*Originally published in Conjur.

*This is an AI-powered machine translation of the original text in Portuguese

The Talmud recounts an ancient Hebrew tradition according to which unanimous convictions by priests in cases involving serious crimes were considered problematic and could be invalidated. Underlying this tradition was a belief in the importance of inherent controversy and doubt in ethical judgments: if all judges immediately convicted the defendant without any dissenting voice or exculpatory argument emerging, this would be a sign that the court had failed to properly exercise its deliberative function. A tribunal genuinely committed to justice should be capable of recognizing ambiguities, seeking alternative perspectives, and raising doubts, such that any claim of certainty would be an indicator of lack of empathy, conformist pressure, insufficient debate, or inadequate reflection.

This feature of ancient rabbinic law offers a curious yet instructive lesson for Bill No. 4,675, which seeks to regulate competition among digital platforms.

Regulatory Authority Granted to Cade

A central element of the Bill is the assignment of a new type of authority to the Administrative Council for Economic Defense (Cade), namely, a rulemaking role through which it may create specific obligations for technology companies deemed to have “systemic relevance,” alongside its traditional supervisory and adjudicatory functions of enforcing competition law and reviewing economic concentrations.

This new authority brings Cade closer to the role of a regulatory agency focused on competitive relationships among providers of digital services. The incorporation of this type of special autonomous agency into the Brazilian legal system encountered strong resistance in light of the constitutional principle of statutory reservation, under which only the Legislative Branch has the authority to create new legal obligations. This controversy was overcome through the definition of two safeguards:

Technical discretion: the regulator does not, strictly speaking, create new obligations, but merely specifies the content of abstract statutory rules (loi-cadre), providing the technical means necessary to achieve the objectives established by law;

Democratic rulemaking: the creation of rules by regulatory agencies presupposes public debate, implemented through prior public consultations and hearings regarding proposed regulations, with the participation of regulated entities and different groups within civil society.

Lack of Transparency and Participation by Regulated Entities

Although the Bill satisfies the first safeguard, by providing a general list of potential obligations to be specified by Cade, it suffers from a serious democratic deficit because it does not ensure transparency and participation by regulated entities in the rulemaking process.

First, the Bill provides for a public hearing only regarding the preliminary conclusions of the Digital Markets Superintendence (SMD) when additional fact-finding is required during the rule-specification process. In other words, only when there is uncertainty that requires further investigation and clarification. Otherwise, the proposal is that the conclusions be forwarded directly to the Cade Tribunal for decision.

The Bill’s rapporteur in the Chamber of Deputies has recently published a new version granting Cade discretion, providing that it “may” also hold a public hearing even when no additional investigative measures are required. This is an improvement, but it does not solve the problem. This “may” should be a “must.” Any claim of “certainty” that would justify dispensing with public debate would constitute a dangerous anti-democratic feature, potentially leading to negative consequences for the market due to the risk of error in interventions affecting digital services, which may compromise technological innovation.

The exposure of a particular understanding—especially one held with the greatest conviction—to new perspectives, information, and opportunities for reflection, as the Talmud reminds us, is an essential characteristic of a tribunal that is both committed to justice and conscious of the possibility of error. Hence the need to revise the Bill so that every preliminary understanding reached by the SMD, whether based on additional fact-finding or not, is submitted to a public hearing and reconsidered before being forwarded to the Tribunal.

More than that, the Bill also does not require the SMD to publicly articulate the specific set of obligations it intends to see imposed on regulated entities. This omission departs from the best practices of regulatory agencies, which, under the general law governing them, are required to submit preliminary versions of their rules to the scrutiny of regulated entities and other interested third parties.

Democratic Oversight

This is not merely a matter of insufficient transparency, but rather a condition for adversarial participation, to be exercised by regulated entities and interested parties who may be positively or negatively affected by the obligations proposed. It is impossible to exercise such democratic oversight based solely on the SMD’s statements on the subject without the proposed rule itself being articulated.

The logic is similar to that applied in enforcement proceedings, in which due process requires a description of the conduct under investigation, as well as its legal characterization (that is, identification of the legal provision that prohibits or penalizes the conduct), as a prerequisite for the right to a full defense. Likewise, in the case of specifying a particular obligation to be imposed on a market participant, the content of that obligation must be clearly articulated as an essential mechanism for framing the defense and enabling interested parties to contribute meaningfully to the development of the Superintendence’s and the Tribunal’s understanding during public hearings.

Such amendments are essential to remedy the democratic deficit present in Bill No. 4,675, should it indeed be the legislature’s intention to grant this new rulemaking authority to Cade. Otherwise, the result may be interventions in highly dynamic and complex markets that are potentially arbitrary and insufficiently deliberated.