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Derestricted
FTAA.ngcp/inf/03/Rev.2
March 22, 2002
Original: Spanish-English
Translation: non FTAA Secretariat
FTAA - Negotiating Group on Competition Policy
Inventory of Domestic Laws and Regulations relating to
Competition Policy in the Western Hemisphere
Prepared by:
Tripartite Committee
Organization of American States
Trade Unit
SUMMARY
Introduction
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This document compiles the laws on free competition in force
in the Western Hemisphere countries, in accordance with the methodology and
information agreed on and supplied by the Free Trade Area of the Americas
Working Group on Competition Policy at the first meeting held in Lima, Peru, May
16 and 17, 1996.
Competition policy deals with a variety of areas and aspects
of a market economy system. However, narrowly defined by the Working Group, it
refers to the set of laws and regulations aimed at ensuring that national
markets function correctly. To that extent, these laws prohibit commercial
practices (i.e., concerted agreements, abuse of dominant positions,
monopolization and economic concentration) which limit or restrict competition
to the detriment of consumers and efficient allocation of resources in the
economy.
The document is divided into thirteen (13) sections: (i)
legal framework, (ii) objectives of the laws, (iii) scope of application, (iv)
exceptions to scope of application, (v) general prohibitions, (vi) prohibited
conduct, including definitions, (vii) exceptions to prohibited conduct, (viii)
economic concentrations, (ix) enforcement bodies, (x) functions of enforcement
bodies, (xi) administrative and/or judicial procedures, (xii) administrative
and/or judicial sanctions, and (xiii) recourse or appeal.
A summary of these elements follows.
I. Legal Framework
The protection of competition is guaranteed in most of the
countries in the Hemisphere. On a constitutional level, many national
Constitutions promote competition with provisions related to freedom of
contract, commerce and private economic initiative. Some others prohibit
monopolies, except those established in favor of the state or by law, excessive
concentration of economic power and abusive manipulation of prices and other
market conditions.
On a legal level, thirteen (13) countries in the Hemisphere
have legislation and institutions on free competition: Argentina (1919, amended
in 1946 and 1980, and currently under review), Brazil (1962, amended in 1990 and
revised in 1994), Canada (1889, and subsequent legislation and amendments),
Colombia (1959, supplemented in 1992), Costa Rica (1994), Chile (1959, amended
in 1973 and revised and incorporated in 1979), Jamaica (1993), Mexico (1934,
replaced in 1992), Panama (1996), Peru (1991, modified in 1994 and 1996),
Uruguay (2001), Venezuela (1991) and United States (1890 and subsequent other
legislation and amendments).
Furthermore, Bolivia, Ecuador, Honduras, El Salvador,
Guatemala, Nicaragua, Dominican Republic, and Trinidad and Tobago are actively
designing and debating respective draft legislation on the issue.
II. Objectives of the Laws
The laws on competition in the Hemisphere can have various
overall objectives: promotion and defense of competition, promotion of economic
efficiency and consumer welfare, freedom of initiative, opening up of markets,
fair and equal participation for small and medium enterprises, deconcentration
of economic power, and prevention of monopolies and abuses of dominant position.
III. Scope of Application
In regard to persons, the laws of the Hemisphere apply to all
national or foreign, public or private persons, enterprises or corporations. In
regard to practices, the laws apply to all conduct, agreements, acts or
transactions pertaining to production and marketing of goods and services. In
regard to territory, the laws apply to practices carried out inside the
countries’ national territory. In some countries the laws also apply to
practices originating abroad that affect internal or external trade.
On a subregional level, the Andean Community and
MERCOSUR countries apply a common regime when practices produce effects that
limit competition in the sub-regional market. By the same token in countries
with a federal system like the United States, state laws apply parallel to
federal ones when anti-competitive practices occur within the market of a state.
IV. Exceptions to Scope of Application
In regard to persons, in Brazil, Colombia, Chile, Jamaica,
Mexico, Panama and Peru, it is allowed the existence of State monopolies,
sectors reserved for strategic or national security reasons and the exclusive
exploitation of intellectual property rights. Nonetheless, it is equally
recognized in such countries that these monopolies are subject to the
competition laws when they incur in abuses of dominant position or monopolistic
practices beyond the nature of the scope provided.
In regard to practices, in Canada, Colombia, Costa Rica,
Jamaica, Mexico, United States and Venezuela specific sectors and economic
activities like agriculture, professional sports, labor organizations and export
activities have been exempted from competition laws. In regard to territory, in
the United States, State laws apply parallel to federal ones when
anti-competitive practices have effects within the market of a State.
V. General Prohibitions
The laws of the Hemisphere, in general, prohibit all
commercial conduct that limits, restricts, or distorts competition.
VI. Prohibited Conduct
The laws of the Hemisphere prohibit certain horizontal
practices consisting of any type of collusive agreements between enterprises
competing in the same sector, as they do certain vertical practices deriving
from agreements between enterprises that perform their activities at different
stages of the production process.
Many laws provide a specific list of prohibited conduct which
include: (i) fixing prices and other sale conditions, (ii) imposing barriers to
market access, (iii) collusive tenders, (iv) limiting production or sale by
fixing or distributing quotas, (v) concerted refusal to purchase products,
provide services, or admit new participants to the market, (vi) allocation of
markets, (vii) discriminatory and predatory agreements, (viii) tied-in
acceptance of supplementary services, (ix) exclusive agreements, (x) abuse of
dominant position or monopolization, and (xi) boycotts.
Commonality and divergence in this area depend on the law
adopted by each country as well as on the case law developed by each national
enforcement body. There are absolute, non-authorizable or per se
prohibitions and relative, authorizable or rule of reason prohibitions.
VII. Exceptions to Prohibited Conduct
The enforcement bodies, on a case-by-case basis, may
examine conduct which might otherwise be prohibited to determine if it could be
justified by its pro-competitive and efficiency-enhancing effects.
The practices for which such exception is allowed
include, economic concentration, certain vertical agreements on conditions not
relating to prices like territorial representation or exclusive agreements,
agreements that help improve production, quality, and marketing of goods and
services, development of research and technology, and utilization of economies
of scale.
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In some countries the criteria and procedures are
established in regulations or judicial precedents, whereas in other countries
these elements are left to the agencies’ discretion. In these countries, the
concepts and criteria to grant exemptions may vary from country to country.
VIII. Economic Concentrations
The laws of the Hemisphere, with the exception of Argentina,
Chile, and Peru (control regime for the electricity sector), contain provisions
for controlling economic concentration deriving from joint ventures, mergers,
acquisition or incorporation of companies, when their effect is to diminish,
harm or impede competition.
To this end Brazil, Canada, Colombia, Costa Rica, Jamaica,
Mexico, and Venezuela have merger control regulations based on either mandatory
prior notification or voluntary notification in order to assess the degree of
concentration and its effects on competition.
IX. Enforcement Bodies
Generally, the laws of the Hemisphere are enforced by
independent bodies or agencies in the form of commissions (Argentina, Brazil,
Canada, Costa Rica, Chile, Jamaica, Mexico, Peru, and the United States) or
superintendencies (Colombia and Venezuela). This autonomy is technical and
operational with regard to conducting investigations and procedures and law
decision-making and enforcement. The decisions on investigations are reached in
a collegiate manner, in the case of Commissions, or by a single person, in the
case of Superintendencies. The enforcement bodies are assisted by technical
units or secretariats.
In Brazil, Canada, Chile, Peru and the United States
the laws empower other agencies with enforcement responsibilities. In Brazil,
there are the Secretariat of Economic Law and the Secretariat of Economic
Surveillance. In Canada, there is the Attorney General with respect to criminal
cases and the Competition Tribunal. In Chile, there is the Economic National
Prosecutor. In Peru, there is INDECOPI´s Tribunal of Competition and
Intellectual Property.
In all the countries tribunals and courts are charged
with reviewing decisions adopted by the administrative bodies that enforce the
laws or adjudicate the case themselves. In the case of the United States and
Canada, courts and tribunals are charged with resolving cases brought by the
Department of Justice and the Bureau of Competition respectively, against
anti-competitive conduct.
X. Functions of Enforcement Bodies
In broad terms, the function of enforcement bodies is to
ensure fulfillment of provisions relating to competition. For these functions,
enforcement bodies in most countries have broad powers to enact preventive
measures, and demand testimony, documents or information pertaining to private
persons and public bodies. The enforcement bodies may also issue injunctions or
seek them in court.
In Brazil, Colombia, Costa Rica, Canada, Chile, Peru, Mexico,
the United States and Venezuela the enforcement bodies may provide comments and
opinions on regulations, policy and programs which might prove adverse to
competition, and recommend their amendment or elimination ("Advocacy of
Competition").
XI. Administrative and/or Judicial Procedure
In all countries the procedures for conducting investigations
and resolving cases of prohibited conduct are administrative or judicial and may
be initiated ex officio by the body or on the petition of an interested
party. The laws establish the instances, modalities, evidence, sanctions, and
time periods for resolving cases or authorizations. Additionally, Uruguay
stipulates arbitration procedures to solve disputes arising from wrongful acts
of competitors prohibited under her competition law.
The laws also resort to judicial procedures established by
ordinary law for cases of judicial review of acts and determinations by
administrative enforcement organs. In Argentina, Canada, Jamaica, and the United
States sanctions for violations of their laws are determined by tribunals and
courts, after a finding of the enforcement bodies or their decision to sue.
XII. Administrative and/or Judicial Sanctions
The sanctions stipulated by the laws of the Hemisphere are
pecuniary and criminal, as well as administrative and judicial, depending on the
body that applies them. Most of the laws authorize enforcement bodies to apply
administrative fines to those committing prohibited conduct and imposing
forcible binding commitments.
The maximum amounts vary depending on the type of
infringement and their effects on the market harmed. They may be pre-determined
according to the turnover of the infringing company, or indexed based on the
minimum wage, as occurs in Brazil and Mexico.
In Argentina, Canada, Jamaica, Peru, and the United States,
apart from applying fines, they are authorized to hand down prison sentences to
those who are in breach of certain prohibited conduct. In these countries, the
determination and application of such sanctions falls to the courts and
tribunals.
Non-compliance with orders and decisions of the enforcement
bodies is sanctioned in all countries with fines.
XIII. Recourse or Appeal
All the countries guarantee, once the administrative
proceedings are exhausted, the right to any person, foreign or national, to
review acts or decisions by enforcement organs before the courts, including
appeals before superior tribunals or the Supreme Court of Justice, as
applicable.
In Costa Rica, Colombia, and Mexico those affected by a
decision of an enforcement body are granted a process review, either by the same
authority that determined there was a violation of the law ("recourse to
reconsideration") or by a higher organ ("hierarchical recourse or recourse to
review"), in conformity with laws of ordinary administrative procedure.
In Brazil, Chile, and Venezuela decisions are reviewed
directly before tribunals. In Chile, those affected may request judicial review
on criminally prohibited practices. In Peru, an appellant has the option of
seeking recourse to reconsideration before the Competition Commission, which may
review the decision, or recourse to appeal before the Tribunal for the Defense
of Competition and Intellectual Property. In countries Canada, Jamaica and the
United States, the review process takes place in ordinary courts, including
appeals.
Finally, all the countries recognize to some extent
the right of any interested party affected by an anti-competitive practice to
obtain compensation for damages and harm resulting from such action. In most
cases the enforcement body must determine the existence of a violation of the
law before compensation may be sought by the affected interested party in court.
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Regulatory Framework
| Law 25.156, on Protection of Competition
National Decree 1.019 of 1999 |
1. Constitution of Brazil, promulgated in
1988. Articles 170, 173, and 174.
2. Law No. 8,884 of June 11, 1994 (Enacted
originally in 1962 and amended in 1990 and revised in 1994). Transforms the
Administrative Council for Economic Defense (CADE) into an autonomous
government agency and provides for prevention and prosecution of infractions
against the economic order.
Complementary Legislation
3. Law No.
8,137 of December 27, 1990. Defines crimes against the tax and economic
order, and against relations of consumption.
4. Law No. 9,021 of March 30,
1995. Provides for implementation of the autonomy of the Administrative
Council for Economic Defense (CADE), established by Law 8,884 of June 11,
1994.
5. Law No. 7,347 of June 24, 1985, amended by the single paragraph of
article 88 of Law No. 8,884 of June 11, 1994. Regulates the civil action for
liability for damages caused to free competition or any other diffuse or
collective interest.
6. Government order No. 186 of the Ministry of Justice
of April 30, 1992. Approves the by-laws of the Administrative Council for
Economic Defense.
7. Directive No. 45 of August 11, 1999, amended by
Directive No. 9 of January 26, 2000.
8. Directive No. 305 of August 18,
1999.
9. Directive No. 849 of the Ministry of Justice of September 22, 2000.
Approves the regulations governing the competence of the Secretariat of
Economic Law Enforcement (SDE) of the Ministry of Justice concerning the
investigation of infringements of the economic order. 10. Law No. 10149 of
December 21, 2000. Amends Law No. 8884 of June 11, 1994.
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Political Constitution. Articles 134, 142 and
233.
Investment Law.
Sectoral Regulation Systems Law (Sirese). |
Objectives of the Law
| To guarantee the proper functioning of the
markets, ensuring free competition and sanctioning behaviors that limit,
restrict or distort competition or that constitute abuse of market position
in a way that could adversely affect the general economic interest. (Summary
of Law 25.156) |
To prevent and prosecute infractions against
the economic order as a means of promoting free competition and free
enterprise. |
The economic structure shall be in harmony
with principles of social justice with a view to ensuring that all residents
enjoy a humane standard of living (Constitution, Article 132)
To stimulate
and guarantee national and foreign investment to promote growth and economic
and social development (Law on Foreign Investment, Article 1).
To regulate,
control, and monitor activities in the telecommunications, electric, energy,
transportation and water sectors, as well as others that are included in the
System by law. To ensure that they operate efficiently, contribute to the
country's development, provide service to all, while enjoying the effective
protection provided in this law as they pursue the public interest.
(Sectoral Regulation System Law, Article 1). |
Scope of Application
Acts or behaviors, of any type, related to
the production or trade of goods or services, whose purpose or effect is to
limit, restrict, falsify or distort competition or market access, or that
constitute abuse of dominant position in a market, in a manner which may
result in harm to the general economic interest are prohibited and shall be
penalized.
The procuring of significant competitive advantages through
violation, declared to be such by administrative act or final judgment, of
other regulations is included in this article, provided the conditions
stated in the preceding paragraph occur.
(Article 1 of the Law on Protection
of Competition) |
This law is applied to practices in all or
part of the national territory, or that produce or may produce effects in
it.
All physical or juridical persons of public or private law, as well as
any associations of entities or persons, constituted de facto and by law,
albeit on a temporary basis, with or without juridical personality, even if
they exercise an activity under a legal monopoly regime, are subject to its
provisions.
It provides for the joint liability of companies of the same
economic group, and does not free directors or managers from individual
liability. The provisions of Law 8,884/94 do not
apply to dumping and subsidies cases addressed in the Agreements Relating to
the Implementation of Article VI of the General Agreement on Tariffs and
Trade (GATT), promulgated by Decrees 93941 and 93962 of January 16 and 22,
1987.
The bodies
entrusted with carrying out the law in this case will be the Ministry of
Industry and Commerce and the Ministry of Treasury.
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All persons and entities, as well as those
that violate the country's laws or commit crimes abroad whose effects are
felt in, or intended to be felt in, Bolivia. (Constitution and Criminal
Code).
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Exceptions to the Scope of Aplication
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The provisions of Law 8,884/94 do not apply
to dumping and subsidies cases addressed in the Agreements Relating to the
Implementation of Article VI of the General Agreement on Tariffs and Trade
(GATT), promulgated by Decrees 93941 and 93962 of January 16 and 22, 1987.
The bodies entrusted with carrying out the law in this case will be the
Ministry of Industry and Commerce and the Ministry of Treasury. |
Any corporation providing telecommunications,
electricity, energy, transportation, or water, and those in other sectors
that are not included in the system, as well as those which, pursuant to
Article 19 (exclusions) are duly authorized to merge to contribute to
increased production or better distribution of regulated goods and services,
without eliminating competition in a substantial part of the affected
production. (Sectoral Regulation System Law). |
General Prohibitions
Acts and behaviors, of any type, related to
the production or trade of goods or services that limit, restrict or distort
competition or constitute abuse of dominant position in a market, in a
manner which may result in harm to the general economic interest are
prohibited and shall be penalized.
The procuring of significant competitive
advantages through the violation, declared to be such by administrative act
or final judgment, of other regulations is included in this article,
provided the conditions stated therein occur. (Article 1) |
Brazilian legislation prohibits any practice
aimed at restricting, limiting, or prejudicial to free competition,
dominating the relevant market of goods or services, arbitrarily increasing
profits, or abusively exercising dominant market position. |
Private economic power shall not be allowed
to accumulate to the extent that it endangers the economic independence of
the state. No form of private monopoly is recognized. When public service
concessions are granted, as an exception to this policy, they shall not be
for longer than 40 years. (Constitution, Article 134).
As provided in the
Constitution, no form of private monopoly is recognized. Activities of
production, domestic marketing, export, import, and financial services
cannot seek protected status from the government. They must operate in a
framework of economic efficiency and competition. (Investment Law, Article
14).
Except as provided in the applicable sectoral legal provisions,
corporations and other entities engaged in telecommunications, electricity,
energy, transportation, or water sectors and others that come under the
scope of this law shall operate in a manner that ensures free competition,
avoiding actions that prevent, restrict, or distort competition. (Sectoral
Regulation System Law, Article 15). |
Prohibited Conduct
The following behaviors constitute practices
that restrict competition:
a. Setting, determining or manipulating, directly
or indirectly, the sale or purchase price at which goods or services are
offered or demanded on the market, as well as exchanging information with
the same objective or effect.
b. Establishing obligations to produce,
process, distribute, purchase or market a single restricted or limited
quantity of goods, or providing a restricted or limited volume or frequency
of services.
c. Dividing up regions, markets, clients and sources of supply
in a cross-sectional manner.
d. Pre-arranging or coordinating bids in
tendering procedures or competitive bidding.
e. Pre-arranging the limiting
or control of technical development or of investments intended for the
production or marketing of goods and services.
f. Impede, hinder or bar
third persons from entering or remaining in a market, or excluding them
therefrom.
g. Setting, imposing or implementing, directly or indirectly in
any form, in agreement with competitors or individually, prices and
conditions for the purchase or sale of goods, delivery of services, or
production.
h. Regulating markets for goods or services, through agreements
to limit or control technological research and development, production of
goods or delivery of services, or to hinder investments intended for
production or distribution of goods or services.
i. Conditioning the sale of
one good on the purchase of another, or on the use of a service, or
conditioning the delivery of a service on the use of another or on the
purchase of a good.
j. Conditioning purchase or sale on not using,
purchasing, selling or supplying goods or services produced, processed,
distributed or marketed by a third party.
k. Imposing discriminatory
conditions for the purchase or transfer of goods or services without sound
reasons based on trade usages or customs.
l. Unjustifiably refusing to fill
specific orders for the purchase or sale of goods or services, made under
current conditions in the particular market. m. Suspend the supplying of a
service with a dominant monopolistic position in the market to a provider of
public services or of services in the public interest. n. Transfer goods or
supply services at prices below their cost without sound reasons based on
their trade usages and customs, for the purpose of displacing competition in
the market or causing harm to the image, patrimony, or value of the
trademarks associated with the suppliers of those goods or services.
(Article 2) |
All forms of conduct the objective or
potential effect of which, even if not attained, is to: 1) limit, falsify,
or prejudice free competition or free enterprise; 2) dominate the relevant
market of goods and services; 3) arbitrarily increase profits; 4) abusively
exercise dominant position.
The "rule of reason" is always applied to
determine what circumstances make out a prohibited form of conduct. There
are no per se offenses.
All forms of conduct, to be considered illegal,
should have, or have the potential to bring about, the anti-competitive
effects described above, independent of fault.
For example, the legislation
lists some forms of conduct which, if harmful to competition, entailing
market domination, arbitrary increase in profits, or abusive exercise of
dominant position, will be prosecuted.
These include collusive practices,
setting up barriers to the entry of competitors, setting prices and sales
conditions, discrimination among purchasers and suppliers, discriminatory,
predatory, or conditional agreements, and unjustified price increases or
imposition of excessive prices, such as:
1. setting or adopting prices and
conditions on the sale of goods or delivery of services, in agreement with
one's competition, in any form;
2. obtaining or influencing the adoption of
uniform or coordinated commercial conduct among competitors;
3. dividing up
the markets for finished or semi-finished goods or services, or the supply
of raw materials or intermediate goods;
4. limiting or impeding the access
of new firms to the market;
5. creating difficulties to the chartering,
operation, or development of a competing company or supplier, purchaser or
financier of goods or services;
6. impeding the access of competitors to
sources of inputs, raw materials, equipment, or technology, as well as
distribution channels;
7. demanding or granting exclusivity for
disseminating advertising in the mass media;
8. pre-arranging prices or
shifting advantages in public or administrative contests;
9. using deceitful
means to cause the prices of third parties to fluctuate;
10. regulating
markets of goods and services, entering into agreements to limit or control
technological research and development, the production of goods, or the
delivery of services, or to hinder investment in the production of goods or
services, or in their distribution;
11. imposing on distributors, retailers,
and representatives in the trade in goods and services prices for resale,
discounts, payment conditions, minimum or maximum amounts, profit margin, or
any other marketing conditions relating to transactions with third persons;
12. discrimination among purchasers and suppliers of goods or services by
differential price setting, or operating conditions of sales or the delivery
of services;
13. refusing to sell goods or deliver services under payment
conditions that are normal in terms of commercial uses and customs;
14.
hindering or interrupting the continuity or development of commercial
relations for an indeterminate term because of the other party's refusal to
accept unjustifiable or anti-competitive commercial clauses and conditions;
15. destroying, rendering unserviceable, or withholding from the market raw
materials, intermediate or finished goods, as well as destroying, rendering
unserviceable, or hindering the operation of equipment for producing,
distributing, or transporting such materials and goods;
16. withholding from
the market or impeding the exploitation of industrial or intellectual
property rights, or rights to technology;
17. abandoning, causing the
abandonment of, or destroying crops or plantations without showing just
cause; 18. selling merchandise below cost without justification;
19.
importing any goods below cost in the exporting country which is not a
signatory to the GATT antidumping and subsidies codes;
20. interrupting or
significantly reducing production, without showing just cause;
21. ceasing
the activities of the firm partially or completely without showing just
cause;
22. withholding production or consumption goods, except to guarantee
coverage of production costs;
23. conditioning sales of one good on the
purchase of another, or on the use of a service, or conditioning the
delivery of a service on the use of another or on the purchase of a good;
24. imposing excessive prices, or increasing the price of a good or service
without just cause.
