Antitrust Policy in Brazil: Evolution and Perspectives

Abstract

The purpose of this chapter is to analyze the evolution of the Brazilian antitrust policy. Although there have been constitutional provisions empowering the government to adopt measures aimed at protecting the economic order since the Constitution of 1934, the first Brazilian antitrust law was promulgated in 1962. The Administrative Council for Economic Defense (CADE) was created in the following year, with the purpose of avoiding the abuse of economic power. Therefore, at least on paper, competition policy in Brazil has been applied for approximately 50 years.

However, during its first three decades, the Brazilian antitrust policy had little (if any) effectiveness. This poor outcome seems to derive from institutional and economic motivations. On the one hand, the Brazilian judiciary system has often reviewed CADE’s decisions. On the other, there was excessive governmental intervention in the economy, via state-owned enterprises, price control mechanisms, investment regulations, and high tariff and non-tariff barriers.

The truth is that the antitrust policy in Brazil remained on paper until the enactment of Law 8,884 in 1994. This can be considered the country’s first effective antitrust law. It structured the so-called “Brazilian Competition Defense System” (SBDC), comprised by CADE (an administrative tribunal) and the Secretariats of Economic Law and Economic Monitoring (empowered to carry out investigations and to issue non-binding reports to support CADE’s final decisions). This law also established merger review rules and procedure.

Law 8,884 was in force for approximately 18 years. During this period, CADE enforced it by reviewing several mergers and acquisitions (although the great majority of them were approved without restrictions) and convicting many players for engaging in anticompetitive conduct, such as cartels (elected as a top priority by the antitrust authorities) and unilateral abuses of dominant positions. Nevertheless, the legislation had significant limitations and bottlenecks that prevented further development of antitrust policy in Brazil. Consequently, a new bill to reform it was drafted and a long-lasting legislative debate was initiated.

Finally, in 2011, Law 12,529 was approved, coming into force in May 2012. It drastically changed several aspects of the Brazilian antitrust legal and institutional environment. Among the key modifications, it is important to mention that it: (a) established a new ex-ante merger control regime; (b) restructured the Brazilian antitrust authorities, concentrating in the new CADE all the investigative functions previously held by the Secretariats of Economic Law and Economic Monitoring; (c) provided new legal thresholds for filing transactions with CADE; (d) determined new value regarding fines related to anticompetitive conduct. After three years of the new law having been in force, it seems stimulating to assess the accomplishment of a new phase in antitrust policy in Brazil.

The evolution of the Brazilian competition policy is a very interesting experience that stresses the efforts (and the related difficulties) to improve the institutional features of public policy in an emerging country. Despite the significant development attained by the authorities through the years, there are still many challenges that need to be addressed properly in order to improve the Brazilian antitrust policy.