Big Tech through the lenses of Brazil’s competition watchdog CADE and the path ahead

The so-called Brussels Effect has reached Brazil. The Draft Brazilian Digital Markets Bill, which foresees not only regulatory oversight of Big Tech platforms by the Brazilian National Telecommunications Agency but also its funding by Big Tech itself (!), is still pending since November 2022. A new government report recommends adding new rules under the existing competition law regime enforced by the Brazilian competition authority CADE instead. Find out more about the details of the current regulatory landscape in Brazil to tackle Big Tech power and the potential path ahead below.

By Vicente Bagnoli[1]

The implementation of the Digital Markets Act (DMA) by the European Union, and other initiatives around the globe, such as in Germany ( Sec. 19(a) of the German Act against Competition Restraints), the UK (UK Digital Markets, Competition and Consumers Act), Japan and the US (American Innovation and Choice Online Act – AICOA), constitute an important experiment in regulating digital markets which other jurisdictions such as Brazil must closely watch.

Brazil is a market economy where free enterprise must operate, with the constitutional principles of private property, the social function of property and free competition as its guarantee. The Brazilian State plays the role of overseer and regulator of economic activity to ensure fair competition in the markets. In the case of digital markets, it is no different, and CADE, the Brazilian Competition Authority, has already been acting in digital markets applying the Competition Law. Nevertheless, in Brazil there are debates going on about the need for regulation of Big Tech, so that the whole society will take the advantages of the benefits arising from the digital age.

Regulators and competition authority in Brazil

The 1988 Brazilian Constitution states that Brazil is a market economy founded on the appreciation of the value of human labor and on free enterprise. The intention is to ensure its people a dignified existence, according to the imperative of social justice, with due regard for some principles, such as free competition. To achieve those goals, the Brazilian State has an important role as the normative and regulating agent of the economic activity, with the functions of supervision, incentive and planning. 

The Brazilian Constitution also stresses that the law should repress the abuse of economic power, in regard to dominating markets, eliminating competition, and increasing profits arbitrarily. This is the very Competition Law enforced by CADE. So, whenever the enhancement of markets is required, regulators and competition authority must act.

In this context, the so-called Brussels Effect has played an important role in the past in Brazil: The Brazilian Data Protection Law (LGPD), for instance, entered into force in 2020. It is an innovative data protection regulation and was greatly inspired by the European General Data Protection Regulation (GDPR). Despite its solid link to the GDPR, the Brazilian Data Protection Law did introduce a different scenario when compared to the GDPR. Another example of Brussels Effect is the Brazilian Bill of Law on Artificial Intelligence from 2023 which aims at establishing standards for the development, implementation, and responsible use of AI systems in Brazil.

Moving forward, some reflections are necessary to try to answer the question of whether the DMA is the model to be followed for digital platform markets. The DMA is an ex-ante regulation based on the European Commission’s history of cases involving digital super platforms or gatekeepers. The DMA can be understood as a response from the European Union to the length of time a case takes from the European Commission to the European courts’ decision. This extent of time, especially in digital markets, can result in ineffective decisions. Whether the DMA will be efficient in preventing competition infringements, only time will tell. The DMA or other foreign initiatives should be observed in Brazil since the regulation of digital platforms is a global trend. However, it is not a case of “copy and paste” from one country to another.

The Brazilian Digital Markets Bill of Law

The Brazilian Digital Markets Bill of Law (Bill of Law Nº 2.768/2022), introduced in November 2022 and currently under discussion in Congress has various issues which deserve mentioning. The Bill considers digital platforms: search engines, social networks, cloud computing and email services, video sharing platforms, among others; and establishes the regulation of digital platforms with essential access control power which offer services to Brazilians. According to the Bill, digital platforms will be considered to have essential access control power when they have an annual turnover equal to or greater than 12 million Euro, approximately.

The Bill gives to the already existing National Telecommunications Agency (ANATEL) the power to regulate the functioning and operation of digital platforms in Brazil. According to the Bill, the agency may: (i) issue rules regarding the operation of digital platforms; (ii) deliberate the interpretation of legislation, including omitted cases; (iii) arbitrate conflicts of interest involving platforms or professional users (such as networks to provide goods or services to end users); (iv) and suppress infringements of user rights.

