Brazil is broadly expected to move forward in the very near future with plans to adopt ex-ante competition regulations to govern digital platforms. Indeed, in the wake of a public consultation launched by the Ministry of Finance in early 2024, President Luiz Inácio Lula da Silva and the administration have spent much of the past year actively promoting plans for this new regulatory regime, although the formal bill text has not yet been introduced.
As Secretary of Economic Reforms Marcos Barbosa Pinto noted in an October 2024 press conference:
We chose to adopt a middle ground approach, between the American approach and the European Union approach, which has been adopted in different forms, with different nuances, in countries such as Japan, the United Kingdom, and Germany.
Under this model, Brazil’s competition authority—the Administrative Council for Economic Defense (CADE)—would be granted new regulatory powers and a new specialized unit for digital platforms, similar to the UK’s Digital Markets Unit (DMU). CADE would be responsible to designate which digital platforms qualify as systemically important (so-called “gatekeepers”) and would impose obligations on those designated entities to remedy identified market failures.
These obligations would be determined through a case-by-case assessment of each gatekeeper and the competitive dynamics of the relevant markets in which they operate. This model contrasts with the European Union’s Digital Markets Act (DMA), which imposes a uniform set of obligations on all designated gatekeepers without conducting individual market analyses.
Based on the administration’s remarks to date, the Brazilian framework is expected to impose both procedural obligations—such as enhanced transparency requirements regarding the goods and services offered on digital platforms, as well as certain data-related duties—and substantive obligations, including prohibitions on self-preferencing, exclusive-dealing arrangements, and potential interoperability requirements.
Regarding the designation rules for gatekeepers, the bill is expected to adopt a dual-criteria model that combines both qualitative and quantitative factors. The qualitative criteria would likely include such factors as the size of the platform’s presence in multi-sided markets, whether the platform has significant market power enhanced by network effects, is vertically integrated into related markets, has access to large volumes of personal and commercial data, and provides multiple digital services. There would also be quantitative criteria related to revenue and size of user base, designed to limit the regulation’s reach to only the biggest technology firms.
The bill is expected to target no more than roughly 10 international digital platforms. This would mark a significant departure from Bill No. 2768/2022, the current ex-ante digital markets proposal under consideration in the Brazilian House of Representatives, which proposes a very low revenue threshold. Based on estimates by the Computer and Communications Industry Association (CCIA), that earlier bill could classify more than 187 digital companies as gatekeepers—raising concerns about regulatory overreach.
Barbosa Pinto has noted that Brazil may be able to “copy and paste” provisions that have proven effective in addressing specific market failures elsewhere, while avoiding other provisions and decisions that appear to have been ineffective. Indeed, it appears this strategy has already begun to influence Brazil’s competition landscape.
For example, CADE’s General Superintendency recently issued an interim measure (later unanimously upheld by CADE’s Administrative Tribunal) against Apple in the Mercado Livre/Apple case regarding iOS’ closed operating system, anti-steering clauses, and the mandatory use of Apple’s payment system, as well as its 30% standard fee. If it is not overturned or suspended by the Judiciary, the decision will compel Apple to prohibit anti-steering provisions, unbundle the payment-processing service, and allow alternative methods of app distribution, such as sideloading and the installation of third-party app stores within the iOS system.
One of CADE’s justifications for this type of intervention is that Apple has already implemented similar changes in the EU in response to its obligations under the DMA. Therefore, CADE argues, there would be no significant technical barriers preventing the company from applying the same solution in Brazil. This marks a concrete example of how international regulatory developments like the DMA can affect other jurisdictions, even before formal legislative changes are enacted.
The administration has specifically highlighted the UK system as an example of a robust framework that allows the competition authority to conduct in-depth market studies, which may or may not lead to future enforcement actions. Similarly, the Ministry of Finance is expected to propose that CADE be granted new powers to request information from companies, industry associations, and other relevant stakeholders for the purpose of conducting these market studies independently of formal antitrust investigations. The ministry has also indicated its intent to establish a framework for inter-agency cooperation involving CADE and other federal public bodies. This initiative would aim to support CADE’s capacity to analyze, monitor, and regulate digital markets more effectively, mirroring the UK’s Digital Regulation Cooperation Forum.
Therefore, while the Ministry of Finance studied and analyzed the experiences of other jurisdictions that have adopted an “intermediate approach” to ex-ante digital regulation—such as Japan and Germany—it is evident that the UK model is regarded as the primary reference for Brazil’s proposed framework. But new developments have unfolded in the UK since the Ministry of Finance’s October 2024 initial report that merit Brazil’s close attention, especially given its intention to follow a similar path in regulating digital platforms.
