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McDonald's Is Under Criminal Investigation In Brazil

A Brazilian federal prosecutor is looking into allegations the company has breached the country's antitrust and franchise laws.

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The Brazilian federal prosecutor's office has begun an investigation into McDonald's, the country's Justice Department confirmed on Friday.

The investigation will consider allegations that McDonald's operations in Brazil "may have disrespected franchise and antitrust laws as well as possibly committed infractions against the country’s economic and tax laws," according to a statement from the prosecutor's office dated February 29.

McDonald's has not yet been formally notified of the investigation, a Justice Department spokesperson told BuzzFeed News, saying prosecutors will reach out to the company in the coming days.

A spokesperson for Arcos Dorados, the master McDonald's franchise operator in Latin America, said the company has not received word of the investigation.

"We have not been officially notified of this issue," Daniel Schleiniger, Senior Director of Communications & Investor Relations, told BuzzFeed News. "As soon as we receive notification, we will present the pertinent information and clarification to the ‘Ministério Público Federal.' Importantly, the Company provides every assurance that it complies with all the laws in all of the markets in which it does business.”

Schleiniger noted he was speaking on behalf of the franchise operator, not McDonald's corporate. McDonald's did not immediately respond to requests for comment.

The company is facing increasing scrutiny of its business practices around the world, as worker advocates in the U.S. campaign to improve pay and conditions at its restaurants. U.S. minimum wage protesters under the banner of the Fight for 15 movement have joined forces with unions and worker groups around the world, including in Brazil, to encourage authorities to investigate the company.

In December, the European Commission announced an investigation into the tax treatment of a McDonald's unit in Luxembourg that collects fees from franchisees across Europe, saying "a tax ruling that agrees to McDonald's paying no tax on their European royalties either in Luxembourg or in the US has to be looked at very carefully."

In January, a coalition of Italian consumer groups filed an antitrust complaint with the European Union, alleging the company abuses its market position in dealings with franchisees. The complaint was supported by unions in the U.S. and Europe.

Allesandro Vietri, the attorney for the Brazilian union that filed the original complaint against McDonald's in Brazil, said that the Fight for 15 campaign has "compelled a global solidarity of unions."

Once the U.S. fast food workers raised awareness about their working conditions, labor groups from different countries first began looking into the burger chain's labor practices in their own countries — then into other kinds of irregularities, such as in tax and real estate practices, according to Vietri.

"Several different unions, not just the complainants in this particular case, became interested and joined in," he told BuzzFeed News. "And so a more narrow problem of labor relations was broadened both in terms of the subject and in terms of the countries."

Last August Scott Courtney, an organizer with the Service Employees International Union and a major architect of the U.S. Fight For 15 campaign, testified against McDonald's at a Brazilian senate hearing attended by workers and labor leaders from more than 20 countries. The SEIU flew many of the attendees to Brazil for the hearing, which ended with some senators calling for an investigation into the company.

“I am ecstatic about the outcomes," Courtney told BuzzFeed News after the hearing. "We more than accomplished everything we hoped for."

Cora Lewis is a business reporter for BuzzFeed News and is based in New York. Lewis reports on labor.

Contact Cora Lewis at cora.lewis@buzzfeed.com.

Manuela Barem é editora-chefe do BuzzFeed Brasil, em São Paulo.

Contact Manuela Barem at manuela.barem@buzzfeed.com.

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