On January 16 2018 the Ministry of Finance issued Decree 9,299/2018, which partially changed the structure of the Brazilian Competition Policy System (BCPS). This restructuring focuses on the promotion of competition advocacy in the country.

Overview

The BCPS undertakes three main activities:

  • preventive control;
  • repressive control; and
  • competition advocacy.

It exercises preventative control through the merger review process, whereas it exercises repressive control through the investigation of collusive practices (ie, cartels) and unilateral practices (ie, abuse of dominance). In Brazil, competition advocacy is not a straightforward concept. In short, it stands for the promotion of a pro-competitive environment through interaction with and oversight of bureaucratic bodies. One of the clearest examples of advocacy is the review of the drafting of laws and regulations that may affect competition. Another important activity is the promotion of the interaction between the BCPS and other agencies (eg, the Brazilian Central Bank, the Securities and Exchange Commission and market-specific regulatory agencies).

The new Competition Law (12,529/2011), which entered into force in May 2012, promoted a significant reform in the BCPS and restructured the scope of its bodies. The Administrative Council for Economic Defence (CADE) became solely responsible for both preventive and repressive activities (ie, merger review and investigation of anti-competitive practices). The Secretariat of Economic Law of the Ministry of Justice (SDE) was abolished and the Secretariat for Economic Monitoring of the Ministry of Finance (SEAE) became the single body responsible for competition advocacy. In the past, all three bodies (ie, the CADE, the SDE and the SEAE) jointly assessed merger cases and investigated anti-competitive practices.

Competition advocacy

According to the existing regulation, the SEAE's main activities are:

  • overseeing new drafts on domestic and international rules involving specific sectors of the economy;
  • reviewing existing norms that may affect competition in Brazil;
  • negotiating and signing agreements with domestic and international entities to promote competition (eg, the Mercosur Competition Defence Agreement);
  • organising and participating in conferences and contests to promote competition (eg, the SEAE's annual writing contest); and
  • researching topics relating to competition policy.

However, in the six years since the Competition Law has been in effect, the SEAE failed to establish specific advocacy activities. Further, a study(1) on competition advocacy in Brazil highlighted that the SEAE had not actively performed the activities listed above.

Ten days after issuing the decree, the SEAE released the Report on the Promotion of Competition, describing the agency's activities in 2017.(2) A quantitative assessment of the reported activities performed by the three departments responsible for the SEAE's previous competences reaffirmed the conclusions of the previously mentioned study: competition advocacy has not been the main focus. According to the assessment, in 2017 there were:

  • 33 cases (described below) involving competition advocacy;
  • 87 cases involving the energy sector; and
  • 53 cases involving transportation, urban infrastructure and natural resources.

More specifically, the SEAE engaged in the following activities:(3)

SEAE's activities

Quantity

Public consultation

20

Legal opinion

2

Technical notes

2

Amicus curiae

2

Other activities (interaction with other government entities, including the CADE)

7

The numbers relating to competition advocacy reflect the SEAE's attempt to improve its direct communication with the Brazilian populus by providing updates on hot topics (eg, the regulation of Uber in Brazil), issuing workbooks and attending events with other entities. However, they also demonstrate the lack of a more active role in its core business, which was the review of new drafts and existing norms that may affect competition in Brazil. The lack of a more active role in the competition advocacy prevented the SEAE from having its own agenda and focusing on matters of greater competitive importance in the past six years.(4)

Changes to BCPS structure

The decree changes the BCPS structure regarding competition advocacy. On January 30 2018 the SEAE was replaced by the Secretariat for the Promotion of Productivity and Competition Advocacy (SPPAC) and the Secretariat for Fiscal Monitoring, Energy and Lottery (SAFEL). Both new secretaries will perform SEAE's existing activities. The SPPAC will be responsible for the competition advocacy tasks defined in Article 19 of Competition Law. In turn, the SAFEL will be responsible for:

  • drafting and promoting fiscal policies;
  • overseeing lottery regulation;
  • assessing the regulatory impact of public policies in the energy sector; and
  • promoting competition within the direct federal public administration.

The decree does not change previous SEAE (and future SPPAC) jurisdiction relating to competition advocacy, since the changes are merely structural in terms of dividing the SEAE into two more focused bodies. However, this move will likely foster competition advocacy in Brazil. The new SPPAC secretary, João Manoel Pinho de Mello, is the head of Microeconomic Reforms and has vast academic experience in economics and, more specifically, in antitrust. He holds a doctorate in economics from Stanford University and was a professor at Insper Institute in Sao Paulo. Before joining the government in March 2017, Pinho de Mello was a fellow at Harvard Kennedy School of Government and a Lemann visiting scholar at the David Rockefeller Centre for Latin American Studies (Harvard University).

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For further information on this topic please contact Bruno Bastos Becke, Marcos Exposto or Gustavo H Kastrup at BMA Barbosa Müssnich Aragão by telephone (+55 21 3824 5800) or email (becker@bmalaw.com.br, maj@bmalaw.com.br or gck@bmalaw.com.br). The BMA Barbosa Müssnich Aragão website can be accessed at www.bmalaw.com.br.

Endnotes

(1) Pereira Neto, Caio Mário da Silva et al Advocacia da Concorrência: Propostas com base nas experiências brasileira e internacional. Sao Paulo: Singular, 2016, pp 71-88.

(2) The SEAE's Report on Promotion of Competition (Relatório de Promoção da Concorrência) 2018.

(3) Source: the SEAE's Report on Promotion of Competition (Relatório de Promoção da Concorrência) 2018.

(4) Pereira Neto, Caio Mário da Silva et al Advocacia da Concorrência: Propostas com base nas experiências brasileira e internacional. Sao Paulo: Singular, 2016, pp 87.