On September 20, the President of the Republic approved the Economic Freedom Law (Law No. 13.874/2019). The Provisional Measure which gave rise to the Law had been presented during the first 100 days of the new government, aiming to promote economic growth and job creation by reducing bureaucracy, regarding economic activity and by encouraging free enterprise and competition. The Law is based on principles and has generated a great amount of controversy, regarding its practical effects on the Brazilian competitive environment.
In summary, the Law can be analyzed on a basis of three general aspects. The first gives primacy to freedom of labor, initiative, and competition by providing minimal and exceptional state intervention over economic activities. The second provides guidelines on the economic rights of individuals and corporations with a focus on economic growth and development. In this topic, the presumption of good faith of the individual stands out and the right to innovate without the need for authorization of economic activity, in which startups will benefit the most through the digitization of public documents and the guarantee of reasonable time of administrative processes, with a special concern of the processes responsible for releasing the exercision of business activities. Lastly, the norm creates the figure of abuse of regulatory power, which intends to suppress the diversion of function, which will need practical confrontation to know itself, or better said, its implications on the performance of organs, such as the Administrative Council for Economic Defense – Cade.
On one hand, experts recognize the noble character of a Law that aims to promote the liberal flag and reinforce the idea that the state should only intervene in the economy, when extremely necessary, to avoid obstacles to entrepreneurship through excessive regulation. On the other hand, there is some skepticism about what the factual developments of the Law will be given that the content of its text does not innovate the statement of principles and economic rights already provided by the Federal Constitution. The question that remains is how the Law can be effective, if reality demonstrates that the Brazilian state suffers from structural problems when constitutional commandments are followed.
