Fazenda and Cade disagree about interstate buses – 07/21/2023 – Market

The Ministry of Finance criticized an understanding by Cade (Administrative Council for Economic Defense) on the regulation of the interstate passenger transport market. The folder points out that the position of the body that should promote competition in Brazil ends up, in fact, harming competition in the sector.

The dispute ground between the ministry commanded by Fernando Haddad (PT) and the antitrust authority is a public hearing of the ANTT (National Land Transport Agency).

The agency needs to regulate a legal change on the authorization process for new interstate passenger transport lines. The legislative change created the obligation to prove the existence of economic and financial capacity for the release.

The question is who or what, exactly, needs to have such a capability. Cade defends that the capacity of the line be considered. In practice, this means that the government would define a maximum number of companies operating the service on each stretch.

“Free market competition and free competition do not constitute an unrestricted public policy, in view of the risk of the service being provided in violation of the principles […] of regularity, continuity, efficiency, security, timeliness, generality (universality), courtesy in the provision and reasonableness of tariffs”, points out a letter from Cade dated April 26 of this year.

For Cade, “delegating a line to a large number of operators can lead to supply and demand problems, harming the quality and security of the service provided to users”. “The excess offer can make the provision of the service unfeasible”, he adds.

The Treasury understands that the capacity assessment should be applied to the company that wants to perform the service. In that case, if the company meets certain requirements, it can offer the line. For the folder, Cade’s position is a “way of creating a barrier to entry”, which “can generate government failures with significant damage to users of the public service that is intended to be protected”.

The folder understands that the correction of failures feared by Cade can be done in the inspection of ANTT based on concrete facts of market failures.

“If there are barriers to entry for new competitors in the market, it is assumed that competition is restricted, which may generate situations of monopoly or oligopoly”, concludes the Treasury. The ministry’s position follows Cade’s and was signed on July 4 of this year. The municipality did not respond to questions.

Cade’s position is signed by the body’s general superintendent, Alexandre Barreto. There is no signature of other technicians in the letter sent to ANTT. The superintendent is appointed by the federal government and Barreto was chosen for the position by then-president Jair Bolsonaro (PL).

In the structure of the competition authority, the General Superintendence works as a first administrative instance. Above it is the Administrative Court, composed of the president and the councillors. According to information gathered by the Sheetthe matter was not discussed with the collegiate.

Cade has an internal advisory structure, the DEE (Department of Economic Studies). A letter even requested a DEE position, but Barreto did not wait for the study to issue Cade’s position.

The position of the Treasury is signed by the specialist in regulation, Mauro Sanjad, by the undersecretary of Regulation and Competition, Ana Patrizia Lira, and by the secretary of Economic Reforms, Marcos Pinto.

ANTT’s public hearing was created last year and reopened on July 7 of this year following a decision by the TCU (Union Court of Auditors). It ends on August 12 of this year.

On August 1, the regulatory agency will hold a public hearing session at its headquarters in Brasília.

The interstate passenger transport industry has intense battles from different lobbies. On the one hand, there are the traditional companies in the sector. On the other, new entrants like FlixBus and Buser.