In determining whether excessive prices are being
charged or prices unjustifiably raised, the following pertinent economic
circumstances and market factors will be considered, inter alia: (a)
the price of the product or service, or the elevation thereof, is not
justified by the behavior of the cost of the respective inputs or by the
introduction of
improvements in quality; (b) the price of the product
previously produced, in the case of a successor resulting from changes that
are not substantial; (c) the prices of similar products and services or the
trend therein, in comparable competitive markets;
(d) the presence of any
arrangement or agreement that results in an increase in the price of the
good or service, or the costs thereof. |
1. Cartels. Companies and entities that carry
out activities in sectors regulated by the present law are prohibited from
engaging in joint agreements, contracts, decisions, or practices whose
intent or effect is to prevent, restrict, or distort free competition by: a)
joint price-setting, directly or indirectly; b) the setting of quotas or
dividing control of production, markets, supply sources, or investments; or
c) the carrying out of other similar anti-competitive practices. (Sectoral
Regulation System Law, Article 16).
2. Abusive practices. Companies or
entities subject to regulation under this law are enjoined from abusive
practices that have the intent or effect harming competitors, clients, and
users, resulting in non-competitive situations in one or more markets. Such
abusive practices may include: a) the direct or indirect fixing of sale or
purchase prices or other unfair trading practices; b) restraint on
production, sources of supply, markets, or technical development, to the
detriment of consumers; c) the application of discriminatory conditions for
similar operations, which put clients and users at a disadvantage; d) making
contracts contingent upon the party's acceptance of additional obligations
that by their nature, or in accordance with commercial practice, are not
relevant to the purpose of the contracts; e) requiring that someone
soliciting a regulated service become a partner or shareholder. (Sectoral
Regulation System Law, Article 17). |
Exceptions to Prohibited Practices
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Brazilian legislation makes an express
exception to cornering the market as the result of a natural process based
on the greater efficiency of economic actors.
It also allows the
Administrative Council for Economic Defense (CADE) to authorize acts,
whatever form they may take, that may limit or harm the competition or
result in the domination of relevant markets for goods and services.
This
authorization of the CADE, however, is subject to the following conditions:
1. The acts should have as their objective, cumulatively or alternatively,
increasing productivity, improving the quality of goods and services, or
promoting efficiency and technological or economic development.
2. The
resulting benefits should be distributed equitably between the participants
and the consumers, or end users.
3. The authorization should not entail
eliminating a substantial part of the relevant market for goods and
services.
4. They should observe the limits strictly necessary for attaining
the objectives sought.
In addition, acts that are necessary because of
prevailing concerns related to the national economy or the common good, if
at least three of these conditions are met and no harm results to the
consumer or end user. |
Public service concessions, granted as an
exception to policy, may not be for a period longer than 40 years.
(Constitution, Article 134).
With Congressional approval, the Executive
Branch can establish a state monopoly for certain exports, if this is in the
national interest. (Constitution, Article 147).
When so decided by the
Sectoral Superintendent, through the corresponding resolution, the
prohibition provided in this law shall not apply to mergers that contribute
to increasing the production or improving the distribution of regulated
goods and services or to stimulation of technical or economic progress for
the benefit of consumers and users without eliminating competition in a
substantial part of the affected production. (Sectoral Regulation System
Law). |
Economic Concentrations (Mergers, Acquisitions, Joint Ventures)
Economic concentration is understood to mean
the taking of control of one or more enterprises through the following acts:
a. Merger between enterprises;
b. Transfer of business assets;
c. The
purchase of property or any right to shares or other equity that confer any
type of right that is convertible to shares or other equity, or having any
influence on decisions of the person issuing these, when such purchase gives
the purchaser substantial control of, or influence over that person;
d. Any
other agreement or act that transfers to a person or economic group, either
artificially or legally, shares of an enterprise or gives that
person/economic group deciding influence in making ordinary or extraordinary
administrative decisions of an enterprise. (Article 6)
e. Economic
concentrations whose purpose or effect is or could be to reduce, restrict or
distort competition in a way that could harm the general economic interest
are prohibited. (Article 7) |
Brazilian legislation provides for controls
on all acts and contracts that may limit or in any way harm free competition
or result in the dominance of relevant markets of goods or services.
These
acts include those expressly aimed at any type of economic concentration, be
it through merger or incorporation of firms, chartering of corporation or
partnerships to exercise control of a firm, or any type of corporate
organization.
It requires measurement of market share by all companies or
groups of companies with more than a 20% share in the relevant market, or
gross annual receipts of at least R$ 400,000,000.00 (four hundred million
reals) on record for any market participants.
Notification can be a priori
or a posteriori, within a maximum term of 15 working days after the
transaction.
Oversight is exercised by the Administrative Council for
Economic Defense (CADE), which may authorize acts involving economic
concentration if it deems justified the increased economic efficiencies
invoked by the participants and the advantages to the consumers or end
users, so long as it does not eliminate a substantial part of the relevant
market, and abides by the limits strictly necessary for attaining the
objectives sought with the operation.
The efficacy of the acts submitted to
the CADE for review is conditioned on its approval, in which case it will be
retroactive to the date they were effectuated. If not reviewed by the CADE
in the time period established by law, they will automatically be considered
approved.
The approval may be reviewed if the decision is based on false or
deceitful information provided by the interested persons, if there is
non-compliance of any of the obligations assumed, or if the benefits sought
were not attained.
In case of non-approval, the acts not carried out subject
to suspension, or if they have already had effects on third persons,
including physical persons, the CADE will determine the appropriate measures
to undo them in their entirety, or in part. |
Private economic power shall not be allowed
to accumulate to the extent that it endangers the economic independence of
the state. No form of private monopoly is recognized. When public service
concessions are granted, as an exception to this policy, they shall not be
for longer than 40 years. (Constitution, Article 134).
As provided in the
Constitution, no form of private monopoly is recognized. Activities of
production, domestic marketing, export, import, and financial services
cannot seek protected status from the government. They must operate in a
framework of economic efficiency and competition. (Investment Law, Article
14).
Companies incorporated in the country, state enterprises, including
independent companies and citizens or foreigners resident or represented in
the country, may associate with each other in joint ventures for any
activity permitted under law. (Investment Law, Article 17).
Merger of
competitive companies and entities subject to regulation under this law
shall be prohibited if it would result in establishment, encouragement, or
consolidation of a dominant position in a given market.
For the purpose of
this law, a company or entity shall be considered to have a dominant
position in the market if it is the only buyer or seller of a given type of
regulated goods or services, or if not the only one, it lacks substantial
competition in the market. (Sectoral Regulation System Law, Article 18). |
Enforcement Bodies
Enforcement Authority
The National
Commission for the Defense of Competition [Tribunal Nacional de Defensa de
la Competencia] is hereby established as an autonomous body under the
nation’s Ministry of Economy and Public Works and Services for the purpose
of enforcing and monitoring compliance with Law 25.156. It shall be
headquartered in the city of Buenos Aires, but may act, be constituted and
meet at any location in the nation, through delegates designated by the
Commission’s Chair. The examining magistrates may be national, provincial or
municipal officials. (Article 17).
The National Commission for the Defense
of Competition shall be composed of seven members with adequate backgrounds
and qualifications to hold the post, of which at least two shall be
attorneys and two others professionals in economic sciences, all with more
than five years of practice in their respective professions. The members of
the Commission shall, except for teaching activities, dedicate their time
exclusively to these responsibilities. (Article 18)
The members of the
Commission shall be appointed by the national executive branch after public
competition that takes account of background and comparative qualifications.
(Paragraph from Article 19)
Members of the Commission shall serve for six
years. These posts shall be renewable on a partial basis every three years
and members may be reappointed through the procedures established in the
preceding article. (Paragraph from Article 20) |
The implementing agencies of Law No. 8,884/94
are:
1. CADE, a collegial body with an adjudicative function and
jurisdiction throughout the national territory, established by Law 4,237 of
September 10, 1962, and which became an autonomous federal government agency
linked to the Ministry of Justice, by force of the above-mentioned law (Law
No. 8.884/94).
2. The Secretariat for Economic Law (SDE), an organ for the
preparation, investigation, and oversight, a decentralized body of the
Ministry of Justice, established by Law 8,158 of January 8, 1991, and the
Secretariat for Economic Monitoring (SEAE) of the Ministry of Treasury.
3.
As regards the attributes of the organs that make up the system for the
defense of competition, administrative proceedings begin in the SDE/MJ,
which during the investigative phase receives technical support from the
SEAE/MF. They are only valid on a definitive basis once the conclusions of
the SDE/MJ are confirmed by the CADE. |
1. Common courts in the case of
constitutional provisions and foreign investment provisions.
2. Office of
the General Superintendent of the Sectoral Regulation System in the case of
the Sectoral Regulation System law. |
Enforcement Bodies / Structure
| |
The organizational structure of the SDE is as
follows:
1.Office of the Secretary, consisting of three Coordinating
Offices:
-Coordinating Office for Legal Affairs
- which prepares legal
opinions on matters to be submitted to the Secretary;
-Coordinating Office
for Administrative Affairs - coordinates the Secretariat's financial and
administrative affairs.
-Coordinating Office for Interagency Liaison -
handles relations between the Secretariat and other government agencies, the
Congress, and international bodies.
2. Department of Economic Protection and
Defense, responsible for enforcing Law No. 8,884/94 (Law on Protection of
Competition). This department consists of:
a) General Coordinating Office
for Legal Affairs; b) General Coordinating Office for Market Intervention;
c) General Coordinating Office for Prohibited Practices.
3. The Department
of Consumer Protection and Defense, responsible for enforcing Law No.
8,078/90 (Consumer Protection Code) is structured as follows:
a) General
Coordinating Office for Legal Affairs;
b) General Coordinating Office for
Inspection and Oversight; c) General Coordinating Office for Consumer
Relations
4. The Office of the Inspector General, which performs the
preliminary analysis of cases to be submitted to the departments of economic
protection and defense and consumer protection and defense, and which has
five regional inspectorates, is responsible for coordinating the affairs of
the Economic Law Secretariat in the states.
The CADE is structured as
follows: A Plenary Council, composed of six councilmen and one chairperson;
An Office of the Prosecutor, chiefed by an attorney general. |
|
Enforcement Bodies / Powers or Functions
The National Commission for the Defense of
Competition shall have the following functions and powers:
a. To conduct
market studies and research that it considers relevant.
b. To hold hearings
with those allegedly responsible, claimants, victims, witnesses and experts,
and to take statements from them and order confrontations, for which it may
request the assistance of the police.
c. To carry out necessary tests on
books, documents and other elements pertinent to the investigation, monitor
supplies, and verify the origin and cost of raw materials or other goods.
d.
To impose sanctions established by Law 25.156.
e. To promote study and
research on competition. f. When it considers it relevant, to issue opinions
in the area of competition and free competition, with regard to laws,
regulations, circulars and administrative acts, without such opinions being
binding.
g. Issue recommendations of a general or sectoral nature regarding
modalities of competition in the markets.
h. Act with the competent units in
negotiating treaties, international accords or agreements on regulations or
policies related to free competition. i. Prepare its internal regulations,
which shall establish, among other things, the method for selecting the
Chair, and the term thereof, who shall serve as the Commission’s legal
representative.
j. Organize the National Competition Registry, created by
Law 25.156.
k. Promote and encourage actions before the court, for which
purpose it shall appoint a legal representative.
l. Suspend the time periods
of Law 25.156 through reasoned ruling.
m. Gain access to locations to be
inspected, with the consent of the occupants or through judicial order.
n.
Request from the competent judge the precautionary measures it deems
relevant, which shall be resolved within 24 hours;
o. Sign agreements with
provincial or municipal agencies for authorizing provincial offices to
receive complaints;
p. The Chair of the Commission is charged with carrying
out the agency’s administrative functions, and may hire staff to carry out
specific or special tasks which can not be carried out by the regular staff,
setting the work conditions and pay.
q. Sign agreements with associations of
users and consumers to promote the participation of community associations
to defend competition and the transparency of markets. (Article 24 )
|
The plenary council of CADE
(Administrative Council for Economic Defense) is to:
1. ensure the
observance of Law 8,884/94 and its regulations, and of the By-laws of the
Council;
2. decide on where there has been an infraction of the economic
order, and apply the penalties provided for by law; 3. decide on the
proceedings initiated by the Secretariat for Economic Law of the Ministry of
Justice;
4. decide on the motions brought, sua sponte, by the Secretary of
the SDE; 5. order measures aimed at bringing an end to the infraction
against the economic order within the time period it determines;
6. approve
the terms of the commitment to end the practice, or the commitment to
perform, and to determine that the SDE should oversee compliance;
7. review,
on appeal, the preventive measures adopted by the SDE or by the
Counselor-Rapporteur;
8. Inform the interested parties of its decisions;
9.
request information of any public or private person, organ, authority, and
entity, respecting and maintaining legal secret when appropriate, as well as
to determine the proceedings that may become necessary in the performance of
its functions;
10. request of the organs of the federal executive, and of
the authorities of the states, municipalities, federal district, and
territories, the measures necessary to carry out this law;
11. oversee the
administration of examinations, inspections, and studies, approving in each
case procedural costs that must be paid by the company, if it should come to
be penalized under the law;
12. review the acts or conduct, however
manifested, subject to approval pursuant to Article 54, setting the
commitment to comply when appropriate;
13. request that the judiciary
enforce its decisions, in the terms of this law; 14. request services and
personnel of any organ or entity of the federal government;
15. determine,
in the case of the CADE counsel, the adoption of administrative and judicial
measures;
16. sign contracts and agreements with national organs or
entities, and submit beforehand to the Ministry of Justice those that should
be entered into with foreign or international bodies; 17. respond to
consultations on the subject matter of its competence;
18. instruct the
public on ways in which one can commit an infraction against the economic
order.
The SDE (Secretariat for Economic Law) has the competence to:
1. ensure compliance with the law, monitoring and studying market practices;
2. monitor, on an ongoing basis, the commercial activities and practices of
physical or juridical persons who held a dominant position in the relevant
market of goods or services to prevent infractions of the economic order, to
which end it may request the necessary infractions and documents,
maintaining legal secrecy, when appropriate;
3. proceed, when there are
indications of an infraction of the economic order, to preliminary inquiries
for bringing an administrative action;
4. decide that the indicia are not
substantive, and so close the record in the preliminary inquiry;
5. request
information from any persons, organs, authorities, and entities, public or
private, maintaining legal secrecy when appropriate, and determine the
procedures necessary for the performance of its duties;
6. bring an
administrative action to investigate and punish infractions of the economic
order;
7. recur sua sponte to the CADE when it decides to close a
preliminary inquiry or administrative proceeding;
8. transmit to the CADE,
for judgment, the proceedings that it initiates, when it understands a case
has been made suggesting an infraction of the economic order;
9. enter into
an agreement to cease, in the conditions it establishes, submitting it to
the CADE, and overseeing its implementation;
10. suggest to the CADE
conditions for entering into a commitment to comply, and oversee its
implementation;
11. adopt preventive measures that lead to the cessation of
the practice that constituted the infraction of the economic order, setting
the deadline for its implementation and the amount of the daily fine to be
imposed in case of continued non-compliance;
12. receive and investigate the
cases to be judged by the CADE, including consultations, and oversee
implementation of the decisions adopted by the CADE;
13. give guidance to
the organs of the public administration regarding the adoption of measures
necessary for carrying out the law;
14. undertake studies and research with
a view to orienting the policy for prevention of infractions of the economic
order;
15. instruct the public on the various ways of committing infractions
against the economic order, and the ways to prevent and prosecute them;
16.
examine beforehand consultations regarding acts that result in greater
concentration.
The SEAE (Secretariat for Economic Monitoring) has the
following competencies:
In the area of defending competition, and
without prejudice to its other attributes under the Ministry of the
Treasury:
1. to prepare technical opinions on transactions resulting in
economic concentration and, at its discretion, in cases of abusive conduct
it may issue an opinion on the matters in which it is specialized;
2. to
verify the existence of indicia of the occurrence of an unjustified increase
in prices, or imposition of excessive prices, and communicating its reasoned
findings to the SDE/MJ, which will determine whether to initiate an
administrative proceeding; and,
3. to request information of any person,
organ, authority, or entity, public or private, maintaining legal secrecy
when appropriate, so long as it is necessary for the performance of its
duties. |
The Office of the General Superintendent of
the SRS has the following duties:
a) to consider and rule on appeals
challenging decisions of the Sectoral Superintendents, sectoral legal
provisions and procedural rules; b) to monitor and issue findings on the
efficiency and effectiveness of the work of the Sectoral Superintendents,
and exercise due control over persons or entities that undertake regulated
activities under this law and the sectoral legal rules; c) to consider and
rule on matters referred to it by the Sectoral Superintendents; it may not
consider other matters on its own initiative or at the direct request of an
interested party; d) to adopt the necessary administrative and disciplinary
measures so the Sectoral Superintendents can carry out their duties pursuant
to this law, the sectoral legal rules, and applicable general law, free from
improper influence from any source. (Sectoral Regulation System Law, Article
7). |
Administrative Procedures
Administrative and/or Judicial Procedures
The procedure shall be started at its own initiative or as a result of a
complaint from any public or private natural or juridical person. (Article
26)
All terms in Law 25.156 shall be calculated in administrative work days.
(Article 27)
a. The complaint shall contain:
b. The name and domicile of the
presenter;
c. The reason for the complaint, stated precisely;
d. The facts
on which it is based, explained clearly;
e. Brief statement of the legal
basis. (Article 28)
Where the procedure is begun on the Commission’s own
initiative, a report on the facts and basis for the action shall be
provided. (Paragraph from Article 29)
Once arguments have been heard, or
when the time period has expired, the Commission shall rule on the
admissibility of the preliminary investigation. (Article 30)
If the
Commission considers the reasons satisfactory, or if, once the investigation
is completed, there is insufficient basis to proceed, the case shall be
shelved. (Article 31)
Once the preliminary investigation has been completed,
the Commission shall notify those against whom the allegation has been made,
so that they may, within 15 days, present a defense and offer any evidence
they consider relevant. (Article 32)
The decisions of the Commission
regarding evidence are unappealable. (Article 33)
The Commission’s ruling
represents the final administrative remedy. (Article 34) The National
Commission for the Defense of Competition shall decide to call for a public
hearing when it considers it appropriate to the progress of the
investigation. (Article 38) Any person who makes a false complaint shall be
subject to the sanctions envisaged in Article 46(b) of Law 25.156, when the
person making the complaint has used false information or documents for the
purpose of harming competition, without prejudice to any other civil and
criminal actions that may be appropriate. (Article 45) |
The prevention, investigation, and
prosecution of practices that hinder competition, based on Law 8,884/94, are
administrative acts.
The proceedings are initiated by the Secretariat
for Economic Law, sua sponte, upon complaint lodged by a third person
alleging injury or, in the case of acts subject to control, by the
interested parties. The SDE/MJ is responsible for the investigative stage of
the administrative proceedings, which include a technical opinion of the
SEAE/MJ, and forwards the record to the CADE for final decision.
The
decisions of the CADE, while not subject to review in the Executive branch,
may be reviewed by the Judiciary.
The administrative proceedings for
investigating and prosecuting infractions of the economic order provided for
in Law 8,884/94 are as follows:
Preliminary Inquiry:
The SDE will
undertake the preliminary inquiry sua sponte, or upon written and justified
representation of any interested person; none of the information so
collected will be disseminated when the indicia of an infraction of the
economic order are not sufficient to initiate an administrative proceeding
immediately.
In the preliminary inquiry, the Secretary of the SDE may adopt
any of the measures indicated in Law 8,884/94, including requesting
clarification of the information provided from persons subject to
investigation.
Once the preliminary inquiry is concluded, the Secretary of
the SDE has 60 days to decide whether to initiate an administrative
proceeding or whether to close the case; in the latter case, it shall recur,
sua sponte, to the CADE.
Where the petition is brought by the Committee of
the National Congress, or by any of its chambers, there is no need for a
preliminary inquiry, and the administrative proceeding is initiated
forthwith.
Administrative Proceedings
An administrative proceeding
will be initiated within a period no longer than eight days, counted from
the time the fact was reported, from the representation, or from the closing
of the preliminary inquiry, by reasoned order of the Secretary of the SDE,
which will specify the facts to be investigated.
The party represented will
be notified to present its defense within 15 (fifteen) days.
The initial
notification will include the entirety of the order to initiate an
administrative proceeding and the representation, as appropriate. The
initial notification will be by mail, with acknowledgement of receipt in
one's own name, or, if notification by mail is not successful, by edict
published in the Official Gazette (Diário Oficial da União) and in a large
circulation newspaper in the state in which the person in question resides
or is based; the deadlines will be counted from the time the acknowledgement
of receipt is attached, or from its publication, as the case may be.
Notice
of the other procedural acts will be by publication in the Official Gazette,
and should include the name of the person represented and of his or her
attorney.
The person represented may participate in the administrative
proceeding through its owner and its directors or managers, or through
legally qualified attorneys, who are ensured full access to the proceedings
in the SDE or the CADE.
A represented person who, once notified, does not
present any defense in the legal time period, shall be considered in
default, and shall be deemed to have confessed as to the facts, and all the
time periods shall be considered to run, independent of notification.
Whatever the phase of the proceeding, the defaulter may participate, without
the right to repetition of any act already performed.
Once the term for
presenting the defense has lapsed, the SDE shall determine the procedures to
follow and the production of evidence of interest to the Secretariat, as it
has the authority to request of the representative of any natural or
juridical person, organ, or public entity, information, clarifications, or
documents to be presented within fifteen days, maintaining legal secrecy as
appropriate.
