Circular Economy and Competition: Merger Control and the Role of the Administrative Council for Economic Defense (CADE) in Integrating Sustainability into Brazil’s Competition Policy

Abstract This article examines how the circular economy, as a sustainable economic model, can be integrated into Brazil’s free competition regime, focusing on the extent to which efficiencies linked to circular practices may be recognized under Brazilian merger control by the Administrative Council for Economic Defense (CADE). The central research question is whether, and under what conditions, environmental and resource-efficiency benefits can be reconciled with the consumer welfare standard without undermining competitive dynamics. Initially, it contextualizes the relationship between competition and environmental protection according to the Federal Constitution, highlighting the principles of the economic order. It then explores the concept of the circular economy and its status in Brazil, analyzing public and private initiatives and correlating these practices with environmental, social, and governance (ESG) strategies, demonstrating their competitive benefits. Based on an analysis of CADE’s decisions related to sustainability, the article proposes a reflection on how circular economy elements can be considered as efficiency factors in merger reviews. The central hypothesis is that incorporating circular economy criteria into CADE competition assessments can foster sustainable practices, generate economic and environmental efficiency gains, and benefit consumers, provided that clear mechanisms are established to measure such impacts while ensuring that market competition is preserved. The article concludes by pointing out growth trends in circular-economy-related operations and CADE’s essential role in regulating these practices, reinforcing the integration between economic and environmental objectives. The contribution, thus, lies in connecting the broader sustainability debate with concrete analytical tools that may strengthen both enforcement and policy in Brazil.