Who gets a say? The case for negotiated mechanisms under Bill No. 4,675/2025 and the future of digital markets regulation in Brazil

Patrícia Bandouk Carvalho

TozziniFreire Advogados, São Paulo

pcarvalho@tozzinifreire.com.br

Isabella Carolline Justino

TozziniFreire Advogados, São Paulo

icarolline@tozzinifreire.com.br

Introduction

Presented on 18 September 2025, and currently under review by the Brazilian Chamber of Deputies, Bill No 4,675/2025 (Bill) represents Brazil’s most recent effort to address the competitive challenges posed by Big Tech. The legislative proposal aims at regulating digital markets, focusing particularly on the designation process of systemic relevant agents (SRAs) commonly known as ‘gatekeepers’ in other jurisdictions, and the subsequent imposition on them of specific obligations.

The Bill proposes the creation of a Digital Markets Superintendence (DMS) within the Brazilian Competition Authority, as the agency responsible for its enforcement. The DMS will apply a two-step regulatory model: (1) the designation of SRAs based on quantitative and qualitative criteria;^[1] and (2) the subsequent imposition of tailored obligations.

This article provides a critical analysis of this new regulation in view of the dynamic of digital markets and existing framework in Brazil. The analysis proceeds on the understanding that the Bill falls into a significant miscalculation by conflating ex ante regulation with a sanctioning logic. As will be demonstrated, the regulatory model could benefit from a more structured negotiation-based dialogue with the SRAs.

Ex ante regulation: is it suitable for innovative markets?

First, it is important to highlight the difficulties and possible consequences and risks of adopting an ex ante regulation in dynamic markets. The original Bill stipulates that the term of designation will be up to ten years and may be renewed. The digital economy requires a more adapted regulator performance, considering that the principal complication directed at ex ante regulation lies in the risk of artificially crystalising transitory competitive structures and discouraging innovation.

By allowing CADE to impose severe obligations on the designated agents, the Bill may discourage investment in innovation and ecosystem development. This point reveals other important limitations of ex ante mechanisms: it could be difficult to distinguish genuinely exclusionary conduct from legitimate competition.

This does not mean that digital markets should remain immune to state action. Nevertheless, its adequacy depends on an extremely cautious institutional design grounded on proportionate obligations and a sensitivity to the economic specificities of the affected markets and designated agents. The crisis between intervention and innovation arises precisely from the intrinsic characteristics of digital markets, which challenge traditional approaches of antitrust. 

Adequacy of the new regime to the Brazilian legal framework

The Bill promotes a significant reconfiguration of CADE, creating hybrid institutional architecture specifically tailored to digital markets through DMS. This reflects the convergence with the European Union’s approaches to digital competition enforcement, especially the shift toward ex ante tools embodied in the Digital Markets Act (DMA). Within this framework, CADE adds a sectoral regulator function for competition in digital markets to its traditional ex post enforcement role, creating a significant impact on its institutional design.

For this new role as digital markets regulator, CADE will have some tools that may help in the process to define the obligations to be imposed on the SRA, such as public consultation and hearings throughout the administrative proceedings.^[2] This introduces an important deliberative dimension to the decision-making process but does not eliminate the need for a more qualified dialogue, mainly with the designated agent that will be directly affected by the obligations.

These designated companies could be subject to specific obligations, which may potentially burden their business model and disincentivise investments in innovation. As an example, the Bill allows the imposition of compulsory transparency disclosures regarding proprietary terms of use, pricing structures, and algorithmic criteria for ranking search results. It also institutes broad behavioural embargos against self-preferencing, product tying, and market access limitations, while enforcing affirmative duties to provide free data portability tools and guarantee technological interoperability with third-party infrastructures.

Depending on the way this new regulation will work in practice, the enforcement mechanisms envisaged by the Bill No 4675/2025 may raise severe incompatibilities with the principles of proportionality, reasonableness, and the presumption of innocence guaranteed under the Brazilian Federal Constitution.^[3] Traditional Brazilian antitrust enforcement operates under an ex post paradigm, penalising anti-competitive conduct after an empirical demonstration of its existence and potential harm. Conversely, this Bill binds severe operational restrictions on an agent solely because of its market positioning.