The proceedings and evidence determined by the Secretary of the
SDE, including examination of witnesses, will be concluded within forty-five
days, which can be extended for a like period in case of justified need. The
federal authorities, directors of federal autonomous entities, foundations,
public companies, and mixed corporations, lest a determination of liability
be rendered against them, shall provide all the assistance and cooperation
requested of them by the CADE or the SDE, including preparing technical
opinions on the matters of their competence.
The person represented shall
present the evidence of its interest within the maximum term of forty-five
days counted from presentation of the defense, and may submit new documents
at any time prior to the conclusion of the investigative stage of the
proceedings.
The person represented may request the Secretary of the SDE to
designate a day, time, and place for hearing witnesses, if there are no more
than three.
The Secretariat for Monitoring the Economy, of the Ministry of
the Treasury, will be informed ex oficio of the initiation of the
administrative proceeding so that, if it so wishes, it may issue an opinion
on the matter of its specialization, which shall be presented prior to the
conclusion of the investigative phase of the proceeding.
Once the
investigative stage of the proceeding is concluded, the person represented
will be notified to present final arguments, within five days, after which
the Secretary for Economic Law, in a detailed report, will decide either to
forward the record to the CADE for judgment, or to close the case, recurring
ex-officio to the CADE in the latter case.
The preliminary inquiry and the
administrative proceeding should be conducted and concluded in the shortest
possible time that is compatible with clarifying the facts; the Secretary of
the SDE and the members of the CADE, as well as the staff and officers of
these organs shall so proceed, lest they be found liable for not doing so.
On the Preventive Measure and the Order to Cease: At any stage of the
administrative proceeding, the Secretary of the SDE or the
Counselor-Rapporteur of the CADE, at his own initiative or prompted by the
Prosecutor-General of the CADE, may adopt a preventive measure when there is
an indication or a well-founded concern fear that the person represented is
causing or may cause harm to the market, directly or indirectly, that is
irreparable, difficult to repair, or that would render the final outcome of
the proceeding ineffective.
In the case of a preventive measure, the
Secretary of the SDE or the Counselor-Rapporteur of the CADE will order the
immediate cessation of the practice, and will order, when materially
possible, reversion to the situation ex ante, setting a daily fine in the
case of non-compliance, in the terms of Law 8,884/94. There may be a
voluntary appeal of this decision, within a period of five days, to the
plenary of the CADE, without suspending its effect.
On the Commitment to
Cease: At any phase of the administrative proceeding the CADE or the
SDE, ad referendum of the CADE, may enter into a commitment to cease the
practice under investigation, which shall not be construed as a confession
as to the facts, nor acknowledgement that the activity under investigation
is wrongful. The proceeding will be suspended so long as the commitment to
cease is fulfilled, and will be closed at the conclusion of the term set, if
all the conditions established are met.
The commitment to cease constitutes
prima facie evidence; it is executed immediately in the case of
non-compliance or if obstacles are placed in the way of its oversight, as
prescribed in Law 8,884/94.
Judgment of Cases before the CADE
Once a
case is received, the Chairman of the CADE will distribute it, by lot, to
the Counselor-Rapporteur, who will submit it to the CADE counsel, who in
turn is to submit a statement within 20 days.
The Counselor-Rapporteur may
decide to undertake complementary proceedings or request new information,
pursuant to Article 35, as well as authorize the party to produce new
evidence when he finds the information in the record insufficient to form
his views.
Upon the Chairman's invitation, by indication of the Rapporteur,
any person may submit additional information to the CADE regarding the
matters in the case file before it.
In the act of judgment in plenary, the
date of which shall be conveyed to the parties with at least five days
anticipation, the CADE counsel and the represented person or his attorney
shall have, respectively, the right to speak for 15 minutes each.
The
decision of the CADE, which shall set forth its reasoning, whatever the
decision, shall contain the following elements when including a finding of
infraction of the economic order:
1. specification of the facts that
constituted the infraction found and an indication of the measures to be
adopted by the persons responsible for making it stop;
2. a time period
within with the measures referred to in the previous section should be
initiated and concluded;
3. stipulated fine;
4. daily fine in the case of an
ongoing infraction.
The decision of the CADE shall be published within five
days in the Official Gazette.
If the decision is not carried out, in full or
in part, the Chairman of the CADE will be informed of said non-compliance,
and order the CADE counsel to prepare its judicial execution.
The decisions
of the CADE shall be made by absolute majority, with the presence of at
least five members. The decisions of the CADE shall not be appealable in the
Executive branch; the decisions shall be executed, and shall immediately be
communicated to the Office of the Attorney General for whatever other
measures may be within its powers.
The Regulation and By-laws of CADE shall
set forth complementary provisions on the administrative proceeding. |
1. The common procedures established in the
Constitution, the Criminal Code, and the Investment Law.
2. To consider and
process complaints filed by users, regulated companies and entities, and
competent state organs concerning activities within the jurisdiction of the
SRS. (Sectoral Regulation Law, Article 10). |
Judicial Procedures
| |
Judicial Proceedings may be civil or
criminal.
The decisions of the CADE, while not subject to review in the
Executive branch, may be reviewed by the Judiciary.
- Decisions of the
plenary of the CADE imposing fines or imposing an obligation to do or not to
do a given act, constitute prima facie evidence. Where the sole purpose of
execution is to collect a monetary fine, it shall proceed pursuant to the
provisions of Law 6,830 of September 22, 1980.
Where the purpose of the
execution is not only collecting fines, but also entailing an obligation to
act or not act, the Judge shall grant the specific oversight of the
obligation, or shall determine measures that assure the practical result
equivalent to that of payment.
Execution shall be by all means, including by
intervention in the firm, when necessary.
The execution of the decisions of
the CADE shall be sought in the Federal Courts in the domicile of the person
against whom they are executed.
In view of the gravity of the infraction of
the economic order, and having set forth the grounds of irreparable damage,
or damage for which reparation is difficult, even if there has been a
deposit of the fines and a bond has been put up, the Judge may immediately
adopt, in full or in part, the measures stemming from the decision of the
plenary.
The process of executing the decisions of the CADE will have
preference over all other types of action, except habeas corpus and the
mandato de segurança.
- In addition to the review of the decisions of
the CADE, and to judicial execution of these decisions, actions may be
brought for civil liability for damages caused to the economic order,
regulated by Law No. 7,347 of July 24, 1985, as amended by the single
paragraph of article 88 of Law 8,884 of June 11, 1994. The law includes a
provision whereby the persons damaged may sue for compensation for losses
and damages, in civil court.
Said compensation, in addition to the fines
paid administratively in the ambit of defending the economic order, also
includes resources to be collected by the Fund for the Defense of Diffuse
Rights (FDD), whose Managing Council is situated in the SDE/MJ; it is
presided over the by secretary and vice-chairman or chairman of the CADE.
In
the criminal sphere, the definition and prosecution of crimes against the
economic order is regulated by Law 8,137 of December 27, 1990, which is
under the competence of the Attorney General's Office. |
Those established in the common system. |
Administrative or Judicial Sanctions
Natural or juridical persons not complying
with the provisions of Law 25.156 shall be subject to the following
sanctions:
a. Cessation of acts or behaviors envisaged in Chapters I and II
(Prohibited Practices and Dominant Position) and, as appropriate, the
elimination of their effects;
b. Those carrying out acts prohibited in
Chapters I and II and in Article 13 of Chapter III (Concentrations and
Mergers) shall be sanctioned with a severe fine. (That fine is stipulated in
Article 46)
c. Without prejudice to other sanctions that may be appropriate,
when it is verified that there have been acts constituting abuse of dominant
position or when it is established that a monopolistic or oligopolistic
position has been acquired or consolidated, in violation of the provisions
of Law 25.156, the Commission may impose conditions aimed at neutralizing
elements that distort competition, or may request of the competent judge
that the violating enterprises be dissolved, liquidated, or broken up;
d.
Those who fail to comply with the provisions of Articles 8, 35 and 36 shall
be subject to a fine of up to Arg$1 million per day. (Article 46)
Juridical
persons are liable for behaviors by natural persons who have acted on behalf
of, with the help of, or for the benefit of such juridical person, even when
the act that was the basis of the representation was without effect.
(Article 47)
Where the violations envisaged in the Law on Protection of
Competition are committed by a juridical person, the fine shall also be
applied jointly and severally to directors, managers, administrators,
trustees or members of the oversight committee, leaders or legal
representatives of such juridical person who, by their action or through
failure to carry out their responsibilities for control, surveillance or
monitoring, have contributed to, encouraged or permitted the violation to be
committed. (Article 48)
In imposing fines, the Commission shall consider the
seriousness of the violation, the harm caused, evidence of intentionality,
the violator’s market share, the size of the affected market, the duration
of the practice or concentration and the recidivism or background of the
responsible party, as well as that person’s economic capacity. (Article 49)
Persons who obstruct or impede the investigation or fail to comply with the
requirements of the Commission may be sanctioned with fines of up to Arg$500
per day. (Article 50)
Natural or juridical persons harmed by acts prohibited
by Law 25.156 may effect compensation for damages and injury, pursuant to
the standards of common law, before the judge competent in the matter.
(Article 51) |
In Brazilian legislation the sanctions for
infraction of the economic order are monetary, and also imply obligations to
act or to refrain from acting.
Among the penalties imposed by Law No.
8,884/94 is the fine imposed on companies and on managers.
Without prejudice
to pecuniary sanction, the following penalties may also be imposed, alone or
cumulatively:
- publication in the press of a synopsis of the decision
imposing liability;
- prohibition on contracting with public organs for five
years;
- non-concession of the dividing up taxes;
- canceling tax incentives
or public subsidies;
- granting of obligatory license for patents owned by
the infractor;
- break-up of the company, sale of assets, partial cessation
of activities, or transfer of corporate control;
- entry of the infractor in
the National Register for Consumer Defense.
Whether imposing a fine or an
obligation to act, the decision of the plenary of the CADE constitutes prima
facie evidence; implementation of the respective decision of the plenary can
be compelled by judicial action.
Where the sole purpose of execution is to
charge a monetary fine, execution will be in the terms of Law 6,830 of
September 22, 1980, which governs the judicial collection of debts
outstanding to the public treasury.
Where implementation has as its purpose
fulfillment of an obligation to act or refrain from acting, the judge will
grant a specific order to ensure the obligation is executed or will
determine the measures to be adopted for the payment of the obligation, and
may also, where it is impossible to obtain the practical results sought,
substitute compensation for the judicial judgment to act or not act, without
prejudice to the fine applied.
Judicial execution of the decision of the
CADE may go as far as intervention in the company, based on a judicial
decree, in cases in which such a measure is necessary to make possible
specific execution.
The criminal sanction, for imposing a monetary fine and
detention, is limited to the scope of application of the Attorney General's
Office in the cases under the criminal laws and to the Code of Criminal
Procedure. |
|
Recourse or Appeal
Commission rulings that may be appealed are
those that order:
a. The application of sanctions.
b. The cessation of a
behavior or abstention from committing a behavior. c. Opposition to or
conditioning of acts envisaged in Chapter III of Law 25.156. d. The
dismissal of the complaint by the Commission for the Defense of Competition.
Appeals envisaged in subparagraph (a) shall be granted with suspensive
effect, and those envisaged in subparagraphs (b), (c) and (d) shall be
granted with devolutive effect. (Article 52)
Appeals shall be lodged, and
reasons for the appeal presented to the National Commission for the Defense
of Competition within 15 days of notification of the ruling. That Commission
shall, within 5 days of the lodging of the appeal, transmit the proceeding
to the appropriate Federal Court. (Article 53)
The Commission may at any
stage of the proceeding mandate compliance with conditions establishing or
ordering the cessation of the injurious behavior or abstention from
committing such behavior. Where serious harm to the competition regime could
result, it may order measures that, according to the circumstances, are most
likely to prevent such harm. This ruling may be appealed with devolutive
effect, in the manner and under the terms envisaged in Articles 52 and 53.
Likewise, it may, on its own initiative, or at the request of a party,
suspend, modify or revoke measures provided by virtue of mitigating
circumstances or circumstances that could not be known at the time of their
adoption. (Article 35). |
The decisions of the CADE are not subject to
review in the Executive branch; their judicial execution follows immediately
upon a decision. The Attorney General's Office should be informed of this
decision so as to adopt the appropriate measures within its powers.
Nonetheless, the Judiciary, through the federal courts, may review the
decisions of the CADE.
Remedies and appeals in such cases are to the
Superior Tribunals. |
Appeals regarding unconstitutionality,
redress, and nullity. |
|
Canada |
Colombia |
Costa Rica |
Regulatory Framework
| |
1. Constitution of 1991, Articles 333 and
334.
2. Decree Law No. 2153 of 1992, which restructured the Superintendency
of Industry and Commerce.
3. Decree No. 1302 of 1964, which regulated Law
155/59 on restrictive trade practices.
4. Law No. 155/59 on restrictive
trade practices. Article 4 of this Law was amended by Article 118of Decree
2666 of 2000.
5. Decision 285 of the Commission of the Cartagena Agreement,
with Rules for Prevention or Correction of Distortion in Competition Caused
by Practices that Restrict Free Competition. |
1. Political Constitution of the Republic,
Article 46.
2. Law No. 7472 on Promotion of Competition and Effective
Consumer Defense of December 20, 1994. Published in the Federal Register of
January 19, 1995.
3. Unforeseen circumstances may, in addition, be subject
to provisions of the General Law No. 6227 on Public Administration of May 2,
1978. Published in the Federal Register of May 30, 1978 (hereinafter
referred to as “General Law”).
4. Executive Decree No. 25234-MEIC,
containing the Regulations of the Law on Promotion of Competition and
Effective Consumer Defense, 25 January 1996. Published in the Federal
Register on July 1, 1996 (hereinafter referred to as “Regulations”).
5. Law
No. 3367 on the Regulation of Judicial Proceedings: Executive Act of 12
March 1966. Published in the Federal Register on April 17, 1966 (hereinafter
referred to as the “Regulations Law”).
6. Law No. 7983 on Protection to
Workers, February 16, 2000 (article 47). |
Objectives of the Law
| The purpose of the Competition Act is to
maintain and encourage competition in Canada in order to promote the
efficiency and adaptability of the Canadian economy, in order to expand
opportunities for Canadian participation in world markets while at the same
time recognizing the role of foreign competition in Canada, in order to
ensure that small and medium-sized enterprise have an equitable opportunity
to participate in the Canadian economy and in order to provide consumers
with competitive prices and product choices. (Section 1.1). |
To ensure compliance with the provisions on
the promotion of competition and restrictive trade practices in domestic
markets in order to accomplish the following goals: to improve the
efficiency of the national production system; to ensure that consumers have
free choice and access to markets of goods and services; to ensure that
enterprises may participate freely in the market; and to ensure that there
is a variety of prices and qualities of goods and services in the market.
(Article 2 (1) of Decree No. 2153/92). |
The law establishes that its objectives are:
a. Effectively protect the rights and legitimate interests of the consumer;
b. Monitoring and promotion of the process of competition and free
enterprise.
Article 1, referred to above, establishes the following
objectives, with a view to achieving the purpose of promoting competition:
a. The prevention and prohibition of monopolies, monopolistic practices, and
other restraints on efficient market operation;
b. The elimination of
unnecessary regulations affecting business. (Article 1) |
Scope of Application
| Apart from certain exceptions outlined below,
the Competition Act applies to business in all sectors of the Canadian
economy. The Competition Act is binding on and applies to an agent of Her
Majesty in right of Canada or a province that is a corporation, in respect
of commercial activities engaged in by the corporation in competition,
whether actual or potential, with other persons to the extent that it would
apply if the agent were not an agent of Her Majesty. (Section 2.1).
|
Encompasses the domestic market and any
natural or juridical person carrying out independent economic activity,
regardless of the legal form or nature of same. (Article 2 (1) of Decision
2153/92). |
The legal provisions concerning the promotion
of competition apply to all economic agents. (Article 9).
In the market, any
person or public or private legal entity engaged in any type of economic
activity as a buyer, seller, requester, or provider of goods or services, in
their own name or on behalf of others, regardless of whether they are
imported or domestic or whether they have been produced or provided by him
or by a third party. (Article 2). |
Exceptions to the Scope of Application
Nothing in the Competition Act applies in
respect of:
a. Combinations or activities of workmen or employees for their
own reasonable protection as such workmen or employees;
b. Contracts,
agreements or arrangements between or among fishermen or associations of
fishermen and persons or associations of persons engaged in the buying or
processing of fish relating to the prices, remuneration or other like
conditions under which fish will be caught and supplied to those persons by
fishermen; or
c. Contracts, agreements or arrangements between or among two
or more employers in a trade, industry or profession, whether effected
directly between or among the employers or through the instrumentality of a
corporation or association of which the employers are members, pertaining to
collective bargaining with their employees in respect to salary or wages and
terms or conditions of employment. (Section 4(1)).
Nothing in section 4.1
exempts from the application of any provision of the Competition Act a
contract, agreement or arrangement entered into by an employer to withhold
any product from any person, or to refrain from acquiring from any person
any product other than the services of workmen or employees. (Section 4(2)).
Sections 45 and 61 do not apply in respect of an agreement or arrangement
between or among persons who are members of a class of persons who
ordinarily engage in the business of dealing in securities or between or
among such persons and the issue of a specific security, in the case of a
primary distribution, or the vendor of a specific security, in the case of a
secondary distribution, where the agreement or arrangement has a reasonable
relationship to the underwriting of a specific security. (Section 5(1)).
The
Competition Act does not apply in respect of agreements or
arrangements between or among teams, clubs and leagues pertaining to
participation in amateur sport. (Section 6(1)). |
The sector of public services to residences:
Law 142 of 1993, which establishes the system of public services to
residences and other provisions.
The financial and insurance sector:
Executive Order 663 of 1993, which updates the Organic Statute of the
Financial System.Television: Law 182 of 1995. |
The chapter on Promotion of Competition shall
not apply to:
a. Agents who provide public services by virtue of a
concession, granted under law for undertaking the necessary activities for
provision of services, in accordance with the limitations established in the
concession and in special regulations; b. State monopolies created by law,
as long as there are special laws authorizing them to carry out specific
activities such as insurance, distilling alcoholic beverages and marketing
same for domestic consumption, distribution of fuel, telephone and
telecommunications services, electricity, and water. c. Municipalities, with
respect both to their internal rules and regulations and to their dealings
with third parties. (Article 9 and 69 of the Law and Article 29 of the
Regulations). |
General Prohibitions
| Prohibitions contained in the Competition Act
take two different forms: criminal offences and civil reviewable matters set
out under Prohibited Conduct. |
Article 1 of Law 155, as amended by Article
10 of Decree 3307 of 1963: It is prohibited to enter into any agreement or
accord that directly or indirectly aims to limit production, supply,
distribution, or consumption of national or foreign raw materials, products,
merchandise, or services; and, in general, to engage in any type of
practice, procedure, or system that aims to limit free competition and to
maintain or fix unfair prices. According to Article 46 of Decree No. 2153 of
1992: Law 155 of 1959 prohibits any conduct that affects free competition in
the markets which, pursuant to the terms of the Civil Code, are considered
to be illegal. |
(...) this law prohibit and penalize public
and private monopolies and monopolistic practices that impede or restrain
competition, access of competitors to markets or removal of competitors from
markets (...) (Article 10). |
Prohibited Conducts
1.Criminal offences include:
i. Conspiracies,
combinations, agreements or arrangements to lessen competition unduly in
relation to the supply, manufacture or production of a product (Section 45);
ii. Bid-rigging: bid-rigging is an agreement between parties whereby one or
more bidders will refrain from submitting bids in response to a call for
tenders, or bids are submitted which have been arranged between the parties
(Section 47);
iii. Knowingly engaging in a practice of discriminating
against competitors of a purchaser of an article by granting a discount or
other advantage to a purchaser that is not available to competitors
purchasing articles of like quality and quantity (Section 50(1)(a); iv.
Engaging in a policy of selling products in any area of Canada at prices
lower than those exacted elsewhere in Canada, where the effect or design is
to lessen competition substantially or eliminate a competitor (Section
50(1)(b);
v. Engaging in a policy of selling products at unreasonably low
prices where the effect or design is to lessen competition substantially or
eliminate a competitor (s. 50(1)(c));
vi. Granting to a purchaser an
allowance for advertising or display purposes that is not offered on
proportionate terms to competing purchasers (Section 51);
vii. Attempting to
influence upward or to discourage the reduction of the price at which
another person supplies or advertises a product, or refusing to supply or
otherwise discriminating against anyone because of that person's low pricing
policy (Section 6l(1));
viii. Attempting to induce a supplier to refuse to
supply a product to a particular person because of that person's low pricing
policy (Section 61(6));
ix. False or misleading representations, when a
representation is made to the public that is false or materially misleading
(the representation could influence a consumer to buy the product or service
advertised). (Section 52);
x. Deceptive telemarketing, which involves
person-to-person calls used to make false or misleading representation in
promoting the supply of a product or a business interest. (section 52.1).
Other provisions relate to the implementation of foreign directives,
agreements relating to participation in professional sport, agreements among
banks, and misleading advertising or deceptive marketing practices.
2. Civil
reviewable matters include:
i. Mergers: the Competition Act applies to every
merger in Canada, irrespective of whether ownership or control lies with
Canadians or foreigners. A merger which is believed to prevent or lessen
competition substantially may be taken to the Competition Tribunal
(Tribunal) for review and the application of remedies (Section 92).
ii.
Abuse of dominant position: This involves a situation where one or more
persons substantially or completely control a class or species of business,
and have engaged in or are engaging in a practice of anti-competitive acts
which have the effect of preventing or lessening competition substantially.
The Competition Act provides a non-exhaustive list of types of conduct
deemed to constitute anti-competitive acts (Section 78 and Section 79).
iii.
