Verticalisation on the financial sector and its impacts on competition is the theme of debate at CADE

The Administrative Council for Economic Defense (CADE, in its acronym in Portuguese) held a public audience on the topic "Structure of the national financial sector: impacts of the verticalization over competition".

The discussion panels were attended by experts, government agents, companies, representative entities and the civil society to debate competition in the Brazilian financial system, with emphasis on the structure of that market.
During the opening session, CADE's President, Alexandre Barreto, stated that the debate is the result of the partnership stablished between the competition authority and the Central Bank of Brazil (Bacen, in its acronym in Portuguese) in the last few months. "We've been walking together looking for common solutions to increase competitiveness in the sector. We have concluded that the joint work is essential and Cade has been doing it with great emphasis", he said.

Regarding the theme of the event, Barreto highlighted that the verticalization of the Brazilian financial system could create economic efficiencies, with benefits to the market and the consumer, as well as competition problems, if applied to restrict the market. "CADE understands the necessity to participate actively in discussions about possible solutions to enhance the competition environment in the financial sector", declared Barreto.

Bacen's director, Reinaldo Le Grazie, highlighted the relevance of the debate and the memorandum of understanding signed in February 2018 for both institutions, aiming to enhance the cooperation concerning mergers and the probe of potential infractions to the economic order involving financial institutions. "The organization of the financial industry is a subject of interest for both institutions, given its potential effects on competition and the efficiency in providing many financial services to society", he said.

The public audience was divided into four discussion panels. The first one, guided by the Chief Economist of the CADE's Department of Economic Studies, Guilherme Resende, approached the possible efficiencies and potential threats to the competition environment as a consequence of the verticalization of the financial sector. The second one dealt with the effects of vertical integration over the industry of electronic payments. The following panel debated interest and bank spread as well las the impact of verticalization on competition.

Finally, the closing debate encompassed fintechs. The articipants approached the services offered by the emerging technology companies and the competition they face in comparison to the traditional financial sector. Marcelo Oliveira, Head of Merger and Antitrust Unit of CADE’s General Superintendence, conducted the presentations.