By transitioning from an abuse-based system to a status-based regulatory model, the framework operates as an inversion of the presumption of innocence, effectively treating economic efficiency and market scale as presumptive evidence of anti-competitive behaviour. This approach should therefore be cautiously evaluated and debated prior to its implementation to mitigate any breaches of the constitutional test of proportionality, which demands that state interventions be necessary, appropriate, and strictly proportional.^[4]

Negotiated mechanisms as vectors of effectiveness in Bill No 4,675/2025

The Bill establishes that the obligations will be imposed by the authority on the SRA. In the first draft of the Bill there were no legal provisions allowing the SRA to participate more proactively to negotiate the obligations. Fortunately, a more recent version of the Bill, still pending to be formally submitted, foresees the possibility for the SRA to present proposals voluntarily, thereby contributing to the definition of the obligations.

The exclusion of the input from SRAs is in stark contrast to the settled practices of Brazil’s antitrust authority. CADE’s settlement-oriented approach stands out as one of the most recognisable and acclaimed attributes of the autarchy. It is renowned for the primacy it affords to the negotiated and consensual resolution of disputes over litigation and punitive enforcement.

The aforementioned phenomenon has been dubbed consensualisation, which is a movement operationalised by the Public Administration and its administrative processes in favour of building consensus.^[5] It is essential to note that methods such as the Leniency Agreement, the Cease-and-Desist Agreement (TCC) and Merger Control Agreement (ACC), developed and constantly used by CADE, represent part of this referred movement.

The actively consolidated consensual policy exercised by CADE does not stem from mere institutional benevolence, but rather from the imperatives of a regulatory strategy and efficiency, a dictate which was even constitutionally foreseen.^[6] The use of such a consensual practical application can be of special relevance in the design of specific obligations. Conversely, the Bill dampens the opportunities for this consensual dialogue.

In addition to the illogical inversion of market power amounting to a type of offence in itself, the Bill changes the dynamics by instituting a regulatory control regime based on unilateral impositions. As a result, the Bill creates a risky scenario, especially in innovative market dynamics, through a deep legal uncertainty based on the potential unpredictability of specific obligations. The Bill brings an excessively broad list of obligations, from the submission of transactions regardless of meeting criteria of mandatory notification, to interoperability, greater data transparency, among others.

The implementation of these obligations is not trivial, it may generate severe consequences to the business model and, ultimately, for the competitive environment. Given all these challenges, having a robust mechanism for institutionalised negotiation with the designated agents should be seriously considered for the Bill to allow the joint construction of proportional and feasible remedies. International experience has demonstrated the importance of such dialogue and has shown how difficult it can be to implement these obligations. A critical examination of Bill No 4,675/2025 reveals an abrupt and worrying departure from CADE’s collaborative legacy.

As demonstrated by the Brazilian approach to digital markets cases,^[7] a consensual solution provides numerous benefits, including rapidity and effectiveness. A qualified dialogue ensures that obligations are operationally feasible and foster tangible gains in enforceability, regulatory legitimacy, and reducing litigation. This would balance intervention more closely with competition policy objectives while ensuring greater respect for free competition and better responsiveness to the specifics of digital markets.

Conclusion

The regulation of dynamic digital markets represents one of the most complex challenges for contemporary legal and economic systems. The international experience has shown that, and Brazil has the opportunity to take this into consideration while building its system according to the particularities of its local digital market.

As Schapiro et al note, traditional punitive enforcement is insufficient to guarantee free competition or effectively alter the entrenched behaviour of complicated economic actors.^[8] However, relying on command-and-control mechanisms in rapidly changing tech sectors carries the severe risk of producing a chilling effect on innovation cycles and emerging business models.

When regulatory remedies are excessively rigid and unilateral, they can impose disproportionate compliance costs that stifle technological progress, ultimately harming the market dynamics they were intended to protect. It is precisely within this landscape that the concerns outlined in this article justify an ample debate of Bill No 4,675/2025, including possible provisions that recommend negotiation-based and collaborative stances.

This collaborative proposal represents a sophisticated evolution beyond existing international archetypes. While the DMA, for example, includes participatory elements, such as market investigations, its structural core remains inherently unilateral. Incorporating a genuinely negotiated profile into ex ante digital regulation fosters greater information density, drastically reduces litigation, and ensures that designed obligations are operationally feasible.

Ultimately, the institutionalisation of structured negotiation delivers a critical double dividend that harmonises economic progress with public welfare. As Schapiro concludes, a successful regulatory negotiation ensures, on one hand, the realisation of significant productivity gains and economic rationality within ‘economic time’, matching the speed of the market itself.^[9] On the other, it guarantees the maintenance of a healthy, vibrant competitive environment essential to the welfare of both intermediate and final consumers. Therefore, a consensual model stands out as an indispensable path to a more efficient and legitimate regulatory future.