Refusal to deal: a situation where a person is substantially affected in his
or her business or is precluded from carrying on business by the refusal,
the person is willing and able to meet the usual trade terms of the
supplier, the product is in ample supply, and the inability to obtain
adequate supply is due to insufficient competition among suppliers in the
market (Section 75);
iv. Exclusive dealing: a situation where a purchaser is
required to deal only or primarily in particular products or refrain from
dealing in specific products as a condition of obtaining supply, the
practice is engaged in by a major supplier or is widespread, and competition
is or is likely to be lessened substantially (Section 77);
v. Tied selling:
a situation where a supplier as a condition of supplying a product requires
a purchaser to purchase a second product or to refrain from using a
particular brand of product in conjunction with the first product, the
practice is engaged in by a major supplier or is widespread, and competition
is or is likely to be lessened substantially (Section 77);
vi. Market
restriction: a situation where a supplier, as a condition of sale imposes
restrictions as to the market in which his or her customer may deal, the
practice is engaged in by a major supplier or widespread, and competition is
or is likely to be lessened substantially (Section 77);
vii. Delivered
pricing: a situation where a supplier engages in a practice of refusing
delivery of an article at any place where deliveries are made to other
customers, the supplier is a major one or the practice is widespread, and
the practice has the effect of denying a customer or potential customer an
advantage that would otherwise be available in the market (Section 80 and
Section 81); viii. Specialization agreements: the Tribunal may register an
agreement on the application of any party where it finds that the
implementation of an agreement is likely to bring about gains in efficiency
and the Commissioner of Competition has been given a reasonable opportunity
to be heard; a registration in this manner exempts an agreement from the
conspiracy and exclusive dealing provisions of the Competition Act (Sections
85 through 90).
Other non-criminal reviewable matters relate to consignment
selling, the implementation of foreign laws or directives and refusals to
supply by foreign suppliers
and misrepresentations to the public. |
Agreements: Any contract, accord, agreement,
or practice undertaken consciously or unconsciously in a parallel manner by
two or more enterprises. The following agreements, among others, are
considered to be contrary to free competition:
1. Those whose purpose or
effect is to directly or indirectly fix prices;
2. Those whose purpose or
effect is to determine discriminatory sale or marketing conditions for third
parties; 3. Those whose purpose or effect is to distribute markets among
producers or among distributors;
4. Those whose purpose or effect is to
allocate production or supply quotas; 5. Those whose purpose is to assign,
distribute or restrict the sources of supply of production inputs;
6. Those
whose purpose or effect is to limit technical development;
7. Those whose
purpose or effect is to condition the supply of a product to the acceptance
of additional obligations which, due to their nature, were not contemplated
in the purpose of the enterprise, without prejudice to what was established
in other provisions;
8. Those whose purpose or effect is to refrain from
producing goods or services or affect their production levels;
9. Those
whose purpose is to deceive in tendering or competitive bidding or those
whose effect is to distribute contract awards, distribute tenders or to fix
the terms of the tenders. (Art. 47, Decree 2153/92).
Act: Any conduct by
those who carry out economic activity. The following acts are considered to
be contrary to free competition:
1. Violation of advertising standards as
contemplated in the consumer protection statute;
2. Influencing an
enterprise to increase the prices of its products or services or to give up
its intention to lower prices; 3. Refusing to sell or render services to an
enterprise or discriminate against same when such an act may be understood
as retaliation for its price policy. (Article 48, Decree 2153/92).
Dominant
Position: The possibility of directly or indirectly determining market
conditions. (Article 45, number 5, Decree 2153/92).
The following conduct
constitutes abuse of a Dominant Position
1. Lowering of prices under cost
when the purpose is to drive one or several competitors out of the market,
prevent them from entering the market or keep them from expanding their
market share;
2. Using discriminatory conditions for equivalent operations,
which puts a consumer or supplier at a disadvantage vis-à-vis another
consumer or supplier with similar conditions;
3. Conduct whose purpose or
effect is to condition the supply of a product to the acceptance of
additional obligations, which, due to their nature, were not contemplated in
the purpose of the enterprise, without prejudice to what is established in
other provisions; 4. Selling to a buyer under conditions different from
those offered to another buyer when the intent is to reduce or eliminate
competition in the market;
5. Selling or providing services in an any part
of Colombian territory at a price different from the one offered in another
part of Colombian territory, when the intent or effect of such practice is
to reduce or eliminate competition in that part of the country and the price
does not correspond to the cost structure of the transaction. (Article 50,
Decree No. 2153/92). |
The law prohibits four types of conduct:
total monopolistic practices, partial monopolistic practices, concentrations
and unfair trade practices.
The law defines total monopolistic practices
as acts, contracts, agreements, understandings, or cooperation among
competing economic agents for any of the following purposes: a) Fixing,
raising, setting, or manipulating the buying or selling price at which goods
are sold or bought in the market, or exchanging information for the same
purpose or effect; b) establishing the obligation to produce, process,
distribute, or sell a set or limited quantity of goods or provide a
restricted or limited frequency, volume, or number of services; c) dividing,
distributing, designating, or imposing portions or segments of a present or
potential market for goods or services in terms of clients, suppliers, and
time or space determined or to be determined; d) establishing, agreeing
upon, or coordinating offers or abstention from bidding in public auctions,
competitions, or sales. (Article 11).
Acts of this kind are prohibited by
law and any person committing such acts shall be punished accordingly.
(Article 11).
Partial monopolistic practices shall be considered
those involving acts, contracts, agreements, understandings, or cooperation
whose effect is or could be improper displacement of other economic agents
from the market, substantial impediment to their market access, or the
establishment of exclusive advantage for one or several persons in the
following cases:
a) fixing, imposing, or establishing exclusive distribution
of goods or services in terms of the subject, the geographical area, or
specific time frames, including the division, distribution, or assignment of
clients or suppliers, among economic agents who are not competitors against
each other;
b) the setting of prices to other terms a distributor or
provider must comply with when selling or distributing goods or providing
services;
c) the sale or contingent agreement to sell, buy, acquire, or
provide goods or services available, which are normally offered to third
parties;
d) the sale or contingent agreement to not use, acquire, sell, or
provide goods and services available, which are normally offered to third
parties;
e) collusion among the various economic agents or the invitation to
them to exercise pressure on some client or supplier to discourage him from
a given act, or applying sanctions, or obliging him to act in a given
manner;
f) the production or marketing of goods and services at prices below
their normal value;
g) in general, any deliberate at that results in the
withdrawal of competitors from the market or bars their access thereto.
(Article 12). For such practices to be deemed in violation of the Law, it
must be proved that the economic agent committing them has substantial power
over the relevant market, and that the practice in question relates to goods
or services offered in or pertaining to that market (Article 13 of the Law).
In determining whether an economic agent has substantial power over the
relevant market, the following factors must be considered:
a) Relative
market share, and the ability to fix prices unilaterally, or to restrict
supply in the relevant market to a substantial degree, such as to render it
impossible for other economic agents, now or in the future, to
counterbalance that power;
b) The existence of barriers to market entry, and
circumstances that may be expected to alter those barriers or to affect
supply by other competitors;
c) The existence of competitors, and their
relative market power;
d) The ability of the economic agent in question, and
of his competitors, to gain access to sources of relevant inputs;
e) Recent
market behavior of the economic agent in question. |
Exceptions to Prohibited Practices
The Competition Act applies to all sectors of
the economy. The only exceptions relate to selected activities such as
collective bargaining, amateur sport, securities or fishing. Apart from
these general exemptions, several other more limited exceptions are found
throughout the Competition Act.
These exceptions take the form of exceptions
or defences to specific offences or non-criminal reviewable practices. A few
other exemptions limiting the application of the Competition Act are also
contained in laws other than the Competition Act.
Exceptions and defenses
contained in the Competition Act are the following:
i. Financial
Institutions: certain agreements between financial institutions are excepted
from the prohibition in section 49. Included are agreements made regarding
loans or deposits made or payable outside Canada, underwriting of
securities, exchange of statistics and credit information, participation in
federally or provincially insured loans programs, servicing customers
outside Canada, and agreements approved by the Minister of Finance for the
purpose of financial policy. Similarly, an amalgamation or acquisition
involving banks is exempt from the prohibitions relating to mergers if
certified by the Minister of Finance as being desirable in the interest of
the financial system. (Section 94(b)).
ii. Cooperative Associations: the
prohibition against price discrimination does not enjoin a co-operative
association, credit union, co-operative credit society or caisse populaire
from returning to its members, suppliers or customers any surplus arising
from its operations. (Section 50(3));
iii. Professional Services: agreements
that relate to a service and to standards of competence and integrity
reasonably necessary for the protection of the public in the practice of a
trade or profession or in the collection and dissemination of information
relating to the service are not contrary to the conspiracy provision of the
Competition Act. (Section 45(7));
iv. Specialization Agreements: agreements
exempted from the conspiracy and exclusive dealing provisions of the
Competition Act if the agreement is registered with the Tribunal. Section 85
to 90);
v. Intellectual Property: an act engaged in pursuant only to the
exercise of any right or enjoyment of any interest derived under the
Copyright Act, Industrial Design Act, Patent Act, Trade Marks Act, or any
other Act of Parliament pertaining to intellectual or industrial property is
not an anti- competitive act. (Section 79(5));
vi. Joint Ventures: joint
ventures undertaken for a specific project or program of research and
development are excepted from the merger provisions of the Competition Act.
A joint venture qualifies for this exception where: the project would not
otherwise have likely taken place; no change of control of any party may
occur; a written agreement exists to strict the activities of the venture,
govern the continuing relationship between the parties, provide for
contribution of assets by at least one party, and provides for termination
upon completion of the joint venture, and the combination does not, or is
not likely to, prevent or lessen competition except to the extent reasonably
required to complete the project or program. (Section 95(1));
vii. Franchise
Agreements: franchise agreements between affiliates are not subject to the
exclusive dealing, tied selling and market restriction provisions.
Similarly, franchise agreements between certain deemed affiliates are not
subject to review for market restriction. (Section 77).
viii. Export Cartel:
agreements that relate solely to the export of products from Canada benefit
from a defense from the conspiracy provisions of the Competition Act,
provided that they do not, or are not likely to, reduce or limit the real
value of exports of a product, restrict any person from entering into or
expanding the business of exporting, or lessen competition unduly in the
supply of services facilitating exports from Canada. (Sections 45(5) and
(6)).
ix. Restrictive Agreements: no conviction under section 45 may occur
if the agreement relates only to specified subject matter set out in
subsection 45(3). These exceptions do not apply where such an agreement is,
or is likely to (1) lessen competition unduly with respect to prices,
quantity or quality of production, markets or customers, or channels or
methods of distribution, or (2) restrict the entry into or expansion of a
business in a trade, industry or profession. (Section 45(4)). x. Mergers: an
exception exists to the application of the merger provisions where the
merger will likely bring about gains in efficiency that will be greater
than, and offset, the effects of any substantial prevention or lessening of
competition and where such efficiency gains would not be attained if an
order of the Tribunal against the merger was issued. Section 96 (2) lists
the factors which must be applied to determine whether such efficiency gains
are present. (Sections 96(1) and (2)).
xi. Bid-rigging: the bid-rigging
provisions do not apply to situations where the agreement is made known to
the tendering authority before bids are made, where the agreement involves
affiliated companies. (Section 47(3)).
xii. Refusal to Supply: a refusal to
supply a purchaser on the basis, of the purchaser's low pricing policy is
permissible if the supplier has a reasonable belief that the purchaser made
a practice of: using the supp1ier's products as loss-leaders; engaging in
misleading advertising in respect of the supplier's products; or not
providing the level of service that purchasers of that product might
reasonably expect. (Section 61(10)). xiii. Exclusive Dealing, Tied Selling
and Market Restriction: exclusive dealing and market restriction are not
offensive where they are engaged in only for reasonable period of time to
facilitate entry of a new supplier or product into a market. Tied selling
may be allowed where it is deemed reasonable having regard to the
technological relationship between the products to which it applies, or
where it is engaged in by a money lending business to better secure loans.
(Sections 77(4)(b) and (c)).
xvi. Deceptive marketing Practices: a due
diligence defense to bait and switch selling exists where a person took
reasonable steps to obtain an adequate supply, did obtain an adequate supply
but demand surpassed reasonable expectations, or undertook to and did supply
the product or a reasonable substitute within a reasonable time (Section
74.04(3). A sale above price is allowed where an advertisement prominently
states that the price as stated is subject to error, a second advertisement
was immediately made to correct an erroneous advertisement, an advertisement
referred to a sale of a security obtained on the open market while its
prospectus was still current, or the person selling the product was not
engaged in the business of dealing in that product. (Section 74.05(3).
xv.
Delivered Pricing: delivered pricing is allowed where the supplier could not
accommodate delivery to any additional customers at a locality without
making a significant capital investment, or where a practice of refusal of
delivery was necessary to maintain a standard of quality in respect of an
article to be sold in association with a trademark owned or used by the
supplier. (Section 81(2) and (3)).
Another defense that can be invoked under
the Competition Act pertains to "regulated conduct". Unlike the exemptions
and defenses listed above, this defense is derived from legal decisions
rendered in the context of the application of criminal provisions of the
Competition Act. This applies to activities undertaken pursuant to valid
regulatory legislation. The regulated conduct defense is limited to conduct
specifically authorized by valid legislation and does not apply to all types
of behavior in a regulated industry.
The major exceptions to the application
of the Act which appear in laws other than the Act are:
i. Ocean Shipping:
Section 4 of the Shipping Conferences Exemption Act, 1987 exempts from the
Act certain agreements of international shipping conferences (i.e. cartels
that regulate rates and conditions of service in liner shipping) registered
with the National Transportation Agency;
ii. Energy: Section 33 of the
Energy Supplies Emergency Act ("ESEA") gives the Energy Supplies Acquisition
Board the power to exempt from the Competition Act an agreement, arrangement
or course of action undertaken by a person to comply with a written request
from the Ministry of Natural Resources in relation to the ESEA or any of its
regulations.
iii. Airlines: Section 47 of the Transportation Act gives the
Government the power to take action, including the imposition of capacity
and pricing restraints and even suspension of the Competition Act, where the
Government is of the opinion that an extraordinary disruption to the
effective continued operation of the national transportation system exists
or is imminent, other than a labour disruption, failure to act would be
contrary to the interests of users and operators of the national
transportation system, and there are no other sufficient and appropriate
remedies. |
|
There are no exceptions to prohibited
practices, other than those included in Title Four above. |
Economic Concentrations (Mergers, Acquisitions, Joint Ventures)
The Competition Act defines mergers as the
acquisition or establishment, direct or indirect, by one or more persons,
whether by purchase or lease of shares or assets, by amalgamation or by
combination or otherwise, of control over or significant interest in the
whole or a part of a business of a competitor, supplier, customer or other
person. (Section 91).
The Commissioner of Competition (the "Commissioner"),
who directs the Competition Bureau, may consider all mergers, proposed or
otherwise, in all sectors of the economy, which come to his attention. Where
a transaction prevents or lessens, or is likely to prevent or lessen,
competition substantially, the Commissioner may ask the Tribunal to issue a
remedial order in accordance with the provisions of the Competition Act.
(Section 92).
The Competition Act provides a list of factors which the
Tribunal may consider in making its determination.(Section 93).
Other merger
provisions include:
i. Section 92 (2): stipulating that the Tribunal's
finding cannot be based solely on evidence of concentration or market share;
ii. Section 96: containing an exception, with some restrictions, for
situations where the merger brings about, or is likely to bring about, gains
in efficiency. Such gains must be greater than and offset, the effects of
any prevention or lessening of competition, and these gains would not likely
be attained if the order were made; and
iii. Section 97 stipulating that no
application can be made by the Commissioner in respect of a merger more than
three years after that merger has been substantially completed.
Review
before the Competition Tribunal.
A merger that the Commissioner believes
will or is likely to prevent or lessen competition substantially may be
taken to the Tribunal for review any time up to three years after completion
of the transaction. If the Tribunal finds that a merger prevents or lessens
or is likely to prevent or lessen competition substantially, it may order
the dissolution of the merger or the disposition of assets or shares. In the
case of a proposed merger, the Tribunal may order that the merger not
proceed, or prohibit the parties, should the merger be completed, from doing
anything that prevents or lessens or is likely to prevent or lessen
competition substantially. In the case of completed mergers, the Tribunal
may issue an order of dissolution or require divestiture of assets or
shares.
Regardless of whether the merger is proposed or completed, the
Tribunal may also, on consent of the Commissioner and those against whom the
order is directed, require that any other remedial action be taken to
counter the anti competitive effects of the merger. Where an application is
made to the Tribunal for a consent order, the tribunal may make the order on
those terms.
The Merger Enforcement Guidelines.
The Commissioner’s approach
toward mergers has been described in considerable detail in the 1991 Merger
Enforcement Guidelines (the "Guidelines"). The Guidelines also set out
certain "safe harbours" that will, in most cases, be sufficient to satisfy
that a merger will not result in a substantial lessening or prevention of
competition. A merger will likely not give rise to a challenge on the basis
of unilateral exercise of market power if the merged entity has a
post-merger market share of less than 35 percent. The merger will also be
unlikely to raise concerns about inter-dependent exercise of market power if
the merged entity's post-merger market share is less than 10 percent and the
concentration of the share of the market accounted for by the largest four
firms in the market post-merger is less than 65 percent.
There is no
presumption that certain mergers are anti-competitive. Subsection 92(2)
prevents the Tribunal from making an order solely on the basis of evidence
relating to market share. There is no bias against bigness in Canadian
merger policy. There are no "likely challenge" bright lines relating to
market share or concentration. Nevertheless, given that high market share or
concentration is a necessary condition that must exist before
anticompetitive outcomes can result from a merger, the Guidelines set forth
market share and concentration bright lines below which challenges are
unlikely to occur.
The sole function of these bright lines is to screen out
the vast majority of mergers that do not present the potential for
anticompetitive effects. These thresholds do not give rise to any
presumption or adverse inference regarding the effect that a merger is
likely to have on competition. They merely separate those mergers that do
not warrant significant review in terms of the various sectors set forth in
section 93 of the Competition Act, from those that do.
Requirements to
notify the Commissioner of Competition:
Part IX (sections 108 to 123) of the
Competition Act deals with notifiable transactions. Certain large mergers
may be subject to pre-closing notification and waiting period requirements.
There are two general thresholds to the application of these provisions.
First, the parties to the transaction together with their affiliates must
have assets in Canada or annual gross revenues for sales in, from or into
Canada in excess of C$400 million. The C$400 million values are determined
by aggregating all assets and sales of all members of the two corporate
families including controlled and controlling affiliates. The second
threshold is one that involves examining the nature of the transaction
itself.
In the case of an acquisition of assets, the value of the Canadian
assets acquired or the annual gross revenues in or from Canada generated by
those assets must be greater than C$35 million. In the case of an
amalgamation, this second threshold is C$70 million for the two companies.
In the case of an acquisition of voting shares, pre-notification is required
where the same C$35 million asset or sales threshold is met and the
acquisition results in the acquiring party holding voting shares which
exceed specified percentages of share ownership. In the case of a publicly
traded company, this threshold is 20% of the outstanding voting shares (or
50%, if 20% is already owned).
Failure to notify a notifiable transaction is
a criminal offence under section 65(2) and is subject to a fine of up to
C$50,000 or imprisonment for up to two years. In addition, the Commissioner
may apply to the Tribunal pursuant to Section 100 for an order preventing
the completion or implementation of the proposed merger until proper
notification is filed. |
Economic Concentrations are regulated in
Article 4 of Law 155/59, Article 5 of Decree 1302 of 1964, and Articles
45(4) and 51 of Decree 2153/92: The Superintendencey of Industry and Trade
shall issue an opinion on mergers, consolidations, integration and
acquisition of control of enterprises that jointly hold 25% or more of the
respective market, or whose assets exceed an amount equivalent to twenty
thousand (20,000) current legal monthly minimum salaries, in cases so
required by regulations on restrictive trade practices. In addition to the
grounds provided in current regulations, the activities shall be objected to
when they are the means for obtaining a position of dominance in the market.
(Article 4 Law 155/59, amended by Article 118 of Decree 2666 of 2000).
Acquisition of Control: The possibility of directly or indirectly
influencing policy governing enterprises, the beginning or termination of
the enterprise’s activity, change in the activity engaged in by the
enterprise, or the disposal of goods or rights essential to the development
of the enterprise’s activity. (Article 45, numeral 4, Decree No. 2153/92).
The Superintendency may object to the activity when it would lead to undue
restraint of free competition in the following cases:
a) when it has been
preceded by binding agreements among the enterprises, with a view to
standardizing or fixing prices for producers of raw materials or consumers,
or for distributing markets among themselves or limiting the production,
distribution, or provision of a service;
b) when the condition of the
products or services in the market is such that the merger, consolidation,
or integration of the enterprise that produces or distributes said product
or service can result in unfair prices to the detriment of competitors or
consumers. (Article 50, Decree No. 1302 of 1964).
Integration of Firms: The
Superintendent of Industry and Commerce may not contest cases of mergers,
consolidation, integration or acquisition of the control of enterprises that
are reported to him, under the terms of Article 4 of Law 155 of 1959, when
the interested parties show that there may be significantly increased
efficiency, that this will result in cost savings that cannot be obtained by
other means and that they guarantee that such act shall not result in a
reduction of the supply in the market. (Article 51, Decree No. 2153/92 ).
|
Concentration shall be construed to mean the
merger, acquisition of control, or any other act by virtue of which there is
a joining of companies, associations, stock, trusts, or assets in general of
competitors, suppliers, clients, or other economic agents for the purpose or
effect of restraining, damaging, or impeding competition or free enterprise
concerning equal, similar, or substantially related goods or services.
In
the investigation of such circumstances, the criteria used for measuring
substantial power over the relevant market shall be those established in
Article 15 of the Law, relating to monopolistic practices. (Article 16).
The
powers of the Commission for the Promotion of Competition shall include the
power to investigate the existence of monopolies, cartels, or other
practices or concentrations prohibited by this Law. (Article 24 (c)).
The
Commission for the Promotion of Competition may order the partial or total
dismantling of any improperly constituted concentration. (Article 25(b)).
