Competition law and neoliberalism: the regulation of economic concentration in Brazil/Direito da concorrencia e neoliberalismo: a regulacao da concentracao economica no Brasil.

AutorMiola, Iage Zendron
CargoReport
  1. Introduction

    Economists, lawyers and even some social scientists often naturalize or silence about the coincidence of two phenomena that has been quite intriguing. On the one hand, the global diffusion, more intensely in the 1990s, of measures of privatization and market liberalization characteristic of neoliberalism. On the other, during the same historical period, the worldwide spread of competition laws to control the economic power of corporations. How to make sense of the fact that the liberalization of markets was accompanied by more regulation directed to control the behavior of corporations?

    From a functionalist perspective, such coincidence is actually not intriguing at all. The regulation of corporate power through competition law would prevent and combat the excesses of corporations when they compete for markets. The control of competition would be a necessary and natural counterpart of liberalization and privatization, an exemplary legal device created for domesticating corporate power liberated by deregulation and privatization. Even further, together with regulatory agencies that exercise control over certain markets, competition law would epitomize a refutation to the very existence of neoliberalism as a political and economic reality.

    In this article I try to offer a distinct account about the regulation of corporate power exercised through competition law and of how it relates to broader transformations in the economy and society encompassed by neoliberalism. The hypothesis here developed is that competition law, as it has been practiced especially in the 1990s, contributes to the production of an economic arrangement that is propelled by neoliberal ideals. I argue that the dominant approach to the enforcement of competition law has legitimized one of its defining traces, the concentration of economic power.

    To illustrate this hypothesis, the article gathers empirical evidence from a case study of Brazilian competition law enforcement. Brazil is taken as an emblematic example of the coincidence that motivates this inquiry, as liberalization of the 1990s was paralleled by the structuring of a new legal and institutional framework to regulate the concentration of economic power and the behavior of companies in market competition. The landmark of this process was the enactment of law number 8.884 of 1994, which reformed the Brazilian antitrust authority--the Administrative Council for Economic Defence (CADE)--accordingly to international standards. This law created the Brazilian System for Competition Defence (SBDC), and implemented what became to be considered a "modern" system of competition regulation.

    The article seeks to contribute to what can be seen as a growing literature that problematizes the dominant perspectives about the regulation of corporate power through competition law. These are studies that have stressed that since the 1980s--and most intensely in countries of the global South and in Europe since the 1990s--competition law has been increasingly functional for neoliberal globalization. The article expands this hypothesis in three senses: conceptually, by identifying connections so far not deeply explored; empirically, by grounding such description in data about legal enforcement; and geographically, since competition law has not been assessed in such terms in Brazil, thus corroborating researches about other contexts such as the US (Eisner 1991, Davies 2010), Europe (Buch-Hansen and Wigger 2016, in this number, and Wigger 2008), and Turkey (Turem 2010, 2016).

    The argument is developed in four parts, besides this introduction. In Section 2, I detail the available knowledge about the roles of competition law in the awake of economic liberalization. Section 3 proposes an alternative conceptual framework to study the connection between competition law and the economic tenets of neoliberalism, combining notions of a critical political economy and instruments of the sociology of law. Section 4 presents and discusses empirical evidence of such connection from the case study on Brazil. Section 5 concludes.

  2. What is known about the roles of competition law?

    Under the auspices of the Washington Consensus, the 1990s were marked by the global agenda of reforming states and economies to which the rhetoric of competition was central. Several of the problems faced by governments of the global South were attributed to the absence of free markets in which firms could compete. Monopoly--especially through state-owned enterprises--and what was reputed to be excessive government control over the economy were characteristics of a state and economic model that needed to be reformed. Hence, policies of liberalization and privatization were undertaken worldwide.

