Seven of the world's major electronics and computer goods companies including Microsoft and Intel joined forces June 28 to fight Brazil's vast black market and piracy, which they say cost the country


SAO PAULO, Brazil (Reuters) -- Seven of the world's major electronics and computer goods companies including Microsoft and Intel joined forces June 28 to fight Brazil's vast black market and piracy, which they say cost the country more than $40 billion a year in lost taxes.

The companies said they would create the Brazilian Legal Institute (IBL) to help gather information on the sale of stolen and pirated electronics that can then be passed onto police.

The group also includes Dell, Advanced Micro Devices, Philips Electronics, Matushitaunit Panasonic and local group Semp Toshiba, which sells Toshiba goods in Brazil.

The IBL said taxes were not paid on eight of every 10 computers sold in Brazil or they include illegally imported parts. The group said the legal market moves about $500 million per year in such goods versus some $2 billion by the black market.

Moreover, the IBL said, 64% of software sold in Brazil is pirated, and the proper amount of tax is not paid on 45% of all portable phones, digital cameras and portable sound systems.

"The illegal sector is making competition tougher every day, and we need agility to defend the free and legal market," IBL executive president Edson Vismona said at a news conference. "The market is moving sideways and our headquarters are asking why, given that this is a powerful market."

Many of the companies in the group belong to other industry groups fighting their black market rivals, but they believe they can do more as a group to quash it.

"The authorities have good intentions, but they lack equipment and training," said Manoel Bussacos, Semp Toshiba's financial director.

The United States has threatened to suspend trade benefits to Brazil if it does not do more to crack down on the sale of pirated goods such as CDs and DVDs.