On
the other hand, Article 47 of the Law No 7983 on Protection to Worker,
February 16, 2000, establishes the following: Mergers and Changes of
Shareholding Control. The mergers and the changes of shareholding control of
the social operators or organizations authorized or of the funds
administered by these will require the previous authorization of the
Superintendente, with base in the regulation that the Supervision dictates
for such effect. The objective of this obligation is to ensure that the
merger process should not injure the interests of the affiliated or
undermine the levels of competition. For such effect, the Superintendente
shall consult to the Commission for the Promotion of Competition, according
to the proceeding set out in the corresponding regulation …”. |
Enforcement Bodies
There are various institutions in the
enforcement of Canadian competition law. These include:
The Commissioner of
Competition (“Commissioner”) who directs the Competition Bureau;
- The
Minister of Industry;
- The Attorney General of Canada;
- The Courts;
v. The Competition Tribunal.
|
The Superintendency of Industry and Trade is
a technical body under the responsibility of the Ministry of Economic
Development, which has administrative, financial and budgetary autonomy. As
the supervisory and control authority, its function is to ensure compliance
with the provisions on restrictive trade practices, as set forth in Law
155/92 and the rules of Decree 2153 of 1992. This Decree created the Office
of Delegates for the Promotion of Competition, which supervises and controls
the activity of economic agents when it aims to restrict competition.
There
are two other important areas in addition to the Office of Delegates for the
Promotion of Competition, to wit: the Office for Consumer Protection and the
Office for Intellectual Property. |
The law creates the Commission for Promotion
of Competition as the maximum antitrust authority. It is attached to the
Ministry of Economy, Industry, and Commerce. This commission shall on its
own initiative or upon complaint investigate and, when appropriate,
penalize, any practices that result in obstacles to free competition and
unnecessarily impede the flow of the market. (Article 18). |
Enforcement Bodies / Structure
| |
The structure of the Superintendency of
Industry and Commerce is the following, for purposes of applying the rules
on free competition and restrictive trade practices:
The Superintendent of
Industry and Commerce is freely appointed and removed by the President of
the Republic.
The Advisory Council for Promotion of Competition, composed of
five experts on business, and economic or legal matters, freely appointed
and removed by the President of the Republic.
The Deputy Superintendent for
Promotion of Competition, freely appointed and removed by the President.
A
Division for Promotion of Competition. |
The Commission is composed of five members
and five alternates, named by the President upon nomination by the Minister
of Economy, Industry, and Commerce. As provided in the law, the Commission
members shall be prominent persons with extensive experience in the field,
recognized judgment, and independent.
Of the five members, four must be a
lawyer, an economist, and two professionals with a university degree in
sciences in fields related to the Commission's activities. The fifth may be
freely chosen by the President.
The alternates shall serve in place of the
members in the event of their temporary absence, impediment, or recusal.
Both members and alternates may attend the meetings, but only the members
may vote.
Members and alternates shall remain in office for four years and
may be reappointed any number of times. However, during the first term, two
of the five members will cease to serve after two years, chosen by lot. On
that date two new persons shall be named for four years. The other three
persons shall remain in their positions until the expiration of the period
for which they were appointed. (Article 19).
The Chairman is elected by the
members of the Commission from among them, by majority vote. He or she shall
remain in that position for two years and may be re-elected. The Chairman's
duties are set forth in Article 78 of the Regulations. A Secretary shall
also be elected, who may be a member of the Commission or not, and whose
powers shall be those established in Article 79 of the Regulations.
The
Commission shall meet in closed session, but it may allow access by the
general public as it sees fit. The Commission normally meets at least once
every two weeks, without need for a special call. A quorum consists of four
appointed members, and decisions should be taken by a vote of at least three
of them. (Articles 22, 81 and 83 of the Regulations).
Except in emergency
cases, a special session of the Commission must always be convened with
advance notice of at least twenty-four hours, in writing, accompanied by the
agenda for the meeting. Notwithstanding, the Commission shall be deemed in
valid session without having fulfilled all requirements relating to advance
notice and the agenda, if all of its members are present and are unanimously
agreed. (Article 81 of the Regulations).
The Commission shall have a
Technical Support Unit staffed by professional experts in the areas governed
by the Law. The work of this body shall be devoted full-time to competition
matters, and it shall conduct such studies and investigations as the
Commission may request within its mandate. The Head and the Legal Advisor of
the Technical Unit shall be entitled to attend sessions of the Commission,
with the right to speak but not to vote. (Articles 23 and 83 of the
Regulations).
The Law provides that the Commission may contract the services
of advisors and consultants in the performance of its functions. (Article 23
of the Regulations). |
Enforcement Bodies / Powers or Functions
Commissioner The Commissioner is an
independent law enforcement official responsible for the administration and
enforcement of the Competition Act.
The Commissioner directs the Competition
Bureau, an independent unit of the federal Department of Industry
responsible for assisting the with the enforcement and administration of the
Competition Act. He is appointed by, and serves at the pleasure of, Cabinet
with a mandate to promote competition in Canada. In respect of criminal
offenses, the Commissioner may refer a case to the Attorney General of
Canada for consideration as to what action the Attorney General may wish to
take, including criminal charges in a court of criminal jurisdiction. In the
case of civil reviewable matters, the Commissioner may apply to the Tribunal
for remedial orders. The Commissioner is required to commence an inquiry
whenever he believes, on reasonable grounds, that an offence under Part VI
or VII of the Competition Act has been or is about to be committed, that
grounds exist for the Tribunal to make an order relating to a reviewable
matter under part VII.1 or VIII of the Competition Act, or that a person has
contravened or failed to comply with an order made under the Competition
Act. The Commissioner is also obliged to commence an inquiry when the
Minister so directs, or when six Canadian residents make an application.
Under sections 125 and 126 of the Competition Act, the Commissioner is
authorized to make representations to, and call evidence before, federal and
provincial boards, commissions or other tribunals. In addition, the Minister
may direct that a representation shall be made by the Commissioner before a
federal regulatory board. In the case of provincial regulatory board, the
Commissioner may only make representations at the request or with the
consent of the agency concerned.
As an advocate of competition, the
Commissioner also makes selected non-statutory representations to bodies
such as government committees or task forces in cases where his particular
expertise can bring a unique perspective to bear upon the issues.
The
Minister of Industry The Minister's primary responsibility, in relation to
the Competition Act, is to cause the Annual Report prepared by the
Commissioner to be laid before Parliament. In addition, the Minister has
certain statutory powers to compel specific action by the Commissioner: the
Minister may instruct the Commissioner to undertake an inquiry, to provide
an interim report with respect to an inquiry, or to make further inquiry
where a matter has been discontinued. Conversely, the Minister has no power
to compel the Commissioner to discontinue an inquiry. Further, and most
importantly, any decision to apply to the Tribunal or to refer a matter to
the Attorney General is the Commissioner’s alone.
The Attorney General The
Attorney General of Canada is responsible for instituting and conducting
criminal prosecutions under the Competition Act. The Commissioner may, at
any stage of an inquiry, refer a matter to the Attorney General for
prosecution or such other action as he may wish to take. The recommendations
of the Commissioner are historically given great weight by counsel for the
Attorney General.
The Courts As discussed above, competition law in Canada
consists of both criminal offences and non-criminal reviewable matters.
Criminal charges are prosecuted before the various courts of criminal
jurisdiction in each province. The Federal Court of Canada, which includes
the Trial Division and the Federal Court of Appeal, also has jurisdiction
with regard to indictable offences.
The Competition Tribunal Non-criminal
reviewable matters (including merger matters) are initiated by the
Commissioner by filing an application before the Tribunal, a quasi-judicial
tribunal, which operates at arms length of the Commissioner. Whereas the
Commissioner's role is investigatory, the Tribunal's is exclusively
adjudicative. It was created in 1986 with a view to developing special
expertise in competition matters. The Tribunal consists of judges of the
Federal Court, Trial Division, as well as lay members. |
The duties of the Superintendent of Industry
and Commerce, as the head of the agency, are as follows:
a. To ensure that
the legal provisions concerning this agency are complied with fully and that
the technical and administrative functions are carried out efficiently;
b.
To ensure compliance with the provisions on promotion of competition and
restrictive trade practices established by Law 155 of 1959, its
complementary provisions and, in particular, those referred to in this
Decree concerning anyone who carries out economic activities, regardless of
their form or legal nature, pursuant to Article 2, number 1 of the Decree;
c. As a preventive measure, to order the immediate suspension of any conduct
that may be contrary to the provisions referred to in number 1 above;
d. To
decide the termination of investigations for alleged violations of the
provisions referred to in number 10 of this Article when, in his judgment,
the alleged violator offers sufficient guaranties that he shall suspend or
rectify the conduct for which he is being investigated;
e. To order that
violators rectify or cease any conduct contrary to the provisions on the
promotion of competition and restrictive trade practices referred to in this
Decree;
f. To issue decisions on the merger, consolidation, integration and
acquisition of control of enterprises;
g. To impose monetary sanctions of up
to the equivalent of two thousand (2,000) legal monthly minimum salaries in
force at the time the sanction for violation of the rules governing the
promotion of competition and restrictive trade practices, referred to in
this Decree is imposed;
h. To impose fines of up to three hundred (300)
legal monthly minimum salaries in force at the time the sanction is imposed,
in favor of the National Treasury; on administrators, directors, legal
representatives, auditors and other natural persons who authorize, execute
or tolerate any conduct that violates the rules on the promotion of
competition and restrictive trade practices referred to in this Decree;
i.
To establish the general policies of the agency. (Article 4 of Decree
2153/92).
The functions of the Deputy Superintendent for the Promotion of
Competition are:
a) To ensure compliance with current rules and laws, and to
propose new provisions;
b) To initiate ex officio, or at the request
of a third party, preliminary inquiries on violations of the provisions on
the promotion of competition and restrictive trade practices as provided for
in number 10, Article 4 of this Decree;
c) To determine the admissibility of
the claims referred to above;
d) To process preliminary inquiries and
conduct investigations aimed at establishing violation of the provisions on
promotion of competition and restrictive trade practices referred to in this
Decree;
e) To keep a record of all investigations conducted and sanctions
imposed, as well as of any commitment made in furtherance of proceedings
regarding the provisions on the promotion of competition and restrictive
trade practices;
f) To determine motions to set aside and requests for
direct repeal of any action that may be issued. (Article 11, Decree No.
2153/92).
Duties of the Promotion of Competition Division:
a. To support the
Deputy Superintendent for the Promotion of Competition in processing
preliminary inquiries and preparing cases concerning violation of the
provisions on the promotion of competition and restrictive trade practices;
b. To attend to the claims filed by individuals and if, during the process,
possible violations to the provisions on restrictive trade practices of
competition are detected, to propose to the Assistant Superintendent for the
Promotion of Competition to initiate the corresponding procedure when the
importance of the conduct or practice merits same;
c. To attend to inquiries
regarding the area under its responsibility;
d. To process requests for
consolidation, integration or merger and acquisition of the control of
enterprises, within the terms established by the law;
e. To prepare draft
rulings by which sanctions are imposed for violation of rules on trade
practices that restrict free competition;
f. To conduct investigations
initiated to determine compliance with the rules on the area under its
responsibility;
g. To obtain and keep relevant information concerning the
different domestic and international markets, classified according to
technical coding systems;
h. To conduct the necessary economic and technical
studies to fulfill the duties of the Office of Delegates for the Promotion
of Competition;
i. To carry out all other functions that may be assigned to
it in accordance with the nature of the entity. (Article 12, Decree
2153/92). |
The law sets forth three fields of action for
the Commission for Promotion of Competition: 1. economic deregulation; 2.
recommendations for setting prices; 3. promotion of competition.
Economic
Deregulation
The Commission is responsible by Law for verifying that
procedures and regulatory requirements governing trade are at all times
consistent with the provisions of the Law, that they are essential and
necessary to achieving its objectives, and that they are based on
considerations of public health and safety, the environment or quality
standards, as determined by ex post review, so as to ensure that the
principle of due dispatch is respected, and that competition requirements
and procedures do not become barriers to trade. (Article 3).
The Commission
has full authority to verify compliance by state agencies and organs with
the obligation to make a cost-benefit study of the regulations governing
economic activities that affect trade, and procedures for guaranteeing free
access of goods and services to the market. This is for the purpose of
eliminating any unnecessary red tape in accordance with the study, or
simplifying those procedures that must be maintained. It should be noted
that the Commission is responsible for determining the criteria to be used
as the basis for such cost-benefit analysis. (Article 4 and 24(a) of the
Law).
The Commission may also recommend to the President the modification,
simplification, or elimination of any requirement to register
pharmaceutical, medical, food, agrochemical, and veterinary products,
laboratories and establishments where these products can be produced or
marketed, or replacement of the requirements with others that more
effectively promote free competition and protect human, animal, and
vegetable health, the environment, safety, and quality standards. (Article
4).
When the Commission considers it advisable, it can waive the requirement
for total or partial participation by professionals or technicians in
procedures for access to the national market of goods produced domestically
or abroad, and other trade regulations. (Article 7).
Setting Prices
The Government may regulate the prices of goods and services, but only under
exceptional circumstances, and only on a temporary basis. The Commission
advises the President on the desirability of setting prices under abnormal
market conditions or conditions of monopoly or oligopoly affecting of goods
and services. (Article 5 of the Law and Article 17 of the Regulations).
The
decision of the Commission shall be limited exclusively to determining the
presence of circumstances that justify the establishment or the elimination
of the regulatory measure in question, (Article 17 of the Regulations).
Promotion of Competition
The Commission has the general duty to review,
either at its own initiative or on the basis of a formal complaint, and
where necessary penalize all practices that obstruct free competition or
unnecessarily disrupt the market flow.
(Article 18 of the Law).
On its own
initiative or at the request of the interested party, it monitors and
controls participation in markets in which there are few suppliers. (Article
11).
The following authority is given:
a) to investigate the existence of
monopolies, cartels, practices or collusion prohibited by law and apply
penalties when appropriate. In carrying out this function the law gives the
Commission authority to require private parties and other public and private
economic agents to provide the pertinent information or documents;
b) to
punish actions in restraint of supply of products when they have effects
that disrupt free competition in the market;
c) to establish machinery for
coordination to punish and prevent monopolies, cartels, concentrations, and
illegal practices;
d) to issue opinions on questions of competition and free
enterprise, with regard to laws, regulations, agreements, notices, and other
administrative acts; such opinions have no legal authority. (Article 24).
A
general duty is established for economic agents to give the Commission, as
an affidavit, the reports and documents it requires to ensure the
fulfillment of its tasks. Likewise, it is the Government’s duty to give all
information that the Commission requires to ensure the fulfillment of its
tasks. (Article 64 of the Law and Article 33 of the Regulations).
According
to Articles 17 and 24 of the Law, cases of unfair competition are solved by
courts following summary procedures. |
Administrative Procedures
Administrative or Judicial Procedures:
As discussed above, the Commissioner is responsible for enforcing the
Competition Act. Matters which the Commissioner pursues proceed through one
or more distinct stages. Normally the Commissioner begins with a preliminary
examination of a matter to determine whether it raises a question under any
of the provisions of the Competition Act. At this stage, the matter may not
be pursued if in the Commissioner opinion further examination is not
justified. If a possible issue under the Competition Act is identified, the
Commissioner may proceed with an information contact or further examination
of the matter. If upon examination, the Commissioner believes on reasonable
grounds that there has been a contravention of the criminal or non-criminal
reviewable matters provisions of the Competition Act or of an outstanding
order, the Commissioner is required to commence an inquiry into all such
matters as are considered necessary to determine the facts. The Commissioner
is also required to commence an inquiry when directed to do so by the
minister or when six Canadian residents make an application under section 9.
Once an inquiry has been commenced, the Commissioner can apply for
authorization from a court to search for and examine records, to conduct
oral examinations, to intercept a private communication where either the
originator of the private communication, or the person intended by the
originator to receive the communication, has consented to the interception,
to intercept private communications without consent and to exercise the
other investigative powers provided by the Competition Act. The Commissioner
may also enter into discussions with the Attorney General of Canada on
appropriate consideration that might be extended to companies or individuals
who voluntarily provide information or evidence with respect to a criminal
matter at an early stage. Such consideration of favorable treatment,
particularly any possibility of immunity from prosecution, can only be
granted by the Attorney General and in accordance with the general policy of
the Attorney General in respect of federal offences. However, the
recommendations of the Commissioner, as the official responsible for the
overall enforcement of the Competition Act, have historically received
careful and serious consideration.
At any stage of an inquiry relating to
the criminal provisions of the Competition Act, the Commissioner may refer a
matter to the Attorney General for consideration for prosecution or such
other action as the Attorney General may wish to take. When a matter is
referred to the Attorney General, the Commissioner normally includes a
recommendation as to an appropriate disposition of the matter. The Attorney
General nevertheless retains complete discretion as to the action to be
taken. In the case of reviewable matters, the Commissioner through legal
counsel brings forward applications to the Tribunal for remedial orders.
|
In order to determine whether the rules on
promotion of competition and restrictive trade practices referred to in this
Decree have been violated, the Superintendency of Industry and Commerce
shall, ex officio or at the request of a third party, initiate and
bring forward a preliminary inquiry, the result of which shall determine the
need to conduct an investigation.
When an order is given to open an
investigation, the investigated party shall be notified personally in order
for him to request or provide the evidence he plans to submit. During the
investigation, the tests requested and those deemed appropriate by the
competent official shall be conducted.
Once the investigation is conducted,
a reasoned report on whether there has been a violation shall be submitted
to the Superintendent. A copy of said report shall also be provided to the
investigated party. |
The Law establishes that the Commission for
Promotion of Competition has primary jurisdiction, which must be exhausted
before legal proceedings are instituted, except in the case of acts of
unfair competition. (Article 18).
Suits to prosecute infractions must
commence within six months of the date when the offense occurs or becomes
known to the injured party. However, in the case of continuous acts, the
period begins after the last act ends. (Article 27).
Based on Article 30,
34, 35, 38 y 39 of the Regulations, the procedure is as follows:
When a
complaint is received or on its own initiative, the Technical Support Unit
makes a preliminary investigation of the facts in order to determine if
there is reasonable evidence to show that a party has engaged in a practice
prohibited by Law, such as to justify the initiation of administrative
proceedings. After its investigation, the Unit presents a report to the
Commission with its recommendation. This report must include an analysis of
such aspects as the legal standing of the complainant, observance of the
minimum requirements established in the General Law of Public
Administration, and the items of evidence submitted. (Article 34 of the
Regulations).
If the Commission determines from its initial analysis that
none of the indicated situations exists, or there is insufficient evidence
of them, it shall reject the complaint and close the case. If it finds to
the contrary, the Commission shall order an administrative trial based on
the result of the investigation, to be carried out by the Technical Support
Unit. (Article 35 of the Regulations).
The applicable procedure is the
normal administrative procedure established in Book Two of the General Law
on Public Administration, which is based on principles of due process,
informal pleading, disclosure, impartiality, and publicity. Procedures
ordinarily consist of an oral private hearing before the executive organ,
which admits and receives evidence and testimony from all parties to the
matter. (Article 25 of the Law).
After the hearing, the Commission should
issue a final ruling within 15 days, counted from the date of the hearing,
unless the executive organ wishes to introduce new facts, add evidence, or
when it has been impossible in the first hearing to prepare the case for the
final decision. In such cases, the Unit shall seek the guidance of the
Commission, which must render its decision within 48 hours. If it approves
an extension, it will schedule a second hearing within no more than 15 days.
There shall not be more than two hearings.
The administrative proceeding
should be concluded, with the Commission's ruling, within two months after
its start, or after the presentation of the complaint or petition of the
party. The complainant shall assist the administration in the procedure and
not be a party in his own right. (Article 38 of the Regulations).
Parties
may request reconsideration of the final ruling of the Commission, in
accordance with Article 21 of the Regulatory Law on Administrative Legal
Proceedings.
Decisions of the Commission shall be carried out upon
notification, unless their effect is suspended on the grounds that serious
or irreparable injury is likely to be caused, by virtue of the terms and
conditions of Article 148 of the General Law on Public Administration. |
Judicial Procedures
| |
Once government channels have been exhausted
through the filing of an appeal for reversal, either to the Superintendent
or Deputy Superintendent, in accordance with the action in question, an
appeal may be made to the administrative court system, by filing a request
for annulment and restoration of the right (Articles 84 and 85 of the Code
of Administrative Procedure)
Application for annulment and reinstatement of
the right. Any person who believes that his right has been injured in a law
under the rule of law, may request that the administrative procedure be
declared null and void and that his right be reinstated. He may also request
that damages be paid. (Article 85 ibid).
During the course of the
investigation, the Superintendent of Industry and Trade may order that the
investigation be closed when, in his judgment, the alleged violator offers
sufficient guarantee that he will cease or rectify the conduct for which he
is being investigated. In matters not provided for in this Article, the Code
of Administrative Procedure shall be applied. (Article 52, Decree No.
2153/92). |
After exhaustion of the administrative
procedures, the final decisions can be appealed on grounds of illegality
with the Administrative Tribunal, by means of an abbreviated administrative
procedure.(Article 61).
The Law establishes the following procedure:
a. The
Superior Administrative Tribunal, second section, shall be the body
competent to hear the complaint;
b. Action must be brought within one month,
from the date of notification of the final decision;
c. The submission to
the Tribunal must be accompanied by a certified copy of the final decision
that is being appealed; d. The administrative inquiry report must be
submitted within five days, under penalty of judicial sanction;
e. A period
of ten days shall be allowed for formalizing complaints and answers thereto;
f. Prior defences may be invoked in the statement of answer to the
complaint;
g. A period of ten days shall be allowed for the consideration of
evidence, which must be submitted with the statement of answer to complaint;
h. Decisions of the Administrative Tribunal, Second Section, may be appealed
to the Third Section of the Superior Administrative Tribunal, (Article 62 of
the Law).
The Law establishes the following rules to be observed in the
execution of rulings:
a. If the legal judgment requires the State to pay
injury or damages, it shall be executed in accordance with Articles 76 ff.
of the Regulatory Law.
b. If the legal judgment requires injury or damages
to be paid by private parties, it shall be executed in accordance with the
Code of Civil Procedure, and in particular, with the provisions of Articles
692 ff of that Code. (Article 63 of the Law). |
Administrative or Judicial Sanctions
Alternative case resolution instruments
(administrative sanctions).
In dealing with possible contraventions to the
Competition Act, the Commissioner may file an application with the Tribunal
(non-criminal reviewable matters) or refer a case to the Attorney General
who may prosecute before the courts (criminal matters). However, the
Commissioner may also respond to certain anti-competitive activities through
administrative action, which applies one of the alternative case resolution
instruments available to him. Indeed, it has been the Commissioner's general
policy over the last few years to make greater use of alternative case
resolution instruments wherever appropriate as some matters may be resolved
quickly and easily without a full inquiry or judicial proceedings. As
discussed above, this is part of a more compliance-oriented approach adopted
by the Commissioner.
