said that it “does not incentivize illegal practices,” and that it operates in compliance with competition regulations.

Three companies under investigation

The three companies under investigation together control more than two-thirds of the national fuel distribution market, according to data from oil regulator ANP.

The operation is the latest effort by Brazilian authorities to clamp down on collusion and price fixing in the fuel distribution market, which has been the most common target of accusations for cartel behavior by antitrust watchdog Cade.

The government had asked Cade earlier this year to investigate fuel stations for potential anticompetitive practices that could account for the large spread between fuel prices at refineries and at pumps.

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Shell, Petrobras Units Probed for Brazil Price-fixing

Brazil’s three largest fuel distribution companies are under investigation for fixing prices at the pump, police said on Tuesday, reigniting debate over potential collusion among gas station owners in Latin America’s largest oil producer.

The firms targeted by the probe are Petrobras Distribuidora SA, a subsidiary of state oil company Petroleo Brasileiro SA; Ipiranga, a unit of Ultrapar Participacoes SA; and Raizen, a Cosan SA and Royal Dutch Shell Plc joint venture.

Police in the southern state of Parana were serving eight arrest warrants and 12 search and seizure warrants in connection with the probe in the city of Curitiba, the state capital, according to police.

The probe comes two months after Brazil’s economy was paralyzed by a trucker strike over soaring diesel fuel prices.

While the government resolved that protest with new subsidies and other measures, antitrust regulators also raised concerns about a lack of competition in the highly concentrated sector.

Investigation  a year old

Police said they were targeting managers and sales representatives of the three firms in the investigation, which has been underway for over a year.

They accused the fuel distribution companies of dictating the prices at the pump charged by individual gas station owners, a violation of Brazilian market rules that the owners should have freedom to set prices freely.

Shares in Petrobras Distribuidora, Ultrapar, and Cosan all tumbled at least 3.5 percent in late morning trade, dragging Brazil’s benchmark Bovespa index down some 1.3 percent.

To make sure the dictated prices were being applied by the gas station owners, the distribution companies hired people to ride motorbikes around the city of Curitiba to take pictures of the gas stations and their pricing banners, according to police.

Petrobras, Raizen offer statements

Petrobras Distribuidora, also known as BR Distribuidora, said in a statement that it follows “the best commercial, competitive and ethical practices toward the consumer”and demands the same behavior from its partners and workforce.

Raizen said in a statement fuel prices were set by individual gas station owners with no interference from the distributor.

“The company operates in total conformity with applicable legislation and always acts toward the consumer in a competitive way and in favor of free competition,” it said in a statement.

In a statement late on Tuesday, Raizen said it had access to the probe late in the day and was considering information provided by the investigation reports.

Ipiranga said that it “does not incentivize illegal practices,” and that it operates in compliance with competition regulations.

Three companies under investigation

The three companies under investigation together control more than two-thirds of the national fuel distribution market, according to data from oil regulator ANP.

The operation is the latest effort by Brazilian authorities to clamp down on collusion and price fixing in the fuel distribution market, which has been the most common target of accusations for cartel behavior by antitrust watchdog Cade.

The government had asked Cade earlier this year to investigate fuel stations for potential anticompetitive practices that could account for the large spread between fuel prices at refineries and at pumps.

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