Digital platforms are also committed to transparency and providing information to the agency about the provision of their services; equal and non-discriminatory treatment when offering services to users and not refusing to provide access to the digital platform to professional users.

The agency would also exercise control, prevention and repression of antitrust violations committed by digital platforms, excluding those powers reserved to CADE; and may apply sanctions to digital platforms, including warnings, indicating a deadline for adopting corrective measures, a fine of up to 2% of the economic group’s revenue in Brazil; and also, temporary suspension or even prohibition of activities.

The Bill also foresees the creation of the Digital Platforms Auditing Fund. One of the fund’s sources of revenue will be an auditing fee charged to digital platforms that hold essential access control powers. The fee will be paid annually in amounts corresponding to 2% of the gross operating revenue earned by the companies.

The Bill as it stands seems unnecessary as the dominant position of digital super platforms is yet to be properly addressed. The Bill creates more bureaucracy and costs to entrepreneurs which will be transferred to consumers. As mentioned above, it will address rules regarding the operation of digital platforms and will demand the payment of fees from any digital platforms with essential access control power with an annual turnover equal to or greater than 12 million Euro, approximately.

Nevertheless, the Bill has positive aspects such as: (i) definitions on the players of the market; (ii) the adoption of some principles for the function of the market and goals to be achieved, despite most of them are already in the Brazilian Constitution; and (iii) above all for being the starting point of the debates on the emergence of sector regulation of digital platforms in Brazil.

Digital Platform Regulation: An alternative path ahead

Among so many possible considerations, perhaps something simpler would be more effective in dealing with the dominant position of digital platforms.

A potential Bill of Law could provide more objective criteria to define what are “digital platforms that hold essential access control power”, defining them by the number of users they have. The revenue criterion adopted by the Bill of 12 million Euro is below the second threshold for submissions of mergers and acquisitions to CADE, which is approximately 13 million Euro, while the first threshold is approximately 130 million Euro. This low amount would place companies with low revenues as super digital platforms regardless of the existence of essential access control power.

Furthermore, a Bill of Law could provide definitions for the better application of the Brazilian Competition Law (Law No. 12.529/2011) to such platforms. The Competition Law already has several tools necessary for its application in digital markets. These include agreements, commitments, competition “remedies”, in addition to preventive measures to anticipate possible decisions and prevent the delay of the process from causing irreversible damage to the market.

However, some adjustments must be made to better apply the Law in the reality of the digital economy: (i) rethinking the revenue criteria for mergers and acquisitions involving digital platforms that hold essential powers of access control or simply a dominant position; (ii) the lack of need to apply the theory of harm to assess cases of abuse of dominant position, especially since the Competition Law already establishes that acts that may produce effects, such as limiting or harming free competition or free enterprise, constitute an infringement of the Law; (iii) greater concession of preventive measures; and (iv) greater agility in procedural analyses by CADE.

CADE is the competition authority and not the regulatory authority, regardless of the market. However, in certain situations, CADE’s decisions end up regulating markets. In cases of abuse of a dominant position, for example, CADE often imposes penalties or, above all, enters into agreements with companies that are under their scrutiny to ensure that conditions of competition are established in the market. Likewise, in mergers and acquisitions to approve a transaction between companies, whether competitors or vertically related, CADE establishes conditions, the so-called competition remedies (structural or behavioral).

Finally, CADE’s experience in operating in digital platform markets over the years must be considered. It legitimizes CADE to be the competition regulation authority in these markets[2]_[3]. Regarding mergers and acquisitions in digital platform markets, from 1995 to 2023, CADE analyzed 233 cases, of which 224 were approved without restrictions, 3 were approved with restrictions and 6 were shelved. Of a total of 30 digital platform markets analyzed, 26% of the cases are online retail and 24% are online advertising. As for cases of antitrust violations, from 1995 to 2023, CADE opened 23 investigations, of which 11 were shelved, 3 were suspended with the signing of agreements and 9 are under investigation. The predominant cases are related to unilateral conduct (abuse of dominant position), especially exclusivity agreements. The main markets for digital platforms affected are search, price comparison and online advertising, which correspond to 22% of the cases, and passenger transport intermediation applications, which also correspond to 22% of the cases.