Examples of alternative case resolution instruments
include:
i. investigative visits: at any stage of an inquiry the
Commissioner may contact a person alleged to be involved in anticompetitive
conduct in order to obtain information. If the information obtained
indicates that further inquiry is not justified, the Commissioner will
discontinue the inquiry.
ii. undertakings: the Commissioner may, in certain
circumstances, accept written undertakings which obviate the need to make an
application to the Tribunal or refer a matter to the Attorney General.
iii.
in respect of mergers, the Commissioner may suggest a restructuring of the
transaction (before closing) which would alleviate his competition concerns.
|
It is the duty of the Superintendent to order
violators to rectify or cease any conduct that may be contrary to the
provisions on the promotion of competition and restrictive trade practices.
He may also impose monetary sanctions of up to two thousand (2000) current
legal monthly minimum salaries and up to three hundred (300) current legal
monthly minimum salaries on administrators, directors, legal
representatives, auditors who authorize, execute or tolerate such conduct.
In order to impose the sanctions on the violators and to decree the
precautionary measures, the Superintendent must previously hear the Advisory
Board for matters related to the promotion of competition.
To impose
monetary sanctions up to the equivalent of two thousand (2000) legal monthly
minimum salaries currently in force at the time the sanction is imposed for
the violation of the rules on the promotion of competition and restrictive
trade policies referred to in this Decree. To impose fines of up to three
hundred (300) legal monthly minimum salaries in effect at the time the
sanction is imposed on administrators, directors, legal representatives,
auditors and other natural persons who authorize, execute or tolerate any
conduct that violates the rules on the promotion of competition and
restrictive trade practices referred to in this Decree. (Article 4 of Decree
2153/92). |
Article 25 of the Law for Promotion of
Competition empowers the Commission to impose monetary and corrective
penalties, on the basis of a written finding taking into account the
financial capacity of the violator of the provisions of Chapter III:
a)
suspension, correction, or elimination of the practice or concentration
concerned;
b) total or partial breakup of any illegal arrangements, without
prejudice to payment of the corresponding fine;
c) payment of a fine of up
to 65 times the value of the minimum monthly wage for having given false
testimony or false information to the Commission, aside from other penalties
that may be incurred;
d) payment of a fine of up to 50 times the minimum
monthly wage for failing to submit information requested by the Commission
in a timely manner;
e) payment of a fine of up to 680 times the minimum
monthly wage for engaging in a total monopolistic practice;
f) payment of a
fine of up to 410 times the minimum monthly wage for having engaged in a
partial monopolistic practice;
g) payment of a fine of up to 75 times the
minimum monthly wage for persons who were directly involved in the
prohibited monopolistic practices or concentration, acting on behalf of the
companies or entities and on their account and direction.
If any of the
infractions listed in the last three points are particularly serious, the
Commission may impose a fine of 10 percent of the annual sales of the
violator during the previous fiscal year, or 10 percent of the violator's
assets, whichever is greater.
In applying penalties, the Commission shall
respect the principles of due process, informal hearings, disclosure,
impartiality, and publicity.
In the case of fines, the Commission shall take
into account the following factors: a) the severity of the infraction; b)
the threat or damage caused; c) indications of intent; d) the violator's
share of the market; e) the size of the market affected; f) the duration of
the practice; g) recurrence of the offense; and h) the violator's ability to
pay.
If the violator refuses to pay the fine established by the Commission,
the amount owing shall be certified as a legally enforceable claim which may
be submitted for judicial enforcement proceedings pursuant to the Code of
Civil Procedures (Article 25).
The minimum monthly wage is that rate of
remuneration established as such by decree of the Executive Power, on the
recommendation of the National Wages and Salaries Council of the Ministry of
Labor and Social Security, or by the competent authority. (Article 2).
Failure to provide information, and provision of false, imprecise, or
incomplete information in the documents required from the economic agents
shall be punished by the Commission as a serious offense. If such failure
arises with respect to a request issued by the Ministry of Economy, Industry
and Trade, the Ministry shall submit those documents to the Commission for
appropriate action, where the subject matter relates to the Commission’s
area of authority, i.e. information requested concerning the committing of
any of the conducts specified in Chapter III of the Law. In this case, the
formal certification submitted by the respective office shall serve as the
formal complaint. (Article 64)
Although the Law does not specify any form of
conduct as a serious offense, in practice the provisions of paragraphs c)
and d) of Article 25 of the Law are applied. The procedure to be followed by
the Commission is that established in Article 64 of the Regulations, This
Article provides that those cases shall be dealt with by summary
administrative procedure, as established in the LGAP [the General Law on
Public Administration], whereby the certification referred to is accepted
and a hearing is held directly, pursuant to Article 324 of the LGAP. If the
Commission deems the violation to be proven, the final decision must order
the violator to comply with the original requirement, within time limit to
be stated, which in any case shall not be less than eight days. If the
violator fails to comply, the provisions of Article 65 of the Law shall
apply.
Criminal penalties
Failure to observe or comply with decisions
or orders issued by the Commission in its areas of competence, within the
time limits determined by it, shall be deemed a criminal offense under
Article 305 of the Criminal Code, which provides as follows:
Disobedience.
Whoever disobeys an order issued by a public official in the exercise of his
duties shall be liable to imprisonment of from fifteen days to one year
In
such cases, the Commission shall proceed to take evidence in order to
support an appropriate complaint to the Public Prosecutor. (Article 65 of
the Law). |
Recourse or Appeal
In the case of civil reviewable matters,
which are adjudicated before the Tribunal, Section 13 of the Competition
Tribunal Act establishes the circumstances where decisions rendered by the
Competition Tribunal may be appealed to the Federal Court. This section
states that:
1. Subject to subsection (2), an appeal lies to the Federal
Court of Appeal from any decision or order, whether final, interlocutory or
interim, of the Tribunal as if it were a judgment of the Federal Court-Trial
Division;
2. An appeal on a question of fact lies under subsection (1) only
with the leave of the Federal Court of Appeal.
The regime setting out
circumstances where a decision rendered in the context of a criminal matter
may be appealed derives from Canadian criminal law principles. The Canadian
Criminal Code gives the right to appeal a conviction for an indictable
offense, provided certain conditions are met. The appeal must be taken to
the Court of Appeal in the Province in which the conviction was registered.
Under specific circumstances, the decision rendered by this Court of Appeal
may be further appealed to the Supreme Court of Canada. |
Government Remedies:
1. General Principle.
There shall be no remedy against general actions or those currently being
processed, prepared or in execution, except in cases provided for in the
express rule. (Article 49 of the Code of Administrative Procedure). As a
general rule, the following remedies shall be applicable against actions
that put an end to an administrative procedure:
a. Reinstatement, for the
same official who made the decision, in order to clarify, amend or revoke;
b. Appeal, for the immediate administrative supervisor, for the same
purpose. There shall be no appeal of decisions taken by ministers, heads of
administrative departments, superintendents and legal representatives of
decentralized entities or of special administrative units that have legal
personality;
c. The person who files a complaint when the appeal is
rejected. The remedy of appeal is optional and may be filed directly to the
superior of the official who handed down the decision, through a writing
that must be accompanied by a copy of the judicial decision that denied the
remedy. This remedy may be used within five (5) days after the notification
of the decision. (Article 50, Code of Administrative Procedure).
2. Remedies
that proceed against actions taken by the Superintendent of Industry and
Trade: Duties of the Superintendent of Industry and Trade: To decide
remedies of reinstatement and requests for direct revocation filed against
the actions taken.
The remedy of appeal shall not be appropriate against
proceedings issued by the Assistant Superintendent, since, on the one hand,
said duty is not assigned to the Superintendent of Industry and Trade and,
on the other hand, the latter, together with the former are responsible for
the management of the Superintendency. Both are directly appointed by the
President of the Republic. (Article 4 Decree 2153 of 1992). |
Pursuant to the General Law on Public
Administration (specifically, Articles 342 and 355), which complements the
Law for Promotion of Competition, appeals in ordinary administrative
proceedings can only be lodged against the act that started them, the denial
of a hearing or right to submit evidence, or the final decision.
As
established in the General Law, the ordinary recourse shall be to seek to
have the administrative decision revoked or set aside, or appealed, and only
exceptionally to have it reconsidered.
In practice, where the Commission is
the body that orders the opening of proceedings, the remedy of revocation
can only be issued against the decision ordering the opening of proceedings.
Under this procedure, decisions of the regulatory agency denying a hearing
or the right to submit evidence are subject to both forms of remedy, i.e.
revocation before the regulatory agency and appeal before the Commission,
which is hierarchically senior to the regulatory agency.
Recourse of
reconsideration or to reversal may be sought against final decisions of the
Commission, pursuant to Article 31 of the Administrative Disputes
Regulations. Accordingly, both the final decision of the administrative
proceeding and decisions of the Commission rejecting the opening of
proceedings may be appealed, since in both cases administrative remedies
would have been exhausted. (Article 61 of the Law).
The General Law provides
for the remedy of reconsideration against definitive final decisions
involving any of the situations covered by Article 353 of this Law.
In the
abbreviated administrative procedure, appeal may be brought before the Third
Section of the Superior Administrative Tribunal, against decisions of the
Second Section of the Administrative Tribunal, which is the competent body
to hear complaints against any decision of the Commission. (Article 62 of
the Law). |
|
Chile |
Dominican Republic |
El Salvador |
Guatemala |
Regulatory Framework
1. Constitution,
Article 19 (21) and (22).
2. Decree
No. 511 of September 17, 1980, which contains the recast, coordinated, and
systematic text of Decree Law No. 211 of 1973, which established the Rules
for Defense of Free Competition.
3. Law 19.610 of 1999 amending Decree Law
No. 211 of 1973. |
1. Constitution of August 14, 1994. Article
8.12 on free enterprise and establishment of monopolies in favor of the
state or as provided in law.
2. Criminal Code. Articles 419 and 420.
3. Law
No. 770 of October 26, 1934.
4. Law No. 13 of 1963. Articles 12 and 13.
|
1. Constitution of El Salvador, Article 110,
promulgated by Decree No. 38 dated December 15, 1983.
2. Commercial Code
Articles 489, 490 and 491 promulgated by Legislative Decree No. 671 dated
May 8, 1970
3. Criminal Code Article 232 promulgated by Legislative Decree
No. 1030 dated April 30, 1997. |
1. The Political Constitution of the Republic
of Guatemala, Articles 39, 43, 118, 119 paragraph h), 130.
2. The Commercial
Code, Congressional Decree 2-70, Articles 361, 362, 363, 364, 365, 366, and
367.
3. Criminal Code, Congressional Decree No. 17 - 73, Articles 340, 341,
and 343. 4. Consumer Protection Law, (Executive Order 1-85).
5. Industrial
Property Law, (Decree 57-2000).
6. General Telecommunications Law. Decree
No. 94-96 (Amendments, Decree No. 115 - 97).
7. Electricity Law (Decree. 93
- 96) |
Objectives of the Law
| To guarantee free competition preventing the
existence of monopoly and monopoly practices and severely punishing them
when they do occur. Monopoly and monopolistic practices are contrary to
wholesome and effective competition in market operation, because control of
supply and demand makes it possible to set artificial prices against the
best interest of the consumer. In addition, such activities do not encourage
production; they protect inefficient producers or distributors; they lead to
concentration of economic power and distort the market to the detriment of
the community. (Preamble of Decree Law No. 211). |
To protect the exercise of free enterprise,
trade, and industry; to prohibit monopolies of private corporations; and to
authorize the state to retain authority to exercise certain economic and
strategic activities. (Constitution, Article 8.12).
To impose penalties in
cases where free enterprise or competition is threatened by acts of
price-fixing, rumor-spreading, or collusion among business executives.
(Criminal Code, Articles 419 and 420).
To protect consumers through a policy
of price control for certain basic articles and services, and through
measures to protect them against arrangements or conspiracy to set false
prices. (Law No. 13 of 1963). |
To guarantee free enterprise and protect the
consumer by prohibiting monopolistic practices. (Constitution, Article 110)
To regulate matters relating to commercial activity and good practices
without prejudice to the public or to the national economy. (Commercial
Code)
To impose sanctions for offences relating to trade and free
competition. (Criminal Code Article 232). |
To prevent abusive practices that lead to the
excessive concentration of goods or means of production, and to prohibit
monopolies and privileged relationships. (Articles 119 paragraph h) and 130
of the Constitution).
To penalize illegal actions that threaten injury to
the national economy, or that involve monopolies and speculation. (Articles
340 and 341 of the Criminal Code).
To regulate in matters relating to the
freedom of contract and to unfair competition. (Articles 361 and 362 of the
Commercial Code). |
Scope of Application
The law applies to all persons, national or
foreign, including the state itself
With regard to geographical coverage,
the law applies to restrictive practices committed in national territory and
those abroad to the extent that they affect free competition within the
country.
The economic sector covered is any extractive, productive,
commercial, or service area, without any exception whatsoever. |
The provisions on competition are applicable
in the territory of the Dominican Republic to the trade in goods and
services deemed to be basic necessities. |
The legislation referred to above is of
general application and is enforceable throughout the territory of the
Republic in respect of all persons. |
The laws referred to are of general
applicability, and therefore apply to all persons within the Republic. |
Exceptions to the Scope of Application
| There are no exceptions to the scope of
application of Decree Law No. 211 of 1973. |
|
Monopolies on the part of the State or
Municipalities will only be approved where they are required in the interest
of the society. The state may be allowed to establish monopolies. |
There are no exceptions. |
General Prohibitions
Anyone executing or going into, individually
or collectively, any event, act or agreement tending to impede free
competition in economic activities within the country, both those of a
domestic nature and those involving external trade activities, shall be
liable to punishment by short prison term in any of its degrees. When the
offense affects essential articles or services, such as those corresponding
to food, clothes, housing, medicine or health, the punishment will be
increased in one degree (Article 1, Decree 511 of 1980).
Monopolies are
prohibited, as is any practice, as defined in this Act, which diminishes,
harms or impedes competition in the production, processing, distribution or
marketing of goods and services.
Pursuant to the provisions of this law,
acts or behavior involving economic activities that constitute abuse of a
dominant market position, or limit, restrain, or distort free competition in
a manner that injures the common economic interest in national territory are
prohibited and shall be punished. |
Setting of artificial prices, spreading of
false rumors, and collusion among business executives are prohibited.
(Criminal Code, Articles 419 and 420).
Arrangements or conspiracy to set
false prices on certain articles and services deemed to be basic necessities
are prohibited. (Law No. 13 of 1963). |
Authorization of private monopolies and
prohibition of anti-competitive practices. |
Practices that lead to excessive
concentration in the provision of goods and means of production. (National
Constitution)
Monopolies and privileged relationships. (National
Constitution)
Illegal acts that pose a threat to the national economy;
monopolistic and speculative practices. (Criminal Code)
Any acts or deeds
undertaken in bad faith or contrary to normal and accepted business
practices shall be deemed instances of unfair competition, and therefore
prohibited. (Article 362 of the Commercial Code). |
Prohibited Conduct
For the purposes envisaged in the foregoing
article, the following, among others, shall be considered as acts or
agreements tending to impede free competition:
a. Those relating to
production, such as quota sharing, reductions or obstruction thereof;
b.
Those relating to transport; c. Those to commerce or distribution, whether
wholesaler or retailer, such as quota sharing or the assignment of market
zones or exclusive distribution, by a sole person or entity, of a same
article of several producers;
d. Those relating to determination of prices
of goods and services, as resolutions or imposing the same to others;
e.
Those relating to the right to work, or freedom of workers to organize, hold
meetings or negotiate collectively, as well the resolutions or acts of
employers, labor unions or other groups or associations tending to limit or
hamper the free course of collective bargaining within each enterprise or
those hampering or hindering the legitimate entry to any activity or work,
and f. Generally, any other measure tending to eliminate, restrict or hamper
free competition. (Article 2, Decree 511 of 1980). Abuse of a monopolistic
market position is a restraint on competition. Monopolistic market position
is taken to mean not only that of a monopoly, but that of any dominant
position exercised by one or more firms, whether they are monopolies or not.
|
1. The spreading of false rumors or the use
of any subterfuge to change natural prices that would result from the free
trade in merchandise, stock, public or private rents, or any other things
that are the subject of contracts;
2. Agreement among two or more business
executives, producers, or vendors, in whatever form, to the effect that one
or more of them stop producing certain articles, or to negotiate for the
purpose of altering the prices thereof;
3. Hoarding of basic necessities for
speculative purposes; 4. Using false weights and measures under any pretext
in order to alter prices; 5. Forcing a consumer to buy unwanted merchandise
in order to purchase an article of basic necessity (tying), using bait and
switch, or selling phony merchandise. (Constitution, Criminal Code, and Law
No. 13). |
Listed below are the methods by which a
person, by abusing a position of total or partial market dominance, or by
means of agreements made with other persons or entities, may impede,
interfere with or distort the rules of competition:
a) Direct or indirect price
fixing;
a) Attaching special conditions to a transaction or making the
conclusion of a contract dependent upon the acceptance of additional
services or commercial arrangements which by their nature and by normal
industry practice are unrelated to the purpose of the contract;
b)
Imposition
of unequal contract terms for transactions of the same type;
a) Imposition of
limits on production, technical development or investment by other persons;
b) Sharing of markets or supply areas;
c) Discriminatory practices in respect of
the movement of goods, securities or commodities;
d) Abandonment of crops,
cultivations, plantations, agricultural products or livestock; and
Preventing or impeding the functioning of industrial enterprises or of
entities for the exploration and exploitation of natural resources.
(Criminal Code). |
The following are considered to constitute
monopoly acts contrary to the public economic and social interest:
1. The
hoarding or withdrawal from market of basic necessities with a view to
causing their prices to rise on the domestic market;
2. Any action or
undertaking that prevents, or attempts to prevent, free competition in the
production or trading of goods; 3. Agreements or pacts entered into without
prior governmental approval, with a view to establishing or maintaining a
privileged relationship or profiting therefrom;
4. The sale of goods of any
kind at a price below their cost, in order to prevent free competition in
the domestic market;
5. The export of basic necessities without obtaining
such permission as may be required from the competent authority, if such
export could lead to shortages or scarcity.
(Article 341 of the Criminal
Code, Decree No. 17-73)
The initiation of false rumors, the spreading of
false news or the use of any other such device to evade or distort the
natural economic laws of supply and demand, or to disrupt normal market
conditions, in such a way as to cause an unjustified increase or decrease in
the value of the national currency, or in the level of current market
prices, public or private revenues, stock market values, wages and salaries
or any other item that is subject to contract. (Article 342 of the Criminal
Code, Decree No. 17-73).
The following actions, among others, are considered
to represent unfair competition:
1. Misleading or confusing the general
public or any given person, by means of: a) Inducing the employees of a
client to mislead him with respect to the services or products supplied;
b)
The making of false claims concerning the origin or quality of products or
services, or the false attribution of honors, awards or distinctions for
such products or services;
c) The use of customary markings or packaging to
identify a false good as a genuine one, and the use of any falsification,
adulteration or imitation for such purposes.
d) The spreading of false news
that might mislead a buyer as to the reasons for offering special purchase
conditions, such as announcing special sale prices as a result of
liquidation or bankruptcy when such a situation does not in fact exist. If
goods have been obtained through bankruptcy or liquidation proceedings, no
announcement may be made of this fact in re-selling them.
Liquidation sales
may only be announced when the firm in question is being wound up, the
establishment or outlet is being closed, or the company is withdrawing from
some branch of its business activity.
2. Any action that directly prejudices
the interests of another business, whether or not it violates any
contractual obligations towards that business, by:
a) Improper use or
imitation of company names, trade marks, signs, logos, samples, patents or
other items belonging to another company or to its establishments,
b)
Spreading news that might discredit the products or services of another
company, c) Inducing the employees of another business to act against the
interests of that business,
d) Obstructing customer access to the premises
of another business,
e) Making direct, public comparisons of quality and
prices between the company's own goods and services and those of other
businesses, in which those businesses are mentioned by name or by another
manner that clearly identifies them.
3. Causing direct prejudice to another
business in violation of contractual obligations, as follows:
a) Using the
name or services of someone who has committed himself to refrain from a
given activity or business for a certain time, if the contract was duly
registered in the Companies Registry for the place or region in which it is
to have effect;
b) Hiring the services of a person who has been directly
induced thereby to break a contract of employment with another employer,
4.
Committing any other similar act intended either directly or indirectly to
divert customers away from another business.
(Article 363 of the Commercial
Code, Decree No. 17-73). |
Exceptions to Prohibited Practices
The concession of any monopoly for exercising
economic activities, such as extractive, industrial, commercial or services
activities shall not be able to be granted to private individuals.
The
monopoly of certain activities such as those pointed out in the foregoing
paragraph, only by means of law, may be reserved to fiscal, semifiscal,
public, autonomous administration or municipal institutions.
Notwithstanding
the above, acts or contracts such as those mentioned in the foregoing
articles may be authorized by duly founded Supreme Decree, subject to prior
approval by the Resolutory Commission established in this law, as necessary
to ensure the stability or development of national investments, and provided
that the national interest so requires (Article 4, Decree 511 of 1980).
|
State monopolies and those provided for in
law are permitted. (Constitution). |
|
No exceptions are noted. |
Economic Concentrations (Mergers, Acquisitions, Joint Ventures)
| There are no specific provisions governing
market control. However, in light of the comprehensive nature of the general
prohibition under Article 1 of the Law, that prohibition has been applied to
instances of concentration among firms that threaten to interfere with free
competition within the country. |
State monopolies and those provided for in
law are permitted. (Constitution). |
No exceptions exist. |
Practices that lead to the excessive
concentration of goods and means of production to the detriment of society
are prohibited. (National Constitution). |
Enforcement Bodies
For the prevention, investigation, correction
and repression of acts or agreements tending to impede free competition or
abuses incurred by a holder of a monopolistic position, even if not
constituting, there will exist the following Organizations and Services:
a.
The Regional Preventive Commissions;
b. The Central Preventive Commission;
c. The Resolutory Commission;
d. National Economic Prosecutor's Office.
