Draft legislation suggests the expansion of CADE’s authority to designate and regulate digital companies
On September 17, the Brazilian Government submitted to Congress a comprehensive bill establishing a new competition regulation regime for digital platforms. The proposed legislation aims to enhance market competition through three core mechanisms: (i) lowering barriers to entry, (ii) preserving competitive processes, and (iii) promoting consumer freedom of choice.
The bill would significantly expand the mandate of Brazil’s competition authority (Conselho Administrativo de Defesa Econômica – CADE), granting it powers to designate certain companies as “systemically relevant in digital markets” and impose tailored “special obligations” on these designated entities.
The bill specifies that the “special obligations” would not apply automatically to designated companies, but would only be imposed following a thorough investigation process and could be limited to specific products or services. Each decision to impose special obligations must be supported by robust economic justification.
When determining special obligations, CADE would consider several mitigating factors, including:
- Product or service features that enhance security
- Compliance with existing legal and regulatory requirements
- Features that improve the core functionality of digital ecosystems
The bill will now undergo congressional debate and may be modified by either the House or Senate. While the government aims for approval by the end of 2025, the actual timeline remains uncertain given the complexity of the proposed changes.
Here are the key provisions of the proposed bill:
| Proposal | Summary |
| (i) Principles guiding the regulation | Regulation to promote competition in digital markets will be oriented by the following principles: I – lowering barriers to entry; II – preservation of the competitive process; and III – promotion of freedom of choice |
| (ii) Creation of a Superintendence of Digital Markets | The bill creates a new “Superintendence of Digital Markets” that will be added to CADE’s existing organizational structure.
In addition to the ex-ante regulation mandate, the Superintendence of Digital Markets will be in charge of regular antitrust enforcement of conduct cases involving designated players (see below), with the exception of collusion cases, which remain under the existing General-Superintendence. Merger cases involving designated companies also remain under the existing General-Superintendence. |
| (iii) Regulation is applicable to companies designated “systemically relevant in digital markets” | CADE will initiate designation proceedings to qualify companies as “systemically relevant in digital markets”, based on criteria like market power associated to network effects, access to large volumes of data, multi-sided platforms, etc.
Only companies with turnover of BRL 5Billion (USD 1Bi) in Brazil or BRL 50 Billion (USD 10 Bi) globally may be designated “systemically relevant in digital markets” (the turnover thresholds can be updated by the government). |
| (iv) “Special Obligations” can be imposed to “systemically relevant” companies | For companies designated as “systemically relevant”, CADE will have the powers to impose certain “special obligations”.
“Special obligations” are not automatically applicable – they will only be applied as a result of an investigation into a “systemically relevant” company and can be limited to specific products or services (see below details on the investigation process). “Special obligations” may include:
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| (v) Imposition of “special obligations” may weigh-in certain factors and must be supported by economic justification | The decision must be supported by economic justification.
Also, imposition of special obligations may weigh-in certain factors, including:
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| (vi) Formal Investigations are required to designate a company “systemically relevant” or impose special obligations | The Superintendence of Digital Markets must initiate formal investigations to:
– designate certain players as economic agents of systemic relevance in digital markets or – determine special obligations to stakeholders of systemic relevance in digital markets Investigations can be launched ex officio or based on a third-party complaint. The party under investigation will have up to 40 days to present clarifications. The Superintendence of Digital Markets can conduct additional investigative acts or send the case directly to CADE’s Tribunal with a final recommendation. In case of additional investigative acts, the Superintendence of Digital Markets will need to issue a preliminary recommendation. The preliminary recommendation will be subject to a public hearing and written contributions. The party will then have the opportunity to present closing arguments. The Superintendence of Digital Markets will issue final recommendations and refer the matter to the Administrative Tribunal (Commissioners). The Administrative Tribunal will issue a final decision. |
| (vii) Cooperation and interaction with other agencies to implement remedies/obligations | CADE can carry out proceedings to implement and supervise compliance with special obligations in cooperation with other agencies “that have relevant technical and sectoral knowledge”.
The Secretariat for Economic Monitoring and all other bodies of the federal administration that deal with digital markets must report to CADE any failures to comply with special obligations over economic agents of systemic relevance in digital markets, and can send CADE recommendations in light of the impacts caused by said special obligations. |
| (viii) Compliance and sanctions | Systemically relevant stakeholders subject to special obligation must file compliance reports. Failure to comply with the “special obligations” CADE will result in the application of the same sanctions applicable for anticompetitive behavior (fines ranging from 0.1 to 20% of gross turnover in Brazil and other eventual remedies). |