The Brazilian Ministry of Finance has introduced a series of measures aimed at regulating digital platforms, which have become a critical part of the modern economic ecosystem. The proposals were outlined during a press conference, where the Ministry shared details of the new regulatory framework designed to address the growing influence of these platforms in markets such as e-commerce, fintech, and social media. Simultaneously, a report with the analysis and main conclusions was released. We present below the main issues raised both at the press conference and in the report:
The Justifications for the New Regulatory Measures
The Ministry’s report provides a comprehensive review of the current state of digital platforms, emphasizing the significant role they play in connecting consumers, service providers, and advertisers. According to the report, platforms benefit from strong network effects, meaning that their value grows as more users join. This same dynamic has led to market dominance by a few large players, limiting competition and raising concerns about data privacy.
Drawing from international examples, the report compares the Brazilian proposal to regulatory models in the United States, the European Union, the United Kingdom, and Japan. It concludes that current antitrust laws are insufficient to address the unique challenges posed by digital platforms. In response, the Ministry opted for a hybrid regulatory approach that combines preventive measures seen in Europe with reactive mechanisms that are, in principle, more flexible and adaptable to each platform and/or specific service provided to users.
The report indicates that the proposals will be presented to Congress in the coming months, possibly through a government-backed bill. Legislative changes are essential to grant CADE, Brazil’s competition authority, the power to designate certain platforms as “gatekeepers” (or, in the adopted terminology, systemically relevant platforms) and to impose specific obligations on them.
Key Proposals from the Report
The Ministry’s report includes several key proposals, summarized below:
Proposal 1: Designating Systemically Relevant Platforms
A new legal instrument will allow CADE to designate systemically relevant economic agents in digital markets based on a combination of qualitative and quantitative criteria. This designation will identify platforms that possess significant market power due to their size, user base, and role in multi-sided markets.
- Qualitative criteria: Platforms with strong network effects, multi-sided markets, access to large amounts of personal and commercial data, and the provision of multiple digital services will be considered.
- Quantitative criteria: Minimum revenue thresholds will ensure that only large economic players are subject to designation, avoiding overregulation of smaller companies.
- Designation process: The process can be triggered by CADE or third parties, including civil society organizations, with all decisions subject to approval by CADE’s Tribunal.
Proposal 2: Substantive obligations
Once designated, the platforms may be subject to general and specific obligations, as assessed by CADE. These obligations aim to ensure fair competition and provide clarity to consumers and other stakeholders.
- General obligations: Designated platforms may be required to notify CADE of any mergers or acquisitions and adhere to transparency requirements related to their services and products.
- Specific substantive obligations: These can include both positive and negative requirements, such as modifying business practices, ensuring data access to third parties, and enabling interoperability with other platforms. Platforms may also be restricted from self-preferencing, a practice where they prioritize their own services over those of competitors.
- Monitoring and compliance: Platforms will need to provide regular reports to CADE, demonstrating compliance with both general and specific obligations.
Proposal 3: Modifications to CADE’s structure
CADE will have the authority to impose obligations on designated platforms based on a thorough investigation of each company’s business model. These obligations will be tailored to address the specific risks posed by each platform. A specialized unit within CADE should be created to manage the designation process and monitor the obligations imposed on these platforms. This unit will collaborate with other regulators, such as ANATEL (the telecommunications agency) and ANPD (the data protection authority), to ensure sector-specific compliance.
The full list of proposals
The proposals focus on establishing new legal instruments for designating systemically relevant platforms and adjusting existing antitrust tools to better address the unique challenges posed by the digital economy. According to the report and the speeches during the press conference, these measures aim to enhance competition, transparency, and regulatory oversight in multi-sided markets, ensuring that platforms with significant market power are subject to appropriate scrutiny and obligations.
The proposals also emphasize the importance of collaboration between regulatory bodies to ensure effective enforcement and compliance in the rapidly evolving digital landscape.
Group 1 – New Instrument for Promoting Competition in Systemically Relevant Platforms
- Proposal 1: Establish a procedure for designating systemically relevant platforms based on qualitative and quantitative criteria, such as multi-sided markets, network effects, and revenue thresholds.
- Proposal 2: Introduce procedural and transparency obligations for designated platforms, including prior merger notifications and transparency in services and terms of use.
- Proposal 3: Allow CADE to investigate designated platforms and impose specific substantive obligations to address competition concerns.
- Proposal 4: Create a specialized unit within CADE to implement and monitor the new pro-competitive tool for designated platforms.
- Proposal 5: Implement substantive obligations in collaboration with regulators like ANATEL and ANPD to address technical and sector-specific concerns.
- Proposal 6: Strengthen CADE’s capabilities for conducting market studies, granting proactive analysis power to the Department of Economic Studies.
- Proposal 7: Create an inter-institutional cooperation forum between CADE and other federal bodies to facilitate information exchange and collaboration on digital market issues.
Group 2 – Adjustments to the Application of Antitrust Tools for Platforms in General
- Proposal 8: Update antitrust analysis tools to incorporate network and ecosystem analyses for assessing competitive risks in digital platforms.
- Proposal 9: Revise CADE’s merger notification form to include specific questions on digital market dynamics, such as network effects and data use.
- Proposal 10: Adopt the ordinary process for analyzing mergers involving digital platforms with a large number of users, allowing for deeper analysis.
- Proposal 11: Use the flexibility of Law 12,529/2011 to require merger submissions that pose competitive risks, even if they do not meet notification criteria.
- Proposal 12: Update revenue thresholds for prior merger notifications to focus CADE’s resources on transactions with greater competitive impact.
Looking Ahead
The Ministry emphasized that this regulatory framework aims to create a balanced approach, ensuring that digital platforms contribute to a competitive, transparent, and fair market in Brazil. The proposals will undergo further scrutiny once presented to Congress, and the Ministry anticipates that discussions will continue in the coming months.
