The Brussels Effect Comes to Brasília: Why Its New Digital Markets Bill Misses the Mark

Brazil’s new Digital Markets Bill (Bill No. 4.675/2025) would amend the country’s 2011 Competition Law to create a parallel antitrust regulatory framework for digital platforms, empowering the nation’s competition authority, the Administrative Council for Economic Defense (CADE), to exercise broad, discretionary oversight of markets already governed by existing competition law. Specifically, the Bill would entitle CADE to impose new ex ante obligations that proactively regulate conduct before it occurs. However, this new digital competition regime is a mistake: Brazil’s digital markets show no evidence of market failure in the form of persistent deficiencies in competition or consumer harm that cannot be corrected through existing law enforcement tools. By seeking to regulate non-existent problems, the Bill attempts to create a complex regime that addresses hypothetical risks at the expense of innovation and legal certainty.

CADE’s new Superintendence of Digital Markets (SMD) would monitor digital platforms, label certain companies as “economic agents of systemic relevance in digital markets” (SREAs), and impose special obligations on them. A firm becomes subject to the regime only after a formal designation process, which the SMD may initiate on its own or in response to a substantiated complaint from another company, regulator, or public body. Once designated, the status applies to the entire corporate group, even if its activities or technologies change. The designation lasts ten years and contains no mechanism for early review or termination. The Bill also grants the SMD broad investigative powers, including the ability to demand data, hold public hearings, and recommend fines of up to 20 percent of a company’s turnover for noncompliance.

The Bill sets both quantitative and qualitative criteria to determine whether a firm is designated as an SREA. Quantitatively, a firm must first exceed R$ 50 billion in global annual revenue (around US$ 9 billion) or R$ 5 billion in domestic revenue (around US$ 900 million). Qualitatively, a firm must also display at least one “systemic” trait, such as strong network effects, vertical integration, control of large datasets, a strategic intermediation role, or a large multi-sided user base. Although the Ministry of Finance estimates only five to ten firms will qualify, the broad qualitative criteria could expand the Bill’s scope and potentially capture dozens of firms.

Once designated, companies would face a wide array of special obligations. These include restrictions on self-preferencing—for instance, giving their own services greater visibility in search or app rankings—and even limits on multi-homing, which allows business users or consumers to offer or access products across multiple platforms. Other prohibited practices cover a platform’s use of business-user data to enhance its own services, tying or bundling different products, and restricting interoperability with third-party systems. Additional positive duties require firms to disclose ranking and pricing criteria, ensure data portability, and provide interoperability interfaces. Formally, these obligations appear per se and are listed as automatic prohibitions. Yet the Bill appears to allow some opportunities for pro-competitive justification and information security exceptions at CADE’s discretion.

The Bill rests on a weak foundation. Brazil shows no clear signs of market failure in its digital sectors, and existing competition law already provides effective tools for addressing misconduct. CADE has demonstrated its ability to handle complex digital antitrust cases—such as bringing enforcement actions against global firms like Apple and Google under the current framework—confirming that ex post enforcement can handle alleged abuses without new regulation. Moreover, even if Brazil found that its existing competition tools were inadequate to handle digital market failure, it would be more prudent to strengthen or refine the current regime rather than introduce a new system that preemptively polices potential harms. At bottom, the Bill borrows heavily from foreign models like the EU’s Digital Markets Act (DMA) and the UK’s Digital Markets, Competition and Consumers Act—rather than focusing on what Brazil’s digital economy actually needs.

The Bill also prohibits conduct that is often pro-competitive rather than harmful. Practices such as self-preferencing, bundling, and data integration typically enhance efficiency, reduce transaction costs, and/or improve user experience. By banning these outright, the Bill risks stifling the very competition it seeks to protect. Evidence from the EU’s DMA already demonstrates the risks of per se rules: Google’s forced separation of search and maps has degraded the user experience and hurt small businesses that rely on visibility, while Apple delayed rolling out new features, such as Apple Intelligence and Live Translation for AirPods, due to interoperability mandates.

Additionally, the Bill’s ten-year designation period introduces another layer of rigidity. In markets that evolve within months, this long duration could lock companies into outdated obligations, even as competition or technology shifts. The absence of a review mechanism further compounds the problem, leaving Brazil’s digital sector governed by static designations in a dynamic economy. Moreover, the designation applies to the entire corporate group rather than to a specific core-platform service, such as e-commerce or social networking—an excessive approach that could cause friction in otherwise highly competitive and dynamic markets.

Finally, the Bill risks creating diplomatic and economic frictions between the United States and Brazil by disproportionately targeting American technology firms. As noted above, the Ministry of Finance estimates that the Bill may focus on five to ten top tech firms, suggesting that Brazil may follow the EU, which has already drawn criticism from Washington for targeting U.S. platforms using the DMA. Doing so would likely draw the ire of the Trump administration, which has made clear that it will defend U.S. digital industries from discriminatory foreign regulations through trade or other retaliatory measures. As such, instead of strengthening the Brazil-U.S. strategic partnership, the Bill could strain bilateral relations at a moment when cooperation on digital policy and innovation would be far more productive.

Brazil should avoid falling into the “Brussels Effect” trap by uncritically following Europe’s lead in digital regulation. Its competition framework already functions effectively, empowering CADE to address abuses as they arise. Rather than replicating Europe’s rigid, one-size-fits-all model, Brazil should uphold its evidence-based, case-by-case approach.