A Law that addresses the best application of the Brazilian Competition Law in digital markets is paramount. CADE with its experience in the market of digital platforms may hold the answer.

Digital Platforms Report: Economic and Competitive Aspects and Recommendations for Regulatory Improvements in Brazil

Reaching a similar result, a report on digital platforms was recently published on October 10th 2024 by the Secretariat for Economic Reforms of the Brazilian Ministry of Finance. The Secretariat presented the results of the survey carried out in the first half of 2024 on economic and competitive regulation of digital platforms in Brazil, in addition to suggestions for new regulation of the sector, with mechanisms and tools that guarantee fair competition in the country. The study was conducted by the Secretariat with the aim of deepening the understanding of the economic and competitive aspects of digital platforms in Brazil and supporting proposals to improve the Brazilian Competition Defense System (SBDC, the acronym in Portuguese).

The Report[3] highlights how the particularities of the economic dynamics of digital platforms and the markets in which they operate limit the applicability of traditional antitrust law analytical tools. In this regard, the concentration of economic power in large platforms creates a new structure of market power that traditional antitrust analysis tools have difficulty identifying and remedying in an appropriate and timely manner.

Focusing on the improvement of the Brazilian Competition Defense System the Report recommends two groups of measures.

The first group of recommendations suggests reforms to the Competition Law (Law Nº 12.529/2011), with the introduction of new pro-competitive instruments aimed at systemically relevant platforms, and to the institutional design necessary to implement them. The new rules will grant powers to CADE to designate platforms with systemic relevance in digital markets and impose specific obligations on them. To achieve that, the Report recommends the creation of a unit specialized in digital markets within CADE.

The second group of measures proposes updating the application of Competition Law, adapting the instruments and procedures for analyzing conduct and acts of concentration to the reality of digital markets.

The Report[4] concludes that for Brazil to reap the dividends of the digital economy, especially digital platform models, competition promotion institutions must adapt to the new reality. Regulatory innovation is justified both by the presence of contexts in which antitrust tools are not capable of promoting competition or efficiency, and by the need to employ a rapid and sufficiently broad response to avoid potential damages generated by complex cases.

There is no doubt that the Report represents a milestone in the development of a Bill of Law which will fully address the needs of an effective Law to regulate Big Tech in Brazil.

We thank Professor Vicente Bagnoli for his contribution to the SCiDA Global Regulation Series. If you’d like to stay up to date on the series and our regular blogs, please subscribe to our newsletter.


[1] Professor of Law at Mackenzie Presbyterian University. PhD in Philosophy and Theory of Law at University of Sao Paulo. Visiting Researcher (Pos-Doc) at the Max Planck Institute for Innovation and Competition – Munich. Master in Economic and Political Law and Graduated in Law at Mackenzie Presbyterian University. President of the Legal Committee of the Italian Chamber of Commerce of Sao Paulo – Italcam. Non-governmental advisor of the International Competition Network – ICN. Director of the Academic Society for Competition Law – ASCOLA Chapter Brazil. Lawyer. vicente.bagnoli@mackenzie.br

[2] http://cdn.cade.gov.br/Portal/centrais-de-conteudo/publicacoes/estudos-economicos/cadernos-do-cade/Caderno_Plataformas-Digitais_Atualizado_29.08.pdf

[3] https://cdn.cade.gov.br/Portal/centrais-de-conteudo/publicacoes/estudos-economicos/cadernos-do-cade/DOI/Cadernos-do-Cade_Mercados-de-Plataformas-Digitais_DOI_10.52896_dee.cc1.021.pdf

[4] https://www.gov.br/fazenda/pt-br/central-de-conteudo/publicacoes/relatorios/relatorio-plataformas-consolidado.pdf, p. 9

[5] https://www.gov.br/fazenda/pt-br/central-de-conteudo/publicacoes/relatorios/relatorio-economico_plataformas_publicacao_rev.pdf, p. 89-90


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