Recent Debates Raise Skepticism of the UK’s DMCC
The UK’s Digital Markets, Competition and Consumers (DMCC) Bill represents a novel ex-ante experiment in regulating digital markets, following similar trends inaugurated by the EU’s DMA and enactment of Section 19(a) of the German Competition Law. It emerged as an attempt to equip the CMA with powers to intervene proactively yet flexibly (primarily in comparison to the DMA) when digital platforms reach a certain threshold of market power. The DMCC has, however, already attracted controversy and critical scrutiny.
Notably, UK Prime Minister Keir Starmer declared in October 2024:
We will make sure that every regulator in this country–especially our economic and competition regulators–take growth seriously as this room does.
The statement was interpreted as signaling direct political pressure on regulatory bodies like the CMA to loosen strictures seen as obstructing international investment and to adopt measures that actively promote such investment. The notion that economic growth was now the UK government’s overriding policy objective was further supported by a December 2024 letter to the nation’s regulatory authorities calling on them to articulate measurable commitments to significantly enhance business confidence, improve the investment climate, and promote sustainable economic growth.
The CMA submitted its reply in January 2025, outlining five specific actions, including one that positioned the DMCC as a tool to achieve the government’s mandate of delivering pro-growth competition: “Action 2: Drive innovation, investment and growth in digital markets through the implementation of the new digital markets competition regime for the benefit of UK businesses and consumers.”
Alas, that response may have been insufficient to meet the UK government’s expectations. Later in January 2025, the CMA announced that Chair Marcus Bokkerink had been replaced with interim Chair Doug Gurr, while stating that the leadership change was made “in a bid to boost growth and support the economy.” The government’s emphasis on a “pro-growth” regulatory agenda was underscored by Secretary of State for Business and Trade Jonathan Reynolds, who added:
This Government has a clear Plan for Change—to boost growth for businesses and communities across the UK. As we’ve set out, we want to see regulators, including the CMA, supercharging the economy with pro-business decisions that will drive prosperity and growth, putting more money in people’s pockets.
The CMA’s leadership transition led to questions raised in some media outlets about whether it signaled a deeper shift—potentially indicating that the government’s growth agenda meant less-vigorous enforcement by the UK’s competition authority.
In January, the CMA established the CMA Growth and Investment Council, composed of key stakeholders like the British Chamber of Commerce and British Private Equity & Venture Capital Association, to “ensure effective competition and consumer protection drive innovation, investment and growth, delivering long term benefits across the UK economy.” And in February, CMA Chief Executive Sarah Cardell announced a series of reforms intended to promote growth and investment, while continuing to safeguard consumer interests.
These initiatives were organized around four guiding principles—referred to as the “4 Ps”: pace, predictability, proportionality, and process. Guided by these principles, the CMA proposed several significant changes to its merger review procedures. Among the key reforms were proposals to shorten the prenotification phase from an average of 65 working days to 40 and to reduce the target review period for “straightforward” Phase 1 cases from 35 to 25 working days.
The CMA also committed to provide greater clarity regarding the two jurisdictional thresholds it applies in merger reviews: the material influence and share of supply tests. Additional reforms included a reassessment of the authority’s approach to antitrust remedies in problematic mergers and the introduction of a new Mergers Charter, intended to serve as a broad framework outlining procedural expectations and best practices for merger control in the UK.
The reforms introduced by Cardell received strong backing from interim Chair Doug Gurr who, in his first public statement, affirmed that economic growth—aligned with the UK government’s objectives—would serve as the agency’s north star. Moreover, as noted by practitioners, these initial changes at the CMA, framed under the new “pro-growth” agenda, could be better broadly understood “in the context of widespread geopolitical change across the US and EU, with the Trump presidency proritising deregulation and reversing the heavy regulatory trends of the Biden era.”
The UK government also launched a public consultation in February to gather input on how best to guide the CMA in developing a new growth-oriented strategic framework. The government published the consultation outcome in May, affirming its goal for the CMA to use its regulatory tools (merger control, market studies, and the new DMCC regime) to actively promote economic growth in a manner that is swift, proportionate, and collaborative.
Moreover, the government’s Draft Strategic Steer to the CMA emphasizes the importance of transparent engagement with businesses and reinforced the CMA’s accountability in its operations. It further calls on the CMA to align its enforcement and regulatory actions with the government’s pro-growth agenda, to minimize regulatory uncertainty for businesses, and to enhance the UK’s attractiveness to international investors. More recently, the government reiterated its expectation that the CMA align with its broader “pro-growth” agenda, while also working to minimize uncertainty for businesses and maintain timely, transparent, and responsive interventions.
While the UK government has not directly challenged the DMCC’s goals, it has advised the CMA to exercise these powers with “particular care,” signaling that proactive interventions should only be undertaken when there is a clear and demonstrable market failure to be addressed. While this guidance does not eliminate the CMA’s ability to act under the DMCC, it unquestionably imposes a new layer of scrutiny and justification that the authority must meet before exercising its powers. As stated in the draft steer:
The CMA should use the new Digital Markets Competition and Consumers Act (DMCCA) digital market regime independently, flexibly, proportionately and collaboratively to effectively unlock opportunities for growth across the UK digital economy and the wider economy. Recognising that the development of markets driven by new and emerging technologies is not always easily predictable, the CMA should take particular care to collaborate with all interested parties to ensure growth and innovation benefits are prioritised, including through supporting the government in delivery of the AI opportunities action plan.
