Have you ever stopped to think about why there isn't just one telephone company, supermarket chain, or bank in Brazil? Or why a billion-dollar merger between giants needs to be approved by a state authority?
These questions are related to the study of Competition Law, a branch of law that establishes the rules of the game so that markets function in a balanced way.
In general terms, he is concerned with preventing companies or groups of companies from using their economic power to stifle competitors, manipulate prices, or restrict consumer choices.
It's like the set of "rules of the game" that ensures everyone can compete on a level playing field, allowing innovation to flourish and society to reap the benefits of a dynamic economy.
In Brazil, competition law is the result of a historical and legal construction that found its most solid foundation in the 1988 Federal Constitution.
By establishing free competition (Article 170, IV) as one of the principles of the economic order, the Constitution enshrined the principle that competition is not only in the interest of businesses, but also a social value linked to collective well-being.
From then on, sub-constitutional legislation, especially Law No. 12.529/2011, known as the Brazilian Antitrust Law (NLAB), began to regulate, in detail, how to prevent and repress practices harmful to competition.
The role of the Administrative Council for Economic Defense (CADE), responsible for enforcing the law, has become fundamental in balancing two poles in constant tension: free enterprise, which encourages entrepreneurial creativity, and state intervention, necessary to curb abuses and preserve competition.
Throughout this text, we will explore how the law, doctrine, and precedents of CADE (Administrative Council for Economic Defense) shape this reality, demonstrating their direct influence on how we live, consume, and relate to each other in society.
Is there "freedom to do business" in Brazil?
The Constitution guarantees the freedom to undertake business ventures, but not without limits.
Article 173, §4, makes it clear that the abuse of economic power, aimed at dominating markets or eliminating competition, will be repressed.
According to some thinkers, competition law does not restrict free enterprise, but preserves it; in other words, combating abuse is precisely about protecting the freedom to compete.
Other authors, however, see a more incisive perspective, arguing that competition law, by intervening in the market, acts as a real limiter of the economic autonomy of certain agents.
Have you ever heard of concentration control?
When two companies decide to join forces, whether through merger, acquisition, incorporation, or even the creation of a joint venture , we are witnessing an act of economic concentration.
The idea seems simple: two companies seek synergy, cost reduction, or market expansion. However, from a legal and economic standpoint, this merger could change the rules of the game, creating risks for competition.
That is why, in Brazil, the law requires that these operations be notified to CADE (Administrative Council for Economic Defense) beforehand. Even before they are completed, they need to be examined by the antitrust authority. It's like a kind of "preventive filter," as a way to assess the effects of the operation beforehand.
And what does CADE analyze?
Essentially, it's about whether concentration can create or reinforce a position of power capable of harming consumers and rivals.
If there is no risk, the operation is approved. If there is, CADE (Brazil's antitrust authority) may impose restrictions (such as requiring the sale of part of the assets or preventing exclusivity agreements) or negotiate a Concentration Control Agreement (ACC), in which the companies commit to adopting corrective measures.
In more serious situations, the operation may even be rejected.
To ensure all of this happens in an orderly fashion, the law has set deadlines.
CADE has up to 240 days to complete the analysis, which can be extended by another 60 or 90 days in exceptional cases.
In general terms, the control of mergers and acquisitions does not aim to prevent business deals or stifle the market. In fact, it seeks to ensure that the freedom to do business is exercised within a competitive environment, preserving space for innovation and ensuring that consumers are not harmed by monopolistic or oligopolistic structures.
Some anti-competitive practices
Brazilian Antitrust Law (LAB) defines as an economic infraction any act that has as its object or may produce anti-competitive effects.
In other words, any conduct that limits competition, dominates the market, arbitrarily increases profits, or abuses a dominant position can already be considered illegal.
Note that it is not necessary to prove intent or guilt; the mere risk of harm is sufficient. Let's analyze some cases:
1. Cartels: the most serious illegal activity
Cartels are seen as the most harmful conduct to competition.
Imagine competitors who, instead of vying for customers with better prices or more creative products, decide to sit down at the table and combine strategies to divide the market.
At that point, the rivalry disappears and consumers foot the bill.
This can happen in several ways: price fixing, production limitation, regional division, or even manipulation of public tenders ( bid rigging ).
The result, as a rule, is a disaster, precisely because higher prices lead to less innovation and lower quality of products and services.
Cartels don't only occur when competitors directly collude on prices. They can also arise indirectly, in arrangements known as hub-and-spoke deals.