Any
reference made in legal rules or regulations to Provincial Preventive
Commissions, Office of the Prosecutor for the Defense of Free-Competition or
to the Prosecutor, shall be understood as referring to the Regional
Preventive Commissions, the National Economic Prosecutor's Office and the
National Prosecutor, respectively. (Article 6, Decree 511 of 1980).
|
The provisions of the Criminal Code are
applied in the courts.
Law No. 13 is applied by the Price Control Office of
the Department of Industry and Commerce, the Department of Labor, and the
Internal Revenue Service. |
Commercial Tribunals are responsible for the
imposition of sanctions, at the request of interested parties, in respect of
the activities prohibited by the Commercial Code.
The Office of the Public
Prosecutor may also initiate investigations in accordance with the
provisions of domestic law. |
When offenses prohibited by the Commercial
Code are committed, the Civil Courts are responsible for imposing sanctions,
at the request of the interested party. The Criminal Courts hear cases and
impose sanctions for cases involving monopolistic practices. Such situations
involve the Public Prosecutor, who is responsible under domestic legislation
for bringing the appropriate action. |
Enforcement Bodies / Structure
National Economic Prosecutor's
Office
The National Economic Prosecutor's Office is a decentralized
public service, with independent legal status and assets, which is separate
from any other public body or service and overseen by the President of the
Republic, through the Ministry of Economy, Development and Reconstruction
(Article 21, Decree 511 of 1980).
The Resolutory Commission
The Resolutory Commission, which has national jurisdiction, is a tribunal
subject to specific procedures. This Commission is the only body that can
impose the administrative and civil sanctions established by the Law, or ask
the National Prosecutor to seek criminal sanctions, as appropriate. Its
members are:
a) A Minister of the Supreme Court, appointed by this Court,
who will preside over it; b) A Head of the Service appointed by the Ministry
of Economy, Development and Reconstruction; c) A Head of the Service
appointed by the Treasury Minister; d) A Dean of the Faculty of Juridical
and Social Sciences of a University, based in Santiago;
and e) A Dean of a
Faculty of Economic Sciences of a University, based in Santiago (Article 16,
Decree 511 1980).
The Central Preventive Commission
The
Central Preventive Commission is empowered to hear cases relating to
practices or abuses of a national character, or that refer to more than one
region, and acts as the Preventive Commission for the Metropolitan Region of
Santiago. Its membership is the following:
a. A representative of the
Ministry of Economy, Development and Reconstruction, who will preside over
it;
b. A representative of the Treasury Minister
c. Two university
professors, lawyer and commercial engineer, respectively, appointed by the
Rector's Council; and
d. A Neighborhood Associations representative. The
corresponding authorities and organizations shall appoint an incumbent
representative and an alternate, who shall hold office for a two-year
period. (Article 10).
The Regional Preventive Commission
These
are agencies of the Government that operate in each region of the country,
composed of the following persons: a. The Ministerial Regional Secretary of
Economy, presiding; b. A member appointed by the Regional Governor; c. A
university-trained professional appointed by the Regional Development
Council; d. A Neighborhood Associations representative. (from Article 7).
|
|
Judicial body: Commercial Tribunals or other
jurisdictional levels, inclusive of the Supreme Court of Justice. |
The lower courts, civil and criminal, are a
part of the judiciary and answer to the Supreme Court of Justice. |
Enforcement Bodies / Powers or Functions
National Economic Prosecutor
The
National Economic Prosecutor is independent in the conduct of his duties
from any authority or tribunal before which he must appear. He may therefore
defend the interests entrusted to him in any manner he deems consistent with
the law.
The powers and duties of the National Economic Prosecutor include
the following:
a. Order the investigations he deems appropriate to verify
infringements of the law.
b. With the knowledge of the President of the Resolutory Commission, the National Economic Prosecutor may order that
investigations conducted his own initiative, or by virtue of complaints
received, be classified as reserved.
c. Act on behalf of the public interest
in the economic domain before the Resolutory Commission and the courts of
law, with all corresponding duties and powers.
d. The National Economic
Prosecutor may, in person or through a delegated representative, defend or
contest rulings handed down by the Resolutory Commission before the Supreme
Court.
e. Enforce rulings, decisions, judgments and instructions issued by
the commissions or the courts of law on issues relating to this law.
f.
Issue such reports as may be requested by the Resolutory Commission and the
Preventive Commissions; g. The National Economic Prosecutor may also,
through the appropriate officials, obtain and examine all documentation,
accounting records and other items as may be deemed necessary.
h. The Resolutory Commission will hear and rule on any such request at its
subsequent session, subject to a verbal or written report by the National
Economic Prosecutor; its ruling will not be subject to any appeal
whatsoever;
i. The National Economic Prosecutor may delegate prosecution of
criminal action to lawyers of the Prosecutor's Office, to the corresponding
Regional Economic Prosecutors, or the State Defense Council;
j. Other powers
and duties as indicated in the law (from Article 27, Decree 511 of 1980).
The Prosecutor and the Preventive Commissions shall, as appropriate, hear
and investigate complaints filed by private individuals concerning acts that
may constitute infringements of the provisions of this law, without
prejudice to the power to submit to the competent authorities those which,
because of their nature, should be heard by other bodies. (Article 30,
Decree 511 of 1980).
Resolutory Commission The Resolutory Commission
may address, at its own initiative or at the request of the Prosecutor’s
office, any situation that is deemed inimical to free competition, and may
conduct such investigations and decide and impose such penalties as the Law
provides. It is the only body within the system that is empowered to impose
civil and administrative penalties. Moreover, the Resolutory Commission is
the only body empowered to order criminal proceedings pursuant to Articles
31 ff. The Commission has direct supervisory authority over all its
component bodies, except for the National Economic Prosecutor, and is in
turn responsible to the Supreme Court with respect to its decisions, which
in criminal cases can be appealed to that Court.
In carrying out its duties,
the Resolutory Commission has the widest powers to investigate, being able
to request information from any person, either directly or through the
National Economic Prosecutor. For these purposes, the Resolutory Commission
has the faculty to request assistance from the forces of law and order,
which will be granted by an order of the Commission.
The Resolutory
Commission may also recommend that government agencies amend legal
provisions or regulations that it deems a hindrance to free competition, and
adopt its own specific guidelines to be followed in acts or contracts that
could affect free competition. (from Title III, Decree 511 of 1980).
Regional Preventive Commissions and Central Preventive Commission.
The Preventive Commissions are not empowered to impose punishment or
remedies in the case of anti-competitive behavior. Their function is to
issue reports and to advise on measures to be taken by the parties involved,
including the State authorities, to deal with anti-competitive situations.
To carry out their prevention function, the Commissions have the following
powers, among others
a. to issue opinions on existing or proposed contracts that could hamper
free competition;
b. to work within their jurisdiction for maintenance of free competition and
prevention of abuses of dominant market position, proposing measures to
correct practices or abuses of which they become aware;
c. to request the respective prosecutor's office to investigate such
practices or abuses;
d. at the request of the prosecutor's office, to adopt preventive measures
for the purpose of suspending the detrimental effect on competition caused
by given acts or contracts. (from Title II, Decree 511 of 1980). |
|
The various judicial tribunals are authorized
to administer justice in accordance with domestic law. |
Justice is administered in accordance with
the Constitution of the Republic and other laws that make up the nation’s
legal system. Judicial power and authority is the exclusive province of the
Supreme Court of Justice and the other courts established by law. These
bodies have the power to hand down and enforce judgments. |
Administrative or Judicial Procedures
|
Before the Preventive Commissions. Issues within
their purview could be queries from private parties concerning acts or
contracts, such as complaints of acts or abuses that restrict trade.
There is no predetermined procedure in law for
matters before these commissions, because their preventive nature and
lack of punitive authority make it unnecessary to have guarantees of a
rigid procedure. In any case, the parties involved in the investigation
may be heard by the commissions and present written observations.
Resolutory Commission (see Article 18 of Decree
Law 511 of 1980). As a jurisdictional body, it must ensure the proper
application of Decree Law No. 211, correcting and punishing acts and
abuses in restraint of competition that come to its attention. In the
exercise of this authority, contained in Article 17.a, the following
procedure applies:
Cases may be filed on its own initiative or at the
request of the prosecutor, and the Resolutory Commission notifies the
parties of the case or suit.
After the period for discussion, the Commission
opens an evidentiary period of 10 days, in which all evidence admitted
by the law may be introduced. If witnesses are to be presented, the
list of their names must be filed by the second day of the evidentiary
period. Each party may present only four witnesses.
If a personal visit is appropriate, it shall be
carried out by the member designated for that purpose by the
Commission.
Evidence submitted during the evidentiary period
shall be weighed from the standpoint of reasonableness or veracity; the
legislator lists the evidence, and the judge weighs it in accordance
with logic, common sense, and the standards of experience.
The report of the case consists of the summary and
the pleas of the parties. The summary consists of the annotated,
methodical analysis presented by the rapporteur to the Commission
members concerning the case, without prejudice to any examination that
the members may deem necessary to conduct by themselves. The pleas are
the oral arguments of the lawyers.
When the report is finished, the Commission shall
issue its decision. The decision, based on its own judgment, must be
rendered within 45 days of the start of the proceeding.
Before the regular courts. Criminal cases arising
from application of Decree Law No. 211 start with a complaint or suit
from the National Economic Prosecutor, upon recommendation of the
Resolutory Commission.
The proceeding shall begin before a Minister of
the respective Court of Appeals, who shall act as a one-person court
and rule on the basis of his own judgment.
The case shall not last longer than 60 days
(extendable for another 30), and the National Prosecutor has the right
to take cognizance of any actions taken during the proceedings.
Criminal proceedings for crimes punishable under
Decree Law No. 211 are subject to ordinary procedures for crimes or
misdemeanors as established in the Criminal Procedure Code (Title V,
Decree 511 of 1980).
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The usual court criminal procedures. |
|
Administrative:
As there is no
specific law governing competition there are no corresponding specific
procedures.
Judicial:
Civil proceedings are commenced with the
submission of a claim setting out, in clear and precise terms, the
facts upon which the claim is founded, the evidence to be presented,
the legal grounds and the petition of the interested party. The case is
tried in accordance with the rules of civil procedure.
Criminal cases begin with the presentation of a
criminal complaint drawn up in keeping with the relevant legal
formalities. The Public Prosecutor is responsible for presenting
evidence so as to initiate proceedings in the manner required by
criminal procedure.
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Administrative or Judiciall Sanction
|
The Resolutory Commission is the only antitrust organ
in Chile with authority to impose sanctions and measures. The Law provides
the following civil and administrative measures:
1. to nullify any act, contract, system, agreement, or
accord that it considers detrimental to free competition;
2. to cancel the license of any corporation or order
the dissolution of any legally constituted association (commercial
companies, for example);
3. to exclude persons involved in these cases from
holding any union or professional office for a term of from one to five
years;
4. to impose fines up to 10,000 Tax Units (about
US$540,000);
5. to order criminal proceedings so that the regular
courts can investigate and punish attempts to restrict free trade.
(from Article 17, Decree 511 of 1980).
In criminal cases, the regular courts shall apply short
prison terms of any length (61 days to five years), cumulative, if the case
involves essential articles or services, such as food, clothing, housing,
medicine, or health.
|
1. Prison terms of 15 days to three months, and a fine
of from 10 to 100 pesos; 2. Sentences of one month to two years in a
correctional prison and fines of 25 to 500 pesos; 3. When the fraud involves
subsistence and other articles of basic necessity, the indicated penalties
are doubled. (Criminal Code).
Correctional prison of six days to two years, and/or a
fine of 25 to 10,000 pesos; 2. confiscation of articles in the case of
hoarding, adulteration, false weights and measures, or tying. (Law No. 13). |
A prison term of four to eight years and a fine of one
hundred and eighty to three hundred. |
There are no
administrative sanctions. Judicial sanctions range from orders to cease and
desist, in civil matters, to fines ranging from two hundred to ten thousand
quetzals; otherwise they range from prison terms of six months to five
years, depending on the gravity of the offence.
|
Recourse or Appeal
|
Concerning decisions of the Preventive Commissions.
None of the recourses normally contemplated in Chilean
law is generally available in the case of decisions of these Commissions.
However, Article 9 establishes a special appeal, called a protest, which has
the following characteristics:
1. It must be presented to the respective Regional or
Central Preventive Committee;
2. The appeal does not suspend the effect of the
decisions that are protested;
3. The Regional or Central Preventive Committee shall
issue a report with the background and reasons adduced to justify the
legality of the decision that gave rise to the appeal;
4. The Resolutory Commission shall be notified of the
appeal.
Once the background information is received, the
Commission can: a) Rule on the protest within 15 days, counting from the day
the background information was received. If it does not make a decision
within that period, the protest will be considered accepted; or it must take
up the matter, regardless of what the parties request, and may conduct a
hearing of those involved and suspend in any case the effect of the
protested resolution.
Concerning resolutions of the Resolutory Commission.
There can be no appeal whatsoever of the resolutions of
the Resolutory Commission, except the protest established in Decree Law 211
itself. This appeal may only be lodged in those cases in which the contested
resolution orders the modification or dissolution of corporations, exclusion
from holding professional or union offices, or the application of fines.
Resolutions that are not sanctions are not subject to any protest, unless
the complainant is the National Economic Prosecutor.
The appeal must be filed not later than 10 working days
after the decision with the Resolutory Commission or through the respective
Preventive Commission. The Commission shall rule based on its own judgment
and notify the Supreme Court. (Article 19).
To file a protest in cases where the resolution has
imposed fines, 50% of the fine imposed by must be posted. The National
Economic Prosecutor is exempt from his requirement. In the event that the
affected party ultimately fails to pay any fine imposed and confirmed by the
Supreme Court, the party shall be liable to imprisonment (Article 20).
|
For criminal offenses, there is the recourse of the
criminal justice system for appeal, review, and suspension of sentence prior
to execution. (Criminal Code).
In decisions concerning actions prohibited in Law No.
13, adopted by the Price Control Office, there is the recourse of appeal to
the Department of Industry and Commerce. (Law No. 13). |
The judicial structure
makes provision for the remedies of appeal, judicial review and quashing;
The law also provides for the initiation of contentious
proceedings by the affected party concerning the legality of administrative
decisions as well as for constitutional protection from the abrogation of
rights enshrined in the Constitution. |
The judicial system provides for the remedies of
appeal, review and annulment. In addition, where appropriate, appeals for
constitutional relief (“amparo”) may be filed, the objective of which is to
protect persons from the threat of violating their rights or to restore such
rights where they have been violated. Appeals for constitutional relief are
filed with the Constitutional Court.
|
|
Jamaica |
Mexico |
Nicaragua |
Panama |
Regulatory Framework
|
The Fair Competition Act of 1993, enacted on March 9,
1993 and entered into effect on September 9, 1993. |
1. 1917 Constitution. Article 28.
2. Federal Law on Economic Competition
Diario Oficial de la Federación
(Federal Register), December 24, 1992.
3. Regulations of the Federal Law on Economic
Competition (LFCE) (Official Gazette of the Federation, March 4, 1998).
4. Internal Regulations of the Federal Commission on
Competition (Official Gazette of the Federation, August 28, 1998). |
Nicaragua has no special legislation on competition
policy. However, there are some laws covering particular economic sectors
that regulate industries such as: electric power, telecommunications, oil
and financial markets.
-Law No. 125, April 10, 1991, “Law that creates the
Superintendencia (Regulatory Body) for Banks and other Financial
Institutions.”
-Law No 200, August 18, 1995, “Law on
Telecommunications and Postal Services.”
-Law No. 277, February 6, 1998, “Law on Oil
Distribution.” Chapter VI on promotion of competition.
-Law No. 272, April 23, 1998, “Electrical Industry
Law.”
-Law No. 271, April 1, 1998, “Amendments to the Law of
the Nicaraguan Institute of Energy (INE).” |
Law 29 of February 1, 1996, whereby rules on the
Protection of Competition are established and other measures are adopted.
Executive Decree No. 31 (September 3, 1998):
“Regulations of Title I (monopoly) and other provisions of Law 29 of
February 1, 1996. |
Objectives of the Law
|
To provide for the maintenance and encouragement of
competition in the conduct of trade, business and in the supply of services
in Jamaica with a view to providing consumers with competitive prices and
product choices. (Preamble of the Fair Competition Act). |
The Law is intended to protect the competitive process
through the prevention and elimination of monopolies, anticompetitive
practices and other restraints on the efficient operation of markets for
goods and services. (Article 2). |
The purpose of the Law is to protect and secure the
process of free economic competition, eradicate monopolistic practices and
other constraints on the efficient functioning of the markets for goods and
services, and safeguard the greater interests of consumers. (Article 1). |
Scope of Application
|
The Act applies to any acquisition, agreement,
advertisement, business, dealer, enterprise, group, group of interconnected
companies, interconnected companies whether industrial, trade, professional
or otherwise, that supply or trade in goods and/or services, which lessens,
hinders or prevents competition within the territory of Jamaica.
For the purposes of this Act, the effect on competition
in a market shall be determined by reference to all factors that affect
competition in that market, including competition from goods or services
supplied or likely to be supplied by persons not resident or carrying on
business in Jamaica. (Section 2). |
The present Act implements Article 28 of the
Constitution with respect to monopolies and free competition among economic
agents. Its provisions shall be in effect throughout the territory of the
Republic and apply to all areas of economic activity. (Article 1).
The provisions of the Act apply to all economic agents,
including natural and juridical persons; agencies and entities of federal,
state and local governments; professional groups and associations; trusts;
and any other manner of participation in economic activities. (Article 3). |
This Law shall apply to all economic agents, whether
natural or juridical persons, private enterprises or state or municipal
institutions, manufacturers, merchants or professionals, for-profit or
non-profit entities, or any others who are involved in any way as active
participants in economic activity. (Article 2). |
Exceptions to the
Scope of Application
Nothing in this Act shall apply to:
(a) combinations or activities of employees for their
own reasonable protection as employees;
(b) arrangements for collective bargaining on behalf of
employers and employees for the purpose of fixing terms and conditions of
employment;
(c) the entering into of an agreement insofar as it
contains a provision relating to the use, license or assignment of rights
under or existing by virtue of any copyright. patent or trademark;
(d) the entering into or carrying out of such an
agreement or the engagement in such business practice, as is authorized by
the Commissioner under Part V;
(e) any act done to give effect to a provision of an
arrangement referred to in paragraph (c);
(f) activities expressly approved or required under any
treaty or agreement to which Jamaica is a party;
(g) activities of professional associations designed to
develop or enforce professional standards of competence reasonably necessary
for the protection of the public;
(h) such other business or activity declared by the
Minister by order subject to affirmative resolution. (Section 3). |
For purposes of this Act, undertakings in strategic
areas reserved exclusively to the State, as set forth in Article 28 of the
Constitution of the United Mexican States, shall not be deemed monopolies.
However, the agencies and entities responsible for
carrying out the undertakings referred to in the foregoing paragraph shall
be subject to the provisions of this Act with respect to activities not
expressly included within the strategic areas. (Article 4).
Labor federations duly constituted in accordance with
applicable legislation to protect the interests of workers shall not be
deemed monopolies.
The exercise of copyrights granted for a specified
period of time to authors and artists for the production of their works, or
patents granted to inventors or those who improve inventions for the
exclusive use of their inventions, shall not be deemed monopolies. (Article
5).
Cooperatives and associations that engage in direct
sales of their products abroad shall not be deemed monopolies, provided: I.
such products are the principal source of income for the region in which
they are produced, or are not basic goods; II. their products are not also
offered for sale or distributed within Mexico; III. membership is voluntary,
and admission to and resignation from the group is permitted without
hindrance; IV. they do not issue or distribute permits or licenses whose
provision is the responsibility of agencies or entities of the federal
government; and V. they are duly constituted under the applicable laws of
the area in which they are located. (Article 6).
The determination of maximum price levels for products
and services deemed necessary to the national economy or essential to meet
the basic needs of society, shall be subject to the following provisions:
a) The Federal Executive has exclusive authority to
determine, in official decrees, which goods and services will be subject to
maximum price levels; b) Notwithstanding the powers of other agencies, the
Ministry shall be responsible for determining the maximum price levels for
goods and services identified under the preceding paragraph, based on
criteria designed to prevent shortages; c) The Ministry may coordinate and
agree with producers or distributors on such actions as it deems necessary
in this area without violating the provisions of this Act. It shall attempt
to minimize the effects of their activities on competition; d) The Consumer
Advocate’s office, in coordination with the Ministry, shall be responsible
for the surveillance and enforcement of the maximum price levels determined
under this Article, in accordance with the Federal Consumer Protection Act.
(Article 7). |
This Law shall not apply to those economic activities
which the Constitution and the laws reserve exclusively for the State.
(Article 3). |
General Prohibitions
|
(1) This section applies to agreements which contain
provisions that have as their purpose the substantial effect of lessening of
competition or have or are likely to have the effect of substantially
lessening competition in a market.
(2) Without prejudice to the generality of subsection
(1), agreements referred to in that subsection include agreements which
contain provisions that
(a) directly or indirectly fix purchase or selling
prices or any other trading conditions;
(b) limit or control production, markets, technical
development or investment;
(c) share markets or sources of supply;
(d) affect tenders to be submitted in response to a
request for bids;
(e) apply dissimilar conditions to equivalent
transactions with other trading parties thereby placing them at a
competitive disadvantage;
(f) make the conclusion of contracts subject to
acceptance by the other parties of supplementary obligations which, by their
nature or according to commercial usage have no connection with the subject
of such contracts, being provisions which have or are likely to have the
effect referred to in subsection (1).
(3) Subject to subsection (4) no person shall give
effect to any provision of an agreement which has the purpose or effect
referred to in subsection (1); and no such provision is enforceable.
(Section 17).
(4) Subsection (3) does not apply to any agreement or
category of agreements the entry into which has been authorized under Part V
or which the Commission is satisfied
(a) contributes to: (i) the improvement of production
or distribution of goods and services; or (ii) the promotion of technical or
economic progress, while allowing consumers fair share to the resulting
benefit;
(b) imposes on the enterprises concerned on such
restrictions are indispensable to the attainment of the objectives
mentioned in paragraph (a); or
(c) does not afford such enterprises the possibility of
eliminating competition in respect of a substantial part of the goods or
services concerned. (Section 17).
