Comment of the Global Antitrust Institute on the Brazilian Ministry of Finance, Department of Economic Reform Request for Contributions: Economic and Competitive Aspects of Digital Platforms

Abstract

The GAI responds to Brazil’s Ministry of Finance, which invited comment on the Economic and Competitive Aspects of Digital Platforms Report, considering the adoption of new ex ante sectoral regulations for digital platform companies. The Comment cautioned that the adoption of such regulation is fraught with risks of discouraging innovation and limiting the competitiveness of the digital sector in Brazil, to the detriment of the economy and consumers. Digital industries are extremely innovative and dynamic. There is a well-established antitrust enforcement system in Brazil that is specifically intended to maintain free competition within the private sector by examining instances of alleged anticompetitive conduct case-by-case, in order to assure that only anticompetitive behavior is prevented or discouraged, while beneficial or neutral conduct is permitted without unnecessary legal intervention. The report identifies no persuasive evidence or analysis to indicate that the antitrust system is falling short, nor that a novel ex ante sectoral regulatory scheme would be superior to continuing reliance on antitrust enforcement. The GAI Comment advises that the proposed new regulatory system contains inherent rigidities that are likely to impose a variety of economic costs and would likely prove very difficult to reform. Specific proposals to place strict prohibitions on any form of “self-preferencing”, or to compel digital firms to establish mandatory “interoperability” between their platforms and other firms -- even direct competitors – will place extensive, complex and ongoing regulatory responsibilities on agencies ill-quipped to carry them out. Accordingly, the GAI urged the Ministry to be extremely cautious in considering any proposal for novel ex ante sectoral regulation of digital platforms, and to carefully evaluate available evidence and apply sound and balanced economic analysis to anticipate the likely consequences of any effort to supplant Brazil’s existing system of antitrust enforcement.

Keywords: Brazil’s Ministry of Finance, digital platform companies, digital sector, antitrust enforcement

JEL Classification: K2, K20, K21, K29