It works like this: an intermediary, usually a supplier or distributor (the hub ), acts as a bridge to coordinate rivals ( spokes ), who should compete with each other.
Instead of communicating directly, competitors use this intermediary to exchange information and align their strategies.
In practice, this happens, for example, in deal registration programs.
A reseller informs the distributor that they are negotiating with a particular client. The distributor, instead of simply recording the information, passes it on to the other resellers and demands that they make higher offers, ensuring that the first one to win the sale.
The customer, who imagined they were faced with several options, actually ends up trapped in a manipulated market.
On April 12, 2023, CADE (Brazil's antitrust authority) condemned for the first time a hub-and-spoke cartel involving resellers of digital whiteboards and projectors.
The scheme followed three steps: (i) a reseller mapped the customer and asked the distributor for “protection”; (ii) the distributor passed on sensitive information to other resellers, demanding that they raise their prices; (iii) with this, everyone kept prices artificially high, eliminating real competition.
The decision was historic because it affirmed that direct communication between competitors is not necessary for a cartel to exist.
If there is an intermediary coordinating the collusion, the effect on the market is the same, and the conduct will be punished as one of the most serious violations of competition law.
2. Abuse of dominant position: power used as a weapon.
While cartels reveal agreements between multiple agents, the abuse of dominant position demonstrates the power of just one.
LAB (art. 36, IV) considers it illegal when a company, due to its size or importance in the market, uses this power to exclude rivals or hinder the entry of new competitors.
A company can dominate an industry because it is more innovative or better managed. The problem begins when it uses its strength to create artificial barriers.
Typical practices include refusal to contract (when a dominant company denies access to essential infrastructure, such as a technology without which rivals cannot operate) and exclusivity, which binds clients or suppliers, preventing access for competitors.
Another example is tied selling, where the consumer can only purchase one product if they also buy another product they didn't want.
A prime example in Brazil was the Ambev program "Tô Contigo".
Created in 2002, it was a loyalty program for bars and restaurants that awarded points, prizes, and special discounts to points of sale (POS) that purchased Ambev beers.
In practice, the program encouraged establishments to keep 90% of their inventory composed of the company's brands, leaving very little room for competitors such as Kaiser, Schincariol, and others.
Opinion polls (IBOPE) and statements from retailers showed that many points of sale understood the program as a requirement for exclusivity, even though it was not formally expressed in the regulations.
CADE's analysis found that Ambev, which holds about 70% of the national beer market, was using its position to impose additional costs on its rivals.
For a competitor to gain market share in bars and restaurants, it needed to offer significantly greater discounts and benefits than the leader, making competition virtually impossible.
The result was characterized as a market closure, with an artificial reduction in competitiveness.
3. Mergers and Acquisitions: A Look at Market Structures
Beyond specific actions, Competition Law also examines the structure of the market. Mergers, acquisitions, and joint ventures can be beneficial, bringing efficiency and dynamism. But they can also concentrate too much power, reducing rivalry and the options available to the consumer.
That is why the control of concentrations by CADE functions as a preventive mechanism.
When a transaction reaches certain revenue thresholds, it must be notified and reviewed. The authority may approve it without restrictions, impose conditions (such as the sale of assets), or, in extreme cases, block the transaction.
The challenge lies in finding the balance: on one hand, there are efficiency and innovation gains that justify many operations; on the other hand, there is the risk of reducing competition in the long term.
The analysis therefore requires looking not only at the immediate benefits, but also at the structural consequences in the future.
In-depth research into competition law
It is necessary to articulate constitutional principles, economic analyses, and CADE (Administrative Council for Economic Defense) jurisprudence, in addition to monitoring international trends that directly impact Brazil.
It is precisely at this point that the Professional Master's Degree in Law from IDP becomes a differentiator.
The program is structured for those seeking academic depth combined with practical application, preparing lawyers, judges, members of the Public Prosecutor's Office, regulators, and public managers to deal with the most complex dilemmas of the economic order.
With a faculty comprised of nationally renowned figures, including professors who are also practicing prosecutors, judges, advisors, and lawyers, the course allows students to study topics such as regulation, market, consumption, digital law, data protection, and competition from the perspective of those who make decisions in the real world.
Furthermore, IDP offers a unique environment for qualified networking, international partnerships (Italy, Germany, USA, China, Argentina, among others) and research groups recognized by CNPq.
It is a space where students not only absorb knowledge, but also produce applied research, publish in academic journals, and influence the formation of public policies and judicial decisions.
In short, it's about connecting theory to high-level practice, with a direct impact on career and society.
