Brazil Initiates Public Consultation on Digital Platform Regulation

The Brazilian Ministry of Finance’s Department of Economic Reform (SRE-MF) embarked on a significant endeavor by opening a public consultation aimed at gathering insights into the economic and competition dimensions of digital platform regulation within the country. This move signals a proactive approach by Brazilian authorities to address the evolving landscape of digital commerce and its impact on market dynamics.

The consultation, scheduled to extend until May 2, 2024, focuses on evaluating potential amendments to the Brazilian Competition Law (Law No. 12,529/2011) concerning the regulation of digital platforms. While issues like fake news, content moderation, and journalistic compensation have garnered considerable attention in Brazil’s legislative circles, the Ministry of Finance seeks to delve deeper into the economic and competitive implications inherent in the operation of digital platforms.

At the heart of the discussion lies the challenge of defining what precisely constitutes a digital platform. These entities leverage digital infrastructure and operate through distinctive business models, incorporating features such as search engines, instant messaging services, social media platforms, and online marketplaces. Moreover, many digital platforms function as ‘two-sided’ marketplaces, facilitating interactions between both users and service providers while processing vast volumes of consumer data, including preferences and purchase histories.

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Highlighting the intricacies of digital platform dynamics, the SRE-MF underscores the need for a comprehensive understanding of interdependent relationships within the digital realm. This understanding is crucial, particularly concerning issues such as cross-platform promotion and the amplification of network effects, where user engagement directly correlates with platform value.

A significant concern raised by the Ministry of Finance is the potential inadequacy of traditional antitrust tools in addressing the competitive dynamics unique to digital platforms. There’s a fear that without appropriate regulatory mechanisms, vital antitrust issues may evade the scrutiny of the Brazilian Antitrust Authority (CADE).

To guide the consultation process effectively, the SRE-MF has formulated 16 questions categorized into four sections:

1. -Objectives and regulatory rationale.
2. -Sufficiency and appropriateness of the current regulatory/antitrust framework.
3. -Designing a competition-friendly regulatory framework.
4. -Institutional arrangements for regulation and supervision.

These questions aim to stimulate a comprehensive discussion on the necessity, scope, and design of regulatory interventions in the digital platform ecosystem. Moreover, they seek to explore potential divergences between the Brazilian context and other jurisdictions with analogous regulatory frameworks.

Source: Mattos Filho