CADE and the OECD launch project to undertake a competition assessment of the port and civil aviation sectors

On Thursday, 8 April, the Administrative Council for Economic Defense (CADE) carried out, in partnership with the Organisation for Economic Co-operation and Development (OECD), the webinar to launch the Competition Assessment Project of the Port and Civil Aviation Sectors in Brazil. Many Brazilian and foreign authorities attended the event and presented an overview of the sectors and the scope of the initiative.

The project is the result of a collaboration amongst several agencies, as the President of CADE, Alexandre Barreto, pondered in his opening speech. Mr. Barreto also mentioned the contributions of the Brazilian Civil Aviation Agency (ANAC), the Brazilian Waterway Transportation Agency (ANTAQ), and the Ministry of Infrastructure, through the Brazilian National Secretariat for Civil Aviation and the Brazilian National Secretariat for Ports and Waterway Transportation, which are part of the High-Level Advisory Group of the Project. CADE's president stated the group "is most certainly going to be instrumental for the development of the project."

In his speech, Mr. Barreto pointed out the importance of this assessment to increase competition in strategic sectors and, consequently, promote the economic development of the country. "Certain standards, especially those imposed on regulated sectors, end up restricting competition in the market and going beyond what would be necessary to achieve the objectives intended with their application. The competition assessment project is aimed at understanding the regulatory framework in the ports and civil aviation sectors, to identify all legal or regulatory provisions that restrict competition unnecessarily. The idea is that, after carrying out this assessment, the OECD puts forward recommendations for the improvement of public policies, with the elaboration of alternative policies that, while less restrictive, are still capable of helping achieve government objectives," he explained.

The Deputy Director of the Directorate for Financial and Enterprise Affairs of the OECD, António Gomes, also celebrated the initiative as a means to improve competition policy in Brazil. "This project is intended to contribute to improve life quality, especially for Brazilian consumers. So that they benefit from better prices, products and services, with a modern and effective competition defence policy. Competition is essential to ensure a healthy economy, and is a propeller of efficiency and innovation at the service of society."

The Project and its Expected Benefits

During the event, OECD's Project Manager and competition specialist, Ania Thiemann, presented a detailed methodology and the stages of the initiative. There will be five stages, which are expected to last for 18 months. "We are going to scrutinise laws and regulations to identify unnecessary restrictions on competition and recommend changes in both sectors. As far as civil aviation is concerned, our focus will be on passengers. In the case of ports, we are going to focus on cargo," she said.

CADE's Deputy Chief Economist, Lílian Marques, listed the expected project benefits, and pointed out that innovation is one of them. "Increased competition amongst firms allows for improvement in production efficiency and the emergence of better–and even new–services, in addition to price reduction. Moreover, there is also the innovation aspect. Increased innovation and competition result in increases in consumer welfare and economic growth.

Sectors Overview

Throughout the development of the project, CADE and the OECD are going to have the collaboration of technicians and specialists of the High-Level Advisory Group to carry out an accurate review of the current framework, in addition to challenges and perspectives involving the ports and civil aviation sectors. At the event, CADE's Deputy Superintendent, Patrícia Sakowski moderated a debate with authorities members of this group, who offered an overview of the sectors and their economic impact.

ANAC's Director-President, Juliano Alcântara Noman, and the Brazilian Secretary for Civil Aviation, Ronei Saggioro Gianzmann, participated as representatives of the civil aviation sector. They pointed out the growth potential of civil aviation in Brazil and how the project can help with it.

Mr. Gianzmann celebrated the initiative as a boost to competitiveness in the market. "Global experience indicates that, in places with strong competition, there are better services, fairer prices, and more options for passengers. All of which increase the well-being of society. Which is precisely what we seek with public policies in the civil aviation sector," he argued.

"Our focus is on promoting regulatory efficiency, so we need to design regulations with a different mind-set. Transform our inspection into a tool to approximate, in a joint effort for regulatory compliance, aimed at rewarding good behaviour, instead of simply punishing bad practices," added Noman.

The Director-General of ANTAQ, Eduardo Nery, and the Brazilian Secretary for Ports and Waterway Transportation, Diogo Piloni e Silva, participated as representatives of the ports sector. The current market situation was pointed out by Piloni e Silva as being ideal for the assessment intended by the project. "The study comes at an excellent time. The ports sector is going through a revolution, I dare say, both with regard to legal and regulatory aspects, and to new contracts and business opportunities, which has been expanding the competitive scenario."

ANTAQ's Director-General, Eduardo Nery, pointed out the experience is likely to result in an improvement of the technical staff and be beneficial in the long run. "There is this opportunity for technicians from regulatory agencies interact with each other, exchange experiences, and acquire knowledge that could be useful in the future, through other regulations that foster competition," he added.

Brazil and the OECD

During the event, Ambassador Carlos Márcio Cozendey, the Brazilian representative to the OECD and delegate to the International Economic Organizations in Paris, also analysed the relationship between Brazil and the organization. Mr. Conzendey mentioned the country's interest in becoming a member of the OECD, and how a closer relationship is mutually beneficial. "Brazil has reached out to the OECD in a very systematic way, to indicate its interest in fostering a closer relationship, and also to take advantage of this process and reap the benefits of this participation, in order to perfect its public policies."

The Special Secretary for Foreign Affairs of the Ministry of Government Affairs, Marcelo Barros Gomes, mentioned long-term federal strategies that Brazil has developed and spoke on the importance of improving public policies. "We have recently launched a long-term federal strategy with national key indicators for 2031. The creation of a strategy with clear indicators, amongst which indicators related to regulatory improvement and governance, is unprecedented in Brazil," he stated.

In his closing speech, CADE's Chief Economist, Guilherme Mendes Resende, commended the initiative and mentioned the many benefits that are likely to result from the partnership. "Regulation and competition are directly related. And this project will make it possible to increase the synergy between different public policies in order to promote competition culture in the ports and civil aviation markets. This is the way to foster the development of less restrictive public policies that favour competition and, consequently, increase market access, international competitiveness, and long-term growth," he concluded.