The relationship between the
regulatory and competition
bodies
The Brazilian Experience
Cleveland Prates Teixeira
Commissioner of the Brazilian
Administrative Council for Economic
Defense (CADE)
Main Topics
• Recent Developments
• Competition and Regulation Institutions in Brazil
• Relationship between Competition and Regulation in Brazil
• Case Studies
• Final Remarks
Recent Developments in Brazilian
Economic Environment
• Since the 1990s Brazil has experienced an important
improvement in the macro and microeconomic fronts:
• Trade liberalization;
• Inflation under control;
• Privatization process.
Regulation and Competition
• “The following tasks could be assigned either to a
regulator, to the competition agency, or to both:
– ensuring non-discriminatory access to necessary
inputs, especially ‘essential facility’ networks ;
– monitoring other anticompetitive behavior, and
reviewing mergers ;
– technical regulation ;
– economic regulation ;
– periodically reassessing the scope and degree of
remaining market power.” (OECD, 1999)
Antitrust Bodies in Brazil
• The Brazilian System for Economic Defense (SBDC) is
composed by three bodies:
• Secretariat of Economic Monitoring (Seae) at the
Ministry of Finance;
• Secretariat of Economic Law Enforcement (SDE) at the
Ministry of Justice;
• Administrative Council for Economic Defense (CADE) Ministry of Justice.
Regulatory Agencies in Brazil
• There are currently eight regulatory agencies in Brazil;
• The creation of the agencies in Brazil can be classified in
three phases:
• Infrastructure and energy Phase I (1996 and 1997): Aneel,
Anatel and ANP;
• Health and environment (1999 and 2000): ANS, Anvisa
and ANA;
• Infrastructure Phase II (2001): ANTT and Antaq.
Regulatory Agencies in Brazil –
Legal Framework
• Brazilian Electricity Regulatory Agency - Aneel
• Created by Law nº 9,427, from 12/26/1996, and Decree nº
2,335, from 10/06/1997.
• Regulatory framework for the sector: Laws nº 9,074/95
(concessions) and nº 9,648/98 (Wholesale Electricity
Market).
• Brazilian Telecommunications Regulatory Agency – Anatel
• Created by Law nº 9,472, from 07/16/1997 and Decree nº
2,338, from 10/07/1997.
• Regulatory framework for the sector: Law nº 9,472/97
(“General Law of Telecommunications”).
Regulatory Agencies in Brazil –
Legal Framework
• Brazilian Petroleum Regulatory Agency – ANP
• Created by Law nº 9,478, from 08/06/1997, and Decree nº
2,455, from 01/14/1998.
• Regulatory framework for the sector: Law nº 9,478/97
(“Petroleum Law”).
• Brazilian Complementary Health Regulatory Agency -ANS
• Created by Law nº 9,961, from 01/28/2000, modified by
Provisional Measure mº 2,177-44, from 08/24/2001.
• Regulatory framework for the sector: Law nº 9,656/98.
Regulatory Agencies in Brazil –
Legal Framework
• Brazilian Sanitary Surveillance Agency – Anvisa
• Created by Law nº 9,782, from 01/26/1999.
• Regulatory framework for the sector: Law nº 9,782/99.
• Brazilian Water Agency – ANA
• Created by Law nº 9,984, from 07/17/2000 and Decree
3,692, from 12/19/2000.
• Regulatory framework for the sector: Law nº 9,433/97.
Regulatory Agencies in Brazil –
Legal Framework
• Brazilian Road and Rail Transportation Agency – ANTT
• Created by Law nº 10,233, from 06/05/2001, and Decree nº
4,130, from 02/13/2002.
• Regulatory framework for the sector: Law nº 10,233/2001.
• Brazilian Water Transportation Agency – Antaq
• Created by Law nº 10,233, from 06/05/2001, and Decree nº
4,122, from 02/13/2002.
• Regulatory framework for the sector: Law nº 10,233/2001.
Relationship between Regulation and
Competition in Brazil
Positive aspects:
• Legal framework of regulated sectors
establishing the relationship between the
regulatory agencies and the antitrust
authorities;
• Several regulatory agencies forming
competition departments to deal specially with
competition issues;
• Cooperation agreements have been signed
between regulatory agencies and Seae, SDE
and CADE.
Relationship between Regulation and
Competition in Brazil
Negative aspects:
• A closer relationship is still needed in
order to improve the analysis of mergers
and anticompetitive practices ;
• Legal conflict regarding the financial
system.
Case Studies – The Telecommunications
Sector
• An example of the need to a closer interaction
between the regulation and competition authority
was the preliminary injuction determined by
CADE regarding the allegations of
anticompetitive practices by a telecom operator;
• According to one of the petitioners, the case was
presented to CADE due to the long delays of the
regulatory agency Anatel in analyzing it.
Case Studies – The Telecommunications
Sector
• CADE decided to apply a provisional measure
taking into account the elements presented and
the competition risks of the supposed
anticompetitive practice;
• The decision was an important step towards a
closer relationship between CADE and Anatel.
Case Studies – The financial system
• As the regulator of the financial system in Brazil,
the Central Bank (Bacen) was considered by the
Federal General Attorney (AGU) as the body in
charge to exclusively analyze competition
concerns in this sector;
• According to CADE, there is no exemption in the
Brazilian Competition Law (Law nº 8,884/94)
regarding the financial sector;
• In order to eliminate this controversy, advanced
negotiations between Bacen and CADE produced
a draft law regarding the distribution of
competences.
Case Studies – The financial system
• The proposed solution was to leave the Central
Bank solely with the analysis of mergers
involving systemic risk to the financial system;
• On the other hand, CADE would be in charge of
the remaining mergers and the anticompetitive
practices;
• This draft law is under way at Congress now.
Final Remarks
• In the last years a closer interaction between the
competition and regulatory authorities in Brazil
is noteworthy;
• But there is, however, room to a better formal
and informal cooperation between these bodies;
and
• A constant competition advocacy role is needed.
THE END
Cleveland Prates Teixeira - Commissioner
Phone number: +55 (61) 426-8472
Fax number: +55 (61) 426-8571
e-mail: cleveland.prates@cade.gov.br