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If you are thinking of expanding your business or opening a new one in Brazil, it is probably because you think you can do well there. A good market landscape and low production costs might have driven you to make the move, and in the long run, it’s likely a wise choice. However, before you develop your business in Brazil, it is extremely important that you understand the Brazilian antitrust and trade regulation laws. Without such an understanding, you could make a mistake that could ban your business from the country or you might be paying fees until your business finally goes under.

Trade Regulation

Trade regulation is government ruling that protects consumers and businesses from unfair practices in the marketplace. This means that companies should follow certain standards when running their business in Brazil. This protects consumers from paying too much for goods or services, and it protects businesses by ensuring that there is no unfair competition that they will be up against. Antitrust law, also known as competitive law, is a sector of this type of regulation, and it specifically deals with the competition between businesses. When competition is unfair, consumers end up paying more because companies may be organizing themselves to do not allow prices fall under a specific amount (cartels). In other cases, companies may force competitors out of business. When that happens, only one company is offering a particular product, and they can make it any price they want.

In fact, a new set of laws for Brazilian antitrust regulations was just enacted in May of 2012, called the Brazilian Competition Act. The new rules mostly have to do with mergers, which are part of antitrust regulation. Mainly, antitrust regulations are meant to:

  • Promote Free Trading - Under the guidelines set forth by antitrust regulations, free trading should be allowed for all businesses. In particular, antitrust regulations prohibit the abolition of free trading by cartels. Cartels are agreements between competing businesses that essentially form an alliance. Such an agreement involves price fixing and market shares to reduce competition.
  • Banning Unfair Domination – Businesses can dominate the marketplace unfairly in a few different ways. They can use predatory pricing, which involves pricing products ridiculously low in order to drive competitors out of business. They can also use price gouging, which involves hiking up the prices on items that are absolutely necessary. For example, during a rainstorm, a business might hike up the price of umbrellas beyond the usual market price. Antitrust regulations ensure that these methods of competition are not used in Brazil.
  • Supervise Mergers and AcquisitionsWhen a company wants to merge with another one, it will first need to be approved by the Brazilian government. This is one of the new aspects of Brazilian trade regulation, and mergers or acquisitions that might unfairly tilt the competition will be prohibited altogether.

Dealing with Regulation

While trade regulations and antitrust/trade in Brazil laws might seem intimidating at first as you begin operating your business in Brazil, they are truly meant to protect the integrity of your operations. Even more so, they are meant to protect consumers from being forced to pay more than market value for goods and services. While you start you business, it is essential that you learn everything about these laws, as accidentally breaking them could ruin your business. To make sure you’re on the right track, you should consider speaking with an attorney who can teach you about trade regulations and antitrust laws in Brazil.

Phone: 212-300-7174