- In Brazil, at the beginning, right after the Country became independent, the State held the monopoly of all strategic sector of the Brazilian economy. The State, by its turn, used to make public concessions to the foreign capital to exploit all infra-structure sectors of the economy;
- The global 1929 crisis, dramatically affected the European and US’ economies. This crisis functioned as an alert to the necessity for those countries to determine a strong policy aiming at preserving the essential sectors of their respective economies;
- At that time, the United States optioned to break the State monopolies their policy was to open the infra-structure sectors of their economy for the private sector, stimulating the competition. To control and ensure a fair market competition and to avoid the formation of private monopolies, such as the cartels, the North-American Government crated and developed the National Regulating Agencies. These Agencies, acting independent from the Government, had the task to control and fiscalize the competition among the private sector, ensuring that no cartels or any kind of private monopolies were going to be formed;
- Europe, by its turn, made a different option, granting to the respective States the task of providing and granting to their societies the services related to the infra-structure. That is, in Europe, on reverse to what happened to the United States, the infra-structure part of the economy was in the hands and under the responsibility of the Government;
- A few years latter, the world faced the Second World War. The Second World War was made on behalf of democracy. Many Countries joined to fight the tremendous threat represented by an individual who had in mind the domination of the world, under a cruel dictatorship. To grant democracy to the world, the allied Countries fought together to battle the dictatorship. That was the philosophy of the war, that is, to preserve the democracy for Countries;
- This principle had a significant impact on the history of the monopolies in Latin America. As the principles of democracy and sovereignty of Countries were largely spread out, it was not compatible with this world ideal of freedom, that neither the United States nor Europe had “Colonies” in the rest of world. The term “Colonies” can be understood in its literal sense (non-independent political Countries) or also in its figurative sense (independent Countries from a political view, but totally dependent from the economic view);
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- Within this world context, the Countries in Latin America, as a necessity to grant, prove and ensure its sovereignty, nationalized all infra-structure sectors of their economies. This means that these sector of the economy were no longer in concession to the private foreign capital, but returned to the hands of the States. The States had those monopolies. By having created a way to develop their own infra-structure companies, It was a way to show the world their self-capacity of development and the power of the Latin American Countries;
- As a result of that, and also influenced by the ideas of some economist from India, the States in Latin America created the large state-owned companies, which were in charge of administrating, under a monopoly system, the infra-structure sector of the economy;
- Particularly with respect to Brazil, as the Country is large, with major capacity of having better mineral resources, the Brazilian Government was able to form several companies, which could be internationally competitive. But the same did not happen with other Countries in Latin America. The state-owned infra-structure companies formed in smaller Latin American Countries did not have conditions to compete within the international market. After year, those companies entered into a very bad financial situation, what also badly affected the economy of those same Countries. This is a problem that is currently reflecting in the Countries of Latin and particularly South-America;
- Given the above, added to the latter influence of the International Monetary Fund (“IMF”), international banks and the globalization, the Latin American Countries had no other option but to break their state monopolies and open the infra-structure sector to the private sector, both foreign and national capital, by means of public concessions or privatizations;
- This is good from one side. But it is very important that the States take care that no private monopolies will be formed, with one single company dominating certain infra-structure sector of a Country or a Continent. The States must create means to efficiently control the fair and free competition among companies, to the benefit of their people; and
- A good way to do that is to encourage the Governments to created Independent Regulating Agencies, which will act independently of the Government, with the objective to fiscalize and ensure the free and fair competition within the infra-stricture sectors. Brazil has adopted this model in most of their infra-structure areas, such as energy, telecommunications, oil, gas, transportation, anti-trust offices.
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