State-owned enterprises between public services and economic activities

Abstract

This article revisits the trajectory of state-owned enterprises in Brazil to better understand their nature, their mission and the contemporary dilemmas they face. Based on a political economy approach, it provides a critical analysis of the crystalized public services versus economic activity dichotomy as a constitutive element of the state-owned enterprises legal regime, and also seeks to investigate whether Law n. 13.303/2016 overcomes such dichotomy, creating at the same time new dilemmas, challenges and “side effects”. It concludes that the Brazilian Supreme Court and the new statute have not adequately reflected changes through which state-owned companies have gone, perpetuating a mismatch between law and the political economy environment. The Supreme Court defers to a consolidated view, not adequately reflecting the “metamorphoses” gone through by the state-owned enterprises. With this respect, Law n. 13.303/2016 has its strengths and weaknesses. It is right by stating that it applies to both entities delivering public services and to those carrying other economic activities. However, since it fails to clearly relinquish the dichotomy at stake, the path for the Supreme Court to perpetuate its consolidated case law remains open. Moreover, the new statute it is currently subject of a Direct Action of Unconstitutionality, which may also limit its effectiveness.