    Another component of such reformist drive was the attempt to ensure that, once opened, markets were kept competitive. This was to be done through a special branch of the law: competition law (and regulation in general). It is common sense that competition law, as we know of it today, originated in the US in the late 1800s, with the enactment of the Sherman Act (2). A century later, however, this form of economic regulation was globally diffused (3). Aydin (2010) and Braithwaite (2008) note, for instance, that while in the 1980s not much more than 20 countries had enacted competition laws in the world, in 2009 there were 107. The growth was especially relevant until the year 2000, when the number of countries with competition laws rose to 80 (Aydin 2010, p. 55; Braithwaite 2008, p. 20). In regional terms, growth was more intense in Europe, Asia and in the Americas. In this last region, while in 1980 around 20% of the countries (including the US and Canada) had laws regulating competition, in the 1990s the proportion more than doubled, reaching 50% of countries in the year 2000 (Aydin 2010, p. 56). As Sassen (2008, p. 236) explains, the spread of competition law from its original context (the US) has historically accompanied the opening of markets in new regions--since the first half of the 20th century, as part of the post- war reforms in Germany and Japan, within the agenda of "reinsertion" of former Soviet countries into the international market, and in the dismantlement of developmentalist states, especially in Latin America in the 1980s and 1990s.

    The enactment of new competition laws or the revision of existing ones is part of a phenomenon of a global regulatory reform, intensified since the 1990s (4). Although much of the official history indicates that competition laws were first enacted in the 1990s in most countries, legal provisions to regulate corporate power can be identified much before that. What can be reputed as new is the form and content of the laws that spread in the 1990s, most notably its "technocratic" aspiration.

    Brazil offers an illustrative example. Most authors locate the origins of the regulation of economic power in Brazil in the late 1930s, and identify several historical points of inflection. In this course, they depict the creation of a new competition law in the 1990s as a reform process that led to an "evolution" (5). Provisions to regulate corporate power, inspired by the Sherman Act, can be located as early as in 1938, during the Vargas administration, such as the Decreto-Lei 869 of 1938, or later the Decreto-Lei 7.666 of 1945, which created a Committee of Economic Administrative Defence to protect the "popular economy". The law 4.137 of 1962 is also exemplary of a legislation to tackle the abuses of economic power.

    In narrating the history of competition policy in Brazil, legal scholars and economists often view this arena of regulation as being ineffective in the period that extends from 1938 until the 1990s. Before the 1990s, antitrust policy is depicted as an instrument of political clashes between domestic interests and foreign corporations (Forgioni 2005), a more "ideological than descriptive" form of regulation (Nusdeo 2002, p. 218). Even with the establishment of a "fully functioning competition authority" by the 1962 law (Todorov and Torres Filho 2012, p. 217), competition policy is said to have solely served the purposes of governmental economic policy of the military regime, strongly based on intervention and facilitating the concentration of national capital. There would be an "ideological climate" historically incompatible with the development of an effective competition policy prior to the 1990s, as the government favored negotiation among firms to organize the market as part of its interventionism and of import substitution policies (Considera and Correa 2002). Through price control mechanisms, the government is said to have stimulated economic concentration and agreements among competitors, rendering unfeasible the "logic of competition" (Salgado 2004, p. 362).

    In this context, the enactment of a new competition law is taken as part of a broader regulatory reform. It is often described as a step in a historical evolution of economic policy-making motivated by a "need" for the state to adjust to a new context opened by economic liberalization and privatizations. Reform is depicted as an expression of institutional modernization, an evolutionary rupture with the preceding years of economic interventionism characteristic of the developmental state (Braithwaite 2008, Jordana and Levi-Faur 2005, Levi-Faur 2005, Jordana et al 2011, Naim and Tulchin 1999 and Pena 2006).

    There are two main roles often attributed to competition law as the result of this evolutionary process (6). On the one hand, to promote a competitive, efficient economy, as a reformed competition policy is said to impose limits to economic power. Regulatory reform entails, in this sense, an attempt of the government to control a recently liberalized market and, in doing so, to guarantee its proper functioning. Regulatory and competition agencies would balance the effects of market liberalization by effectively...

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