The reform of Cade and the regulatory agencies

Laércio Farina and Denis A. Guimarães - October 6th, 2015

Published in Valor Econômico, session of Legislation and Taxes, p. E2, São Paulo September 17, 2009.

As it is known, the good functioning of the institutions of a country and its consequent and positive impact on economic development is a theme present in the agendas of academics and policy makers. In a relatively recent scholarly article - The Unseen Elephant: What Blocks Judicial System Improvement ?, published by the University of Berkeley by Robert M. Sherwood, three aspects were pointed out closely related to the good functioning of the Judiciary, to the credibility of the institutions of democracies and the economic effects derived from these institutional issues. These are: the quality of legislation, the credibility of public policies and the support provided by the judiciary to other institutions. Three aspects of extreme importance for the current Brazilian reality. With regard to the defense of competition, and here we refer to the Administrative Council for Economic Defense (Cade), the quality of legislation is undoubtedly a very important topic, especially at this time when the antitrust reform bill is discussed in the Senate. It should be noted that this discussion sometimes leads to debates on the controversial bill reforming regulatory agencies. This project faced strong resistance from opposition parties to the federal government and various segments of civil society: it was said that the government intended to restrict the autonomy of the regulatory agencies to make their technical decisions and broaden political influences on those decisions by expanding the competencies of ministries. In this sense, there is the regulatory framework of the pre-salt proposed by the government, which tries to establish a growth of the role of the government and Petrobras and the creation of a new state, to the detriment of the National Petroleum Agency (ANP). The question of the credibility of public policies, according to this author, can be analyzed under the aspects of correction and stability. Both refer again to the institutional discussion on the independence and technical nature of decisions taken by competition agencies and regulatory agencies, as well as the means by which these decisions are analyzed by the Judiciary when possible disgruntled parties knock on their door for a review. Correction and stability of public policies depend, therefore, on the system of appointing the leaders of these bodies (fixed mandates), but they depend even more on the degree to which the institutional model of independent bodies is effectively respected, that is to say, they depend on the real commitment of the chief of the Executive in naming names that have the technical preparation to act in a particular sector - instead of making indications whose sole objective is to attend to the lawsuits of political parties of the ruling base - as well as the commitment of the senators in the defense of such a model when they comply its role of sabatinar the nominees - the Senate acts as institution responsible for reducing the risk of politicization of the State. From that point on, we can see that the solidity of institutions depends not only on the existence of legal norms that delineate institutional models with certain characteristics but also (and perhaps mainly) on the existence of a culture of institutional preservation. In the case of the institutional model of independent bodies, the norms protect the technical organs from political influences, but do not even shield them from these influences. Faced with the resistance it suffered, the bill to reform the agencies sent by the federal government to the House of Representatives in 2004 was not approved, but since 2003 the government has been using various means to weaken regulatory agencies. This year, the Attorney General's Office has issued an order that puts under its command the judicial defense of decisions of agencies and Cade before the higher courts. Thus, in the final analysis, the judicial defense of these decisions is under the command of the head of the Executive, since he appoints the Advocate General of the Union at his own discretion. As a contribution to the institutional improvement of the antitrust reform bill, the Brazilian Institute of Competition, Consumption and International Trade (IBRAC) has submitted several suggestions to the Senate Economic Affairs Committee, such as: exclusion of the possibility that the president of Cade appoint an acting councilor to serve in a vacant position before the Senate clears the nominees for the positions of Chief Prosecutor and Chief Economist of Cade; need for the inspection of compliance with the decisions of the Cade Plenary to be made by the body itself; the need for any decision taken by the body responsible for examining cases to be reviewed by the Cade plenary; among others. It should be noted that the three aspects pointed out in the academic article referred to are closely related: the credibility of the policies to some degree depends on the quality of the legislation, as well as both are related to the support provided by the Judiciary to other institutions. For example, in reviewing decisions taken by the public administration, the judiciary can take a position between whether or not to support the credibility of administrative bodies such as competition agencies and regulatory agencies. If in addition to analyzing the legality of administrative decisions, the judiciary has the role of reviewing the technical aspects or the merits of these decisions, many will say that it will be acting in accordance with the Constitution - based on the vague disposition that no question can be subtracted to the evaluation of the Judiciary - but it certainly will not be supporting institutions, the organs of the Executive Branch responsible for the implementation of public policies, whose proper functioning is as important for the economy as the proper functioning of the Judiciary itself. In times of great criticism of the Executive's boom, a great deal of discredit is being made about the Legislative and many expectations are placed on the Judiciary, as if the latter could be an appropriate forum for the resolution of all economic and social demands. on those issues that deal with a democratic and economically efficient inter-institutional relationship, precisely so that the problems faced by our institutions do not serve as a pretext for discrediting them, but rather to constitute incentives for their eventual improvement and for their strengthening . In other words, for institutions to function well.