The Brazilian Supreme Federal Court (STF) confirmed the constitutionality of Law No. 6,729/1979, widely known as the “Ferrari Law”, which regulates the relationship between automakers and vehicle dealerships in Brazil. The ruling, delivered within the scope of law suit ADPF No. 1106, puts an end to a challenge led by the Prosecutor General’s Office regarding territorial limits, distribution exclusivity, and the organization of sales networks.
The challenge argued that such regulatory mechanisms stifled free enterprise and competition, representing undue state intervention that could ultimately harm consumers.
In rejecting these arguments, the Supreme Court clarified that the constitutional economic freedom is not absolute. The Justices held that the Ferrari Law does not create a market monopoly or eliminate competition; rather, it establishes a specific legal framework for a sector defined by massive capital investments and high economic dependency between manufacturers and distributors.
A critical point of the decision was the Court’s recognition that the Ferrari Law does not shield the sector from the competition authority oversight. The STF emphasized that any anti-competitive practices or abuses of economic power remain subject to the scrutiny of the Administrative Council for Economic Defense (CADE).
This ruling solidifies the legitimacy of regulatory mechanisms designed to organize specific markets. It reinforces the understanding that state intervention, when aimed at promoting balance in economic relations and preserving competition, is a valid exercise of constitutional authority.