The CMA should use its range of tools, including its forthcoming direct consumer enforcement powers under the DMCCA, to, where appropriate, grow the economy through promoting consumer trust and confidence, while deterring poor corporate practices.
These recent developments in the UK competition-policy landscape underscore that regulation is not an end in itself, but rather a means to achieve specific and well-defined objectives. Even ostensibly narrowly focused interventions like the DMCC can risk conflicting with, or at least complicating, the implementation of a broader pro-growth agenda. At this stage, it remains unclear how the CMA should wield its new powers in a way that strikes the appropriate balance between promoting competition in digital markets and supporting the government’s overarching economic priorities.
This political friction also reflects a broader skepticism of ex-ante regulations in dynamic sectors. In particular, it reflects new geopolitical winds arriving from the United States, as highlighted by the Trump administration’s “Defending American Companies and Innovators from Overseas Extortion and Unfair Fines and Penalties” memorandum. The UK debate serves as an essential cautionary tale for Brazil, demonstrating that even ostensibly balanced regulatory frameworks may lead to unforeseen negative consequences.
Conclusion
Even as Brazil looks to the UK as the principal model for its proposed ex-ante regulation of digital markets, it must also pay close attention to recent developments that continue to shape the UK’s competition and regulatory landscape. The UK experience demonstrates that ex-ante regulatory frameworks—regardless of how flexible they are designed to be—are inherently complex and highly susceptible to political influence and shifting policy priorities.
Indeed, if the UK, with its well-established regulatory institutions, has encountered significant debate and uncertainty, Brazil—whose regulatory and institutional frameworks are unquestionably not as well-developed—may face an even more amplified version of these challenges.
The rapid growth and growing economic relevance of digital markets heighten the macroeconomic risks associated with poorly designed regulatory intervention, especially in the absence of clear evidence regarding its long-term effects on social welfare. When this uncertainty is combined with the potential for unintended consequences, regulatory inaction may, in fact, yield better outcomes than premature or poorly targeted action.
As George Mason University’s John Yun has observed, even modest regulatory burdens can significantly slow innovation in emerging technologies, with long-term consequences that far exceed their immediate impact. Using a simple illustration, Yun explains that:
Let us start, in period 0, with T = 100 and an annual growth of 30 percent (which is likely orders of magnitude less than recent growth rates in AI innovation). Due to compounding, after 10 years, T will grow to nearly 14X the original size. Now, consider instead a marginally lower growth rate of 25 percent. After the same 10-year period, T will grow slightly over 9X the original size, which is clearly still quite good – but 5X lower than the counterfactual growth rate of 30 percent. The point is that even a “modest” reduction in the growth rate of an emerging technology, e.g., 5 percent (in terms of absolute levels), can result in significant, long-term losses in social welfare. These losses are magnified over even longer horizons. (emphasis added and footnotes omitted).
This insight underscores the importance of caution: regulation that may seem incremental in the short term can produce significant long-run opportunity costs in high-growth, innovation-driven markets. The good news is that, at least in theory, the Brazilian Ministry of Finance is somewhat aware of these likely undesired impacts.
Brazil has long struggled with stagnant productivity, a structural issue that has directly contributed to its persistently low macroeconomic growth over recent decades. The government’s digital platforms report drew important correlations between the digital sector and labor productivity, noting that the average productivity of a Brazilian worker employed in the digital sector is approximately three times higher than a worker in nondigital sectors and that average wages in the digital sector are more than double the national average. These findings underscore the sector’s strategic importance to broader economic performance. What remains unclear is how the implementation of novel regulation in digital markets will impact labor productivity in Brazil—whether positively or, more likely, negatively.
In this context, a precautionary approach appears to be the most prudent path forward. The potential adverse consequences of a poorly designed or improperly implemented regulatory framework—in terms of reduced innovation, increased operational costs for firms, diminished consumer welfare, or even a reduction in the productivity gains pursued by the Brazilian government—are particularly significant in the fast-evolving digital economy. These risks warrant careful consideration before moving ahead with an ambitious ex-ante regulatory regime.
Finally, given the complexities illustrated by the UK’s DMCC, the ongoing political debate surrounding its enforcement, and the broader push for a pro-growth agenda across all levels of the UK government, Brazilian policymakers should apply a heightened level of scrutiny to any proposed ex-ante regulatory framework. If the UK is indeed serving as the administration’s reference point for Brazil’s own regulatory ambitions, then these recent developments must be carefully considered. They reveal the potential for unintended consequences, not only for the competitive dynamics of digital markets, but also for the broader political and institutional landscape in which such regulation would be embedded.
