Economic Reform Secretariat creates new procedure for assessing regulatory impact on competition

On December 19, 2024, Brazil’s Ministry of Finance published the Normative Instruction SRE/MF No. 12, establishing the Regulatory and Competition Assessment Procedure – “PARC”, which will come into force on January 01, 2025. PARC replaces the FIARC procedure.

PARC will be aimed at identifying potentially anticompetitive regulations.

The Secretariat for Economic Reforms (“SRE”) of the Ministry of Finance will be responsible for proposing the revision of regulations that may produce the following anticompetitive effects:

• limiting the number or variety of companies in the market;
• limiting the ability of companies to compete with each other;
• reducing the incentive for companies to compete;
• limiting consumer choice and information.

Procedures

The PARC provides for an ordinary proceeding, consisting of cycles of public calls for the selection of regulations to be reviewed, and an extraordinary proceeding, which makes it possible to review normative acts at any time, at the request of any public or private entity, or by the Ministry of Finance itself.

The ordinary proceeding will involve the participation of the public. Every six months, the SRE will open public calls, and may indicate specific economic sectors or topics to receive suggestions for regulations that may have anticompetitive effects.

When indicating regulations that may have anticompetitive effects, interested parties must submit:

• Identification of the regulatory provision potentially harmful to competition.
• A copy of the regulatory impact analysis, including a competition impact analysis, if available.
• Details of the negative effects of the regulation on the market, with a demonstration of the economic impact and, if possible, methodology and calculation memory.

Measures

After conducting the procedure, with the collection of opinions from the responsible entity for issuing the provision and other relevant information, the SRE will issue a conclusive Technical Note on the normative act.

Based on its conclusions, the SRE may adopt the following measures:

(1) Normative Act inferior to decree: SRE will send the responsible entities a conclusive Technical Note with suggestions for improvement;

(2) Decree: SRE will send suggestions for improvement to the responsible Ministry, which may include a draft of a new decree; and;

(3) Law: SRE will send the responsible Ministry suggestions for improvement, which may include a draft of a bill.

Replacing the FIARC

The new procedure replaces the now extinct Intensive Front for Regulatory and Competition Assessment (“FIARC)”. FIARC was linked to the Ministry of Economy’s Competition and Competitiveness Advocacy Secretariat (SEAE/ME). Now, the Ministry of Finance will perform the function through the Secretariat for Economic Reforms (SRE).

Demarest advised the National Union of Port Support Shipping Companies (SINDIPORTO) on the first case brought under the FIARC program, which received a “red flag” denoting the existence of regulatory abuse.

It is expected that PARC will resume the program with greater speed and maturity, reviewing regulations that could cause, or that have been causing, anticompetitive effects in the market.

Demarest’s Competition team is available to provide additional clarifications.