Proposals to regulate economic and competition aspects of digital platforms released in Brazil

On October 10, 2024, the Brazilian Ministry of Finance’s Economic Reform Secretariat (SRE/MF) released a report titled ‘Digital Platforms: economic and competition aspects and recommendations for regulatory improvements in Brazil’ (Plataformas Digitais: aspectos econômicos e concorrenciais e recomendações para aprimoramentos regulatórios no Brasil). The report contains twelve proposals for legal and infra-legal measures to regulate the economic and competition aspects of digital platforms.

The document is based on an analysis of regulations issued in other countries in recent years (such as the European Union’s Digital Markets Act – DMA), as well as submissions on the subject from civil society and local authorities to SRE/MF Public Call No. 1, which took place between January and May 2024. The Ministry of Finance’s conclusions indicate that the mechanisms provided for in current legislation – in particular, the Brazilian Competition Law (Law No. 12,529/2011) – are insufficient for dealing with the challenges posed by developments in the digital world, which would justify amending the Brazilian Competition Law to include new measures for this purpose.

The report is divided into two sets of proposals:

• Proposed changes to the Brazilian Antitrust Framework (SBDC) and the Brazilian Competition Law that would provide mechanisms for the Brazilian Antitrust Authority (CADE) to intervene in competition issues specifically related to the digital platform sector; and
• Proposed infra-legal or soft law recommendations on how the Brazilian Competition Law is applied, with the broad aim of improving competition analysis and promoting competition in digital markets.

CADE has also published an official note expressing its agreement with these proposals.

For more information on this subject, please view a recent article published by Mattos Filho’s Antitrust and Technology practices.

CADE Report on the video on demand market

In July 2024, CADE’s Economic Studies Department published a study on the video-on-demand (VoD) segment. The study analyzes how the relevant market is determined in cases involving VoD services and compares cases analyzed by foreign authorities and by CADE – including discussions concerning the impacts of digital content on the sector, especially traditional television. Along with streaming, VoD represents a new, non-linear way of consuming audiovisual content, with the ability to commence viewing, pause, fast-forward and rewind at the consumer’s behest.

According to data from the Brazilian Institute of Public Opinion and Statistics (IBOPE), in April 2024, VoD and streaming services accounted for around 30% of the audience in Brazilian households (the other 70% consists of free-to-air and pay TV). According to the study, the biggest players in the VoD market in Brazil are Netflix, HBO Max, Star Plus (now Disney+), Amazon Prime Video and Pluto TV.

The study concluded that there are still no precise limits in regard to the relevant market for VoD services, especially as conditions such as infrastructure and internet reach for transmitting audiovisual content can vary substantially depending on the cut-off point adopted, which may be decisive in defining the product’s substitutability with other more traditional segments. The conclusion, however, is that competition authorities around the world have increasingly allowed for the possibility of pay TV being replaced by VoD. This has consequences for both the analysis of cases involving VoD services and cases involving more traditional segments within the sector.

CADE/ICN Report

In June 2024, CADE made a report titled Control of Data, Market Power and Potential Competition in Merger Reviews available to the Brazilian public. Prepared by the International Competition Network’s (ICN) Merger Working Group and based on a survey of authorities from 22 jurisdictions, the report analyzes the correlation between data control, market power, and potential competition in mergers and acquisitions involving digital markets.

The report identified that authorities are not notified of many transactions due to the companies involved still being at an early stage, in which they do not meet revenue thresholds provided for in local legislation. In this regard, countries like Germany and Austria are adopting new mandatory filing criteria aimed at addressing the potential underreporting of transactions involving startups. The study also highlighted the need to discuss new rules, including a system that allows for the possibility of notifying transactions involving digital markets ex-post.

The report also acknowledges the difficulties authorities face in adequately defining the relevant markets and analyzing the market power of companies operating in digital markets, especially considering the extremely dynamic nature of the sector. There is a consensus among competition authorities worldwide on the need to find qualitative tools to complement existing quantitative ones that are widely used to analyze transactions. However, the study argues that such tools should not replace case-by-case analyses; despite concerns that may arise (e.g., the potential market power generated by data access), these transactions also represent an opportunity to enhance efficiency and consumer welfare.

Cooperation agreements with ANEEL and ANAC

CADE has signed two new Technical Cooperation Agreements (ACTs) in recent months – one with the Brazilian Electric Energy Agency (ANEEL) and another with the Brazilian Civil Aviation Agency (ANAC) – reinforcing the authority’s commitment to collaborating with other regulatory bodies and promoting competition in the sectors these bodies regulate. The ACTs cover information exchanges between the agencies, joint research, and the creation of educational material to promote competition in the electric, civil aviation, aeronautical, and airport infrastructure sectors.

The objectives of these initiatives are to reprimand and prevent antitrust violations, as well as to monitor the economic activities inherent to the regulated sectors. The agreement with ANEEL is particularly noteworthy, considering that transactions involving the electric energy sector have made up a significant portion of the merger notifications to CADE in the past five years (see CADE’s annual reports – available in Portuguese).

For further information on this topic, please contact Mattos Filho’s Antitrust practice area.