STRAIGHT TO THE POINT
On Wednesday, August 12, 2026, the Brazilian Supreme Court (STF) held that the Soy Moratorium is compatible with the Federal Constitution. By a majority, the Court also ordered the dismissal of proceedings premised, directly or indirectly, on the unlawfulness of the arrangement, including damages claims and investigations before CADE, Brazil’s competition authority. The ruling is significant for future agreements, but it does not confer antitrust immunity on sustainability agreements among competitors.
- The full Court ruled on Direct Actions of Unconstitutionality (ADIs) 7774 and 7775 and unanimously upheld the validity of the state statutes under review.
- In ADI 7774, reported by Justice Flávio Dino, several political parties challenged State Law No. 12,709/2024 (Mato Grosso), which bars tax incentives and grants of public land to companies adhering to the agreement. In ADI 7775, the same claimants challenged State Law No. 5,837/2024 (Rondônia), which withdraws tax incentives from agribusiness companies participating in agreements that restrict the expansion of agricultural activity in areas not protected by specific environmental legislation.
- In upholding those statutes, the Court held that their tax effects must observe the time limits and safeguards that apply to the withdrawal or reduction of tax incentives. The Court also addressed, by a majority, the constitutionality of the Soy Moratorium itself and the consequences of that finding for the broader legal system.
- On that second point, the justices divided over whether the Moratorium’s constitutionality and lawfulness were properly before them in the ADIs, and over the appropriate disposition of the pending proceedings on the subject.
- The Soy Moratorium is a private, voluntary agreement entered into in 2006 by industry participants and nongovernmental organizations, with the endorsement of government bodies. In the form reviewed by the Court, the parties undertake not to purchase soy grown in areas of the Amazon biome deforested after July 2008, even where the production would comply with the limits of the Forest Code.
- Justice Dino concluded that, in the circumstances presented, the Moratorium suffers from no civil, constitutional, or antitrust defect, and that none of the categories of unlawful conduct set out in the Brazilian Competition Law (Law No. 12,529/2011) was present.
- In his opinion, the Moratorium is a voluntary exercise of private autonomy, entered into before the current Forest Code and built on objective, public, and uniform criteria. He also emphasized the participation and endorsement of successive federal administrations and the economic and environmental effects attributed to the agreement.
- In Justice Dino’s view, private companies may legitimately define their own purchasing policies and take on environmental commitments more demanding than the statutory floor. That does not prevent the states, however, from setting general criteria for their incentive policies, so long as they do not act arbitrarily and observe the applicable constitutional safeguards.
- Justice Dias Toffoli dissented, taking the view that the Moratorium’s constitutionality and lawfulness fell outside the scope of the ADIs, which was limited to the validity of the state statutes. In his view, any finding of a cartel or other antitrust violation would require a proper factual investigation and should be left to CADE and the other competent authorities. Justices André Mendonça and Luiz Fux joined him.
- A majority nonetheless coalesced around Justice Dino’s view that the Moratorium’s validity had to be addressed in order to give the outcome coherence and legal certainty. Justices Cristiano Zanin, Alexandre de Moraes, Cármen Lúcia, Gilmar Mendes, and Edson Fachin joined. Justice Cármen Lúcia expressly noted that, in her view, the holding is tied to the terms and circumstances presented to the Court in this case and at this time; future changes to the agreement or to its factual premises may warrant fresh consideration.
- The full Court, by a majority, ultimately upheld the constitutionality of the Soy Moratorium on the terms and in the circumstances reviewed, and ordered the dismissal, for lack of a live interest, of proceedings whose cause of action or premise is, directly or indirectly, the unlawfulness or unconstitutionality of the arrangement, or civil or antitrust liability arising from it.
- As a practical matter, the dismissal order reaches the proceedings pending before CADE that rest on those premises. Critically, however, and consistent with Justice Cármen Lúcia’s opinion, the decision is not a broad immunity or an abstract antitrust safe harbor. It follows from the specific design and evidentiary record before the Court. Sustainability arrangements remain subject to antitrust scrutiny, and care is still required with respect to exchanges of competitively sensitive information, coordination on competitive variables, output restrictions, and potential unjustified foreclosure.
- The decision therefore recognizes meaningful room for private environmental commitments that go beyond what legislation requires, without placing them outside antitrust scrutiny. Whether such arrangements hold up will continue to depend on voluntary adherence, transparent and objective criteria, sound governance, and the absence of unnecessary coordination among competitors.
- We are available to discuss the ruling’s impact on private sustainability agreements, cooperation among competitors, and proceedings before CADE and the courts.