The recent publication of the Economic Freedom Law (Law No. 13,874, of 2019) resulted in some changes in the Brazilian regulatory scope, both due to the creation of the figure of “abuse of regulatory power” and the new requirement for Regulatory Impact Analysis.

The rule is presented in the context of the constitutional economic order, under the justification of establishing free market guarantees, as determined by article 170 of the Constitution. In this regard, the new Law comes as a response to the constitutional demand and, therefore, must be interpreted in light of the provisions that concern the matter – the protection of private property, free competition, consumer and environmental protection, among other guidelines.

The Law brought a chapter just for the guarantees of free initiative, in which it establishes the duty of the public administration to avoid abuse of power and describes the behaviors that characterize this excess.

In practice, public administration, at the federal level, is prevented from adopting measures that limit competition and harm the exercise of economic activity.

The aim is to ensure that the public authorities respect economic freedom when exercising regulation, as the regulatory power conferred by the Constitution is used to maintain balance in market relations.

Another highlight of the standard is the changes that alter important aspects in the event of the publication and alteration of certain normative acts. Under the new legislation, the Regulatory Impact Analysis (RIA) is characterized as a necessary administrative procedure that must precede the creation or alteration of normative acts of general interest to economic agents.

The topic is relevant to the transparency of regulatory processes, which must occur with due analysis of social, economic and financial impacts.

It is important to highlight that RIA is the “systematic process of evidence-based analysis, which seeks to evaluate, based on the definition of a regulatory problem, the possible impacts of the available alternatives for action to achieve the intended objectives, with the purpose of guiding and supporting decision-making.”[1]

Thus, the scope of this procedure is to identify the possible effects of the objective of the proposed new regulation, such as potential problems or failures, and to assess the impacts of the regulatory options available to achieve the intended objectives.

For example, RIA would assist in the decision-making process on regulatory matters, while allowing indirect political control and the execution of economic planning.

With the implementation of Regulatory Impact Analysis, the level of predictability and regulatory effectiveness tends to increase, as the legal system will be changed when it is actually relevant, while regulatory interventions that prove to be inadequate will be covered by the procedure.

[1] Regulatory Impact Analysis Concept – RIA. General Guidelines and Suggested Analytical Roadmap for Regulatory Impact Analysis. Civil House, Presidency of the Republic. Available at: http://www.casacivil.gov.br/conteudo-de-regulacao/regulacao/consulta-publica/consulta-publica-001-2017/abertura/anexo-iv-air-diretrizes-e-roteiro-analitico.pdf/view