Improving Cade is crucial for new investments
Source: Legal Consultant - SP - ARTICLES - 14/11/2009
[Editorial by Folha de S. Paulo]
An important step towards improving mechanisms to combat anti-competitive practices in the country was taken this week. The Senate Economic Affairs Commission approved the bill that reorganizes the Brazilian Competition Defense System.
Under the proposal, which is expected to pass through two other committees in the Senate before consideration in plenary, for later return to the Chamber, Cade (Administrative Council for Economic Defense) will concentrate the functions of the antitrust body in the country.
The format contrasts with the time-consuming system currently in effect, which covers three different authorities: Cade itself and the Economic Law Secretariats, of the Ministry of Justice, and Economic Monitoring, of the Treasury. The three bodies are responsible for taking part in the mergers and acquisitions of companies and investigating the formation of cartels.
In addition to concentrating decisions, the “new Cade” will have to judge the acquisition and merger processes before their actual completion, which is vital to increase the degree of legal certainty for the transactions. Under the current system, the reversal of acts that result in excessive concentration of economic power can take place years after its effectiveness, with obvious losses to consumers and to the companies themselves.
Another positive point of the proposed reorganization is the fact that Cade will have to work with defined deadlines, in order to ensure the speed of the processes. The project, although on the right path, should have been more daring, bringing together the three existing agencies in one body. Although depleted of decision-making power and personnel, the secretariats linked to Justice and Finance would continue to coexist with Cade in the new model.
The project foresees the strengthening of Cade's technical staff, in order to make the agency compatible with the expansion of its role. Without significantly improving the capacity for prior specialized analysis, the competition defense body will not be able to meet the tight deadlines set out in the trial stages.
Improving the competition defense system is a crucial step towards creating an institutional environment favorable to investment. In view of the challenges facing the Brazilian economy, there is no way to dispense with a market system that combines clear rules of action for the private sector with the guarantee of fundamental consumer rights.
If there is no way to escape the trend of capital concentration in some sectors of the economy, it will always be possible to condition these mergers to rules that avoid the deleterious effects of oligopolization.
[Article originally published in this Saturday's edition (14/11) in the Folha de S. Paulo newspaper]