(1) No person shall conspire, combine, agree or arrange
with another person to
(a) limit unduly the facilities for transporting,
producing, manufacturing, storing or dealing in any goods or supplying any
service;
(b) prevent, limit or lessen unduly, the manufacture or
production of any goods or to enhance unreasonably the price thereof;
(c) lessen unduly, competition in the production,
manufacture, purchase, barter, sale, supply, rental or transportation of any
goods or in the price of insurance on persons or property;
(d) otherwise restrain or injure competition unduly.
(2) Nothing in subsection (1) applies to a conspiracy,
combination, agreement or arrangement which relates only to a service and to
standards of competence and integrity that are reasonably necessary for the
protection of the public:
(a) in the practice of a trade or profession relating
to the service; or
(b) in the collection and dissemination of information
relating to the service. (Section 35). |
Monopolies and measures to exclude competitors are
prohibited, as are any practices that, under the terms of this law, tend to
diminish, harm or impede competition and the freedom to produce, process,
distribute or market goods and services. (Article 8). |
This Law prohibits any action, contract or practice
which restricts, diminishes, damages, impedes or in any other way harms free
economic competition and free competition in the production, processing,
distribution, supply or marketing of goods and services. (Article 5). |
Prohibited Conduct
|
(1) For the purposes of this Act a provision of
an agreement is an exclusionary prevision if:
(a) the agreement is entered into or arrived at between
void persons of whom any two or more are in competition with each other; and
(b) the effect of the provision is to prevent, restrict
or limit the supply of goods or services to, or the acquisition of goods or
services from, any particular person or class or persons either generally or
in particular circumstances or in particular conditions, by all or any the
parties to the agreement or, if a party is a company, by an interconnected
company.
(2) For the purposes of subsection (1), a person is in
competition with another person if that person or any interconnected company
is, or is likely to be or, but for the relevant provision, would be or would
be likely to be, in competition with the other person or with an
interconnected company, in relation to the supply or acquisition of all or
any of the goods or services to which that relevant provision relates.
(3) No person shall give effect to an exclusionary
provision of an agreement. (Section 18).
(1) It is unlawful for any two or more enterprises,
being suppliers of goods, to enter into or carry out any agreement by virtue
of which they undertake:
(a) to withhold supplies of goods from dealers (whether
parties to the agreement or not) who resell or have resold goods in breach
of any condition as to the price at which those goods may be resold:
(b) to refuse to supply goods to such dealers except on
terms and conditions which are less favourable than those applicable in the
case of other dealers carrying on business in similar circumstances;
(c) to supply goods only to persons who undertake or
have undertaken to do any of the acts described in paragraph (a) or (b).
(2) It is unlawful for any two or more enterprises
referred to in subsection (1) to enter into or carry out any agreement
authorizing:
(a) the recovery of penalties (however described) by or
on behalf of the parties to the agreement from dealers who resell or have
resold goods in breach of any such condition as described in subsection (1)
(a); or
(b) the conduct or any proceedings in connection
therewith. (Section 22).
(1) It is unlawful for any two or more enterprises,
being dealers in any goods, to enter into or carry out any agreement by
which they undertake:
(a) to withhold orders for supplies of goods from
suppliers (whether parties to the agreement or not); (i) who supply or have
supplied goods without imposing such condition as is described in section
72(1)(a); or (ii) who refrain or have refrained from taking steps to ensure
compliance with such conditions in respect of goods supplied by them; or
(b) to discriminate in their handling of goods against
goods supplied by those suppliers.
(2) It is unlawful for any two or more enterprises
referred to in subsection (1) to enter into or carry out an agreement
authorizing:
(a) the recovery of penalties (however described) by or
on behalf of the parties to the agreement from the suppliers referred to in
subsection (1); or
(b) the conduct of any proceedings in connection
therewith. (Section 23).
Sections 22 and 23 apply in relation to an association
whose members consist of or include:
(a) enterprises which are suppliers or dealers in any
goods; or
(b) representatives of such enterprises, as they apply
to an enterprise. (Section 24).
(1) Any term or condition of an agreement for the sale
of goods by a supplier to a dealer is void to the extent that it purports to
establish or provide for the establishment of minimum prices to be charged
on the resale of the goods in Jamaica. (Section 25).
(1) Section 25 applies to patented goods (including
goods made by a patented process) as it applies to other goods. (Section
26).
(1) It is unlawful for a supplier to withhold supplies
of any goods from a dealer seeking to obtain them for resale on the ground
that the dealer:
(a) has sold goods obtained either directly or
indirectly from that supplier at a price below the resale price or has
supplied such goods either directly or indirectly to a third party who had
done so; or
(b) is likely, if the goods are supplied by him to sell
them at a price below that price, or supply them either directly or
indirectly to a third party who would be likely to do so;
(2) In this section “the resale price”, in relation to
a sale of any description, means:
(a) any price notified to the dealer or otherwise
published by or on behalf of a supplier of the goods in question (whether
lawfully or not) as the price or minimum price which is to be charged on or
is recommended as appropriate for a sale of that description; or
(b) any price proscribed or purporting to be proscribed
for that purpose by an agreement between the dealer and any supplier;
(3) Where under this section it would be unlawful for a
supplier to withhold supplies of goods, it is also unlawful for him to cause
or procure any other supplier to do so. (Section 27)
(4) Subsection (3) does not apply where the proof that
supplies were withheld consists only of evidence of requirements imposed by
the supplier in respect of the time at which or the form in which payment
was to be made for goods supplied or to be supplied. (Section 28).
(1) A person who is engaged in the business of
producing or supplying goods shall not, directly or indirectly
(a) by agreement, threat, promise or any like means,
attempt to influence upward or discourage the reduction of, the price at
which any other person supplies or offers to supply or advertises goods;
(b) refuse to supply goods to or otherwise
discriminates against any other person engaged in business;
(c) refuse to supply goods to or otherwise
discriminates against any other person engaged in business because of the
low pricing policy of that other person.
(2) Subsection (1) does not apply where the person
attempting to influence the conduct of another person and that other person
(a) are interconnected companies; or
(b) principal and agent.
(3) For the purposes of this section, a suggestion by a
producer or supplier of goods of a resale price or minimum resale price in
respect thereof, however arrived at, is proof of an attempt to influence the
person to whom the suggestion is made, unless it is proved that the person
making the suggestion, in so doing, also made it clear to the person to whom
it was made that he was under no obligation to accept it and would in no way
suffer in his business relations with the person making the suggestion or
with any other person if he failed to accept the suggestion.
(4) For the purposes of this section, the publication
by a supplier of goods other than a retailer, of an advertisement that
mentions a resale price for the goods is an attempt to influence upward the
selling price of any person into whose hands the goods come for resale
unless the price is so expressed as to make it clear to any person who
becomes aware of the advertisement that the goods may be sold at a lower
price. (Section 34).
(1) Subject to subsection (2), it is unlawful for two
or more persons to enter into an agreement whereby
(a) one or more of them agree or undertake not to
submit a bid in response to a call or request for bids or tenders; or
(b) as bidders or tenders they submit in response to a
call or request, bids or tenders that are arrived at by agreement between or
among themselves.
(2) This section shall not apply in respect of an
agreement that is entered into or a submission that is arrived at only by
companies each of which is, in respect of every one of the others, an
affiliate. (Section 36).
Misleading Advertising and Deceptive Marketing
Practices
(1) A person shall not in pursuance of trade and for
the purpose of promoting, directly or indirectly, the supply or use of goods
or services or for the purpose of promoting, directly or indirectly, any
business interest, by any means:
(a) make a representation to the public that is false
or misleading in a material respect;
(b) make a representation to the public in the form of
a statement, warranty or guarantee of performance, efficacy or length of
life of goods that is not based on an adequate and proper test thereof, the
proof of which lies on the person making the representation;
(c) make a representation to the public in the form of
a statement, warranty or guarantee that services are of a particular kind,
standard, quality, or quantity, or that they are supplied by any particular
person or by any person of a particular trade, qualification or skill;
(d) make a representation to the public in a form that
purports to be -
(i) a warranty or guarantee of any goods; or (ii) a
promise to replace, maintain or repeat an article or any part thereof or to
repeat or continue service until it has achieved a specified result-, if the
form of purported warranty or guarantee or promise is materially misleading
or if there is no reasonable prospect that it will be carried out; (e) make
a materially misleading representation to the public concerning the price
at which any goods or services or like goods or services have been, are or
will be ordinarily supplied. (Section 37).
Representation as to reasonable test and publication of
testimonials:
A person shall not, for the purpose of Promoting,
directly or indirectly, the supply or use of any goods, or for the purpose
of promoting, directly or indirectly any business interest: (a) make a
representation to the public that a test as to the performance, efficacy or
length of life of the goods has been made by any person; or (b) publish a
testimonial with respect to the goods, unless he can establish that (i) the
representation or testimonial was previously made or published by the person
by whom the test was made or the testimonial was given, as the case may be;
or (ii) before the representation or testimonial was made or published, it
was approved and permission to make or publish it was given in writing by
the person who made the test or gave the testimonial, as the case may be,
and it accords with the representation or testimonial previously made,
published or approved. (Section 38)
A person shall not supply any article at a price that
exceeds the lowest of two or more prices clearly expressed by him or on his
behalf, in respect of the article in the quantity in which it is so supplied
at the time at which it is so supplied: (a) on the article, its wrapper or
container; (b) on anything attached to, inserted in or accompanying the
article, its wrapper or container or anything on which the article is
mounted for display or sale; or (c) on a display or advertisement at the
price at which the article is purchased. (Section 39).
Sale at a bargain price:
(1) For the purposes of this section, “bargain price”
means: (a) a price that is represented in an advertisement to be a bargain
price by reference to an ordinary price or otherwise; or (b) a price so
represented in an advertisement, that a person who reads, hears or sees the
advertisement would reasonably understand to be a bargain price by reason of
the prices at which the goods advertised or like articles are ordinarily
sold.
(2) A person shall not advertise at a bargain price
goods which he: (a) does not intend to supply; or (b) does not have
reasonable grounds for believing he can supply.
at that price for a period that is, and in quantities
that are, reasonable having regard to the nature of the market in which he
carries on business, the nature and size of his enterprise and the nature of
the advertisement.
(3) Subsection (2) does not apply where the person who
is advertising proves that: (a) he took reasonable steps to obtain in
adequate time a quantity of the article that would have been reasonable
having regard to the nature of the advertisement, but was unable to obtain
such a quantity by reason of events beyond his control that he could not
have reasonably anticipated; (b) he obtained a quantity of the article that
was reasonable having regard to the nature of the advertisement, but was
unable to meet the demand therefor because that demand surpassed his
reasonable expectations; or (c) after he became unable to supply the article
in accordance with the advertisement, he undertook to supply the same
article or equivalent article of equal or better quality at the bargain
price and within a reasonable time to all persons who requested the article
and who were not supplied therewith during the time when the bargain price
applied and that he fulfilled the undertaking. (Section 40).
Sale above advertise price:
(1) A person who advertises goods for sale or rent in a
market shall not, during the period and in the market to which the
advertisement relates, supply goods at a price that is higher than that
advertised.
(2) This section shall not apply in respect of: (a) an
advertisement that appears in a catalogue or other publication in which it
is prominently stated that the prices contained therein are subject to error
if the person establishes that the price advertised is in error; (b) an
advertisement that is immediately followed by another advertisement
correcting the price mentioned in the first advertisement.
(3) For the purposes of this section, the market to
which an advertisement relates shall be deemed to be the market to which it
could reasonably be expected to reach, unless the advertisement defines
market specifically by reference to a geographical area, store, sale by
catalogue or otherwise. (Section 41). |
Monopolistic practices (absolute and relative) are
prohibited. |
A. Monopolies
1. Absolute monopolistic practices: are any
combinations, arrangements, agreements or contracts between competing or
potentially competing economic agents, the purposes or effects of which are
any of the following:
a. To fix, manipulate, agree upon or set the sales or
purchase price of goods or services, or to exchange information for said
purpose or outcome; b. To agree not to produce, process, distribute or
market other than a small quantity of goods, or to provide a limited number,
volume or frequency of services; c. To divide, distribute, assign or
allocate portions or segments of an existing or potential market for goods
or services, through patronage, suppliers, defined or definable time or
spaces; or, d. To establish, agree upon or coordinate bids or
nonparticipation in bidding, requests for proposals, competitions or public
auctions. (Article 11)
In addition to their adverse economic effects, absolute
monopolistic practices are inherently illicit. (Article 10)
Absolute monopolistic practices. The following
can be considered to be among the factors indicating the existence of an
absolute monopolistic practice between two or more competing or potentially
competing economic agents, under Article 11 of the Law:
1. When the price structure, including the cost and
international reference price, market shares, or discounts and other
benefits granted show evidence of collusion among economic agents;
2. When economic agents maintain or change, to the same
extent, their prices for identical, similar, or interchangeable goods or
services, and when that behavior does not respond to changes in consumers’
preferences or in regular producer or supplier costs;
3. When economic agents as a group apply the sales or
purchase prices published by an association or any competitor for identical,
similar, or interchangeable goods and services;
4. When associations of economic agents issue
instructions or recommendations to their members, which results fixing,
manipulating, or agreeing on sale or purchase prices for identical, similar,
or interchangeable goods and services, or in sharing information with the
same objective or effect;
5. When associations of economic agents issue
instructions or recommendations to their members, resulting in the
establishment of requirements to produce, process, distribute, market, or
buy only a restricted or limited quantity of goods or the provide a
restricted or limited number, volume, or frequency of services; and when
they set requirements to share, distribute, assign, or impose shares or
segments of a current or potential market for goods or services; or
6. When in public tendering, calls for bid prices,
competitive bidding, or public auctions there is a pattern of behavior that
indicates the possibility that important information is being shared on bid
prices and terms or on the modality and advisability of participation by
economic agents in these processes.
The foregoing does not affect the ordinary rules
concerning the circumstancial evidence and presumptions of the case, or
burden of proof.
(Art. 7, Regulations)
2. Relative monopolistic practices: are
unilateral actions, combinations, arrangements, agreements or contracts, the
purpose or effect of which is to unduly supplant other agents in the
respective market, to prevent them from gaining access or to establish
exclusive privileges for one or more persons in the following instances:
a. Among noncompeting economic agents, the fixing,
definition or establishment of the exclusive distribution of goods or
services, by virtue of subject, geographic location or for given periods of
time, including the division, distribution or assignment of customers or
suppliers, as well as imposition of the obligation not to produce or
distribute goods or services for a defined or definable period of time;
b. Setting the price or other conditions that a
distributor or supplier must observe in reselling goods or providing
services;
c. A sale or transaction conditional upon the purchase,
acquisition, sale or provision of another good or service, usually different
or distinguishable, or on bases of reciprocity;
d. A sale or transaction subject to the condition of
not using or acquiring, selling or providing, goods or services produced,
processed, distributed or marketed by a third party;
e. A unilateral action consisting of refusing to sell
or provide, to specific persons, goods or services which are available and
normally offered to third parties, except when the customer or prospective
customer is in default of contractual obligations to the economic agent or
it is known that said customer or prospective customer frequently returns or
damages goods;
f. The agreement among various economic agents or an
appeal to the latter to exert pressure on any customer or supplier for the
purpose of deterring him from taking a given step, taking reprisals or
forcing him to act in a certain way;
g. Any predatory action taken unilaterally or jointly
by an economic agent in order to cause damages or squeeze a competitor out
of a market, or to prevent a potential competitor from entering said market,
when said action cannot reasonably be expected to generate or increase
earnings, but rather to encourage the competitor or potential competitor to
stop competing or to withdraw from the market, leaving the agent with
substantial power or in a monopolistic position vis-à-vis the respective
market;
h. In general, any action that unduly harms or impedes
the process of free economic competition and free competition in the
production, processing, distribution, supply or marketing of goods or
services. (Article 14).
Relative monopolistic practices can adversely affect
the interests of consumers and are therefore prohibited. (Article 13).
Relative monopolistic practices. Subject to
proof of the assumptions contemplated in Articles 15, 16, and 17 of the Law,
the following are among the acts that unlawfully impair or impede the
process of free competition and competitiveness under Article 14 of the Law:
1. The systematic sale of goods and services below
their variable average cost, the purpose or effect of which is or could be
to totally or partially displace competitors from the particular market in
which the practice is applied, thereby making it feasible to recover the
losses incurred in future by charging higher prices than would otherwise be
charged;
2. The sale of goods and services under the conditions
indicated in the preceding paragraph, when such action blocks the expansion
of the competitors of the economic agent committing the act, or the entry of
new competitors into other markets in which said agent also participates;
3. The granting of favorable conditions by producers or
suppliers to buyers, with the requirement that purchases from the former
represent a particular volume or percentage of the latter’s demand, when
this is cannot be justified in terms of economic efficiency;
4. The imposition of territorial, volume, or customer
restrictions that economic agents must observe in the resale of goods or
provision of services, when this is cannot be justified in terms of economic
efficiency;
5. The granting of discounts, by producers or suppliers
to buyers, requiring exclusivity in the distribution or marketing of the
goods or services, when this is cannot be justified in terms of economic
efficiency;
6. Consistent use of the profits obtained by an
economic agent from the sale or a good or provision of a service to offset
losses from another good or service, with a view to increasing the latter’s
market share, when this is cannot be justified in terms of economic
efficiency; or
7. The setting of
different prices or conditions of sale for different buyers in equivalent
transactions, when this is cannot be justified in terms of economic
efficiency. (Art 8, regulations).
3. Economic combination: is a
merger, takeover or any act whereby corporations, partnerships, shares,
partners' shares, trust funds, establishments or assets in general are
combined, by suppliers, customers or other economic agents who compete with
one another.
Economic combinations are prohibited which have or may
have the effect of diminishing, restricting, harming or unreasonably
impeding free economic competition and free competition with respect to
equivalent, similar or substantially related goods or services. (Article
19).
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Prohibited Conduct / Definitions
|
Conspiracy: Any practice whereby one person combines,
agrees or arranges with another to limit unduly the manufacture, transport
or supply of any goods or services or to enhance the price of same or to
restrain or injure competition unduly. (Section 35)
Exclusive Dealing: Any practice whereby a supplier of
goods requires that his customers interact exclusively with him as a
condition precedent to the supply of the goods, which in effect protects the
supplier from his competitors. (Section 33)
Tied Selling: Any practice whereby the supplier of an
article as a condition of supplying the article requires his customer to, at
the same time, purchase any other item. (Section 33)
Market Restriction: Any practice whereby the supplier
of goods requires that his customer supplies goods only in a defined market
or extracts a penalty of any kind from the customer if he supplies of any
goods outside the defined market. (Section 33)
Abuse of Dominant Position: An enterprise which by
itself or together with an interconnected company, occupies such a position
of economic strength as will enable it to operate in the market without
effective constraints from its competitors or potential competitors, abuses
its dominant position, if it impedes the maintenance and development of
effective competition in a market. (Sections 19 and 20). |
Absolute monopolistic
practices are contracts, agreements, arrangements, or combinations between
competing economic agents having any of the following objectives or effects:
I) fix, raise, agree on, or manipulate the sale or purchase price of goods
or services supplied or demanded on the market, or information sharing with
the same objective or effect; II) establish the obligation to produce,
process, distribute, or market only a restricted or limited quantity of
goods or provide a restricted or limited number, volume, or frequency of
services; III) divide, distribute, assign, or impose shares or segments of a
current or potential market for goods and services through customers,
suppliers, determined or determinate times or spaces; or IV) establish,
agree on, or coordinate positions or abstain from tendering, competitive
bidding, auctions, or public auctions (Article 9). The Commission considers
the following to be among the indicators of the existence of an absolute
monopolistic practice under the terms of Article 9: I) the sale price
offered in the national territory by two or more competitors of goods and
services that are internationally interchangeable is considerably higher or
lower than the international reference price, unless the difference is due
to tax provisions, transportation or distribution costs; and II) two or more
competitors establish the same maximum or minimum prices for a good or
service or apply the sales or purchase prices dictated by a business chamber
association or other competitor for a good or service (Article 6 of the LFCE
Regulations).
Subject to the standards in Articles 11, 12, and 13 of
this Act, contracts, agreements, or combinations whose purpose or effect is,
or could be, to unfairly drive other economic agents from the market,
substantially impede their access to the market, or establish exclusive
advantages in favor of one or more persons shall be deemed “relative”
anticompetitive practices when they involve: I. the conclusion, imposition
or establishment of agreements between economic agents that are not
competitors for exclusive distribution of goods and services based on
subject matter or geographic area, or for specific periods of time,
including the division, distribution or allocation of customers or suppliers
- as well as imposition of an obligation not to produce or distribute goods
or services for a specified period; II. the imposition of prices or other
terms and conditions under which distributors or suppliers must sell or
distribute goods and services; III. making sales or transactions conditional
upon the purchase, acquisition, sale or provision of another, normally
separate product or service, or on the basis of reciprocity; IV. making
sales or transactions conditional upon not using, purchasing, selling or
providing goods and services produced, processed, distributed or sold by a
third party; V. unilateral refusal to sell or provide to particular persons
goods or services normally available and offered for public sale; VI.
conspiring with other economic agents, or inciting them to apply pressure on
a client or supplier in reprisal for certain actions or for the purpose of
forcing that person to act or refrain from acting in a given manner; or VII.
in general, any act which unduly diminishes, harms or impedes competition in
the production, processing, distribution or marketing of goods and services.
(Article 10).
The following practices are among those included in
Article 10, Section VII of the Law: I) the systematic sale of goods and
services at prices below their overall average cost, or their occasional
sale below their variable average cost; II) the granting of discounts, by
producers or suppliers to buyers, requiring exclusivity in the distribution
or marketing or the goods or services, when this is cannot be justified in
terms of economic efficiency; III) the consistent use of the profits
obtained by an economic agent from the sale of a good or service to finance
losses on another good or service; IV) the establishment of different prices
or conditions of sale for different buyers under the same conditions; or V)
concerted action by one or more economic agents with the actual or potential
objective or effect, be it direct or indirect, of increasing costs and
obstructing the productive process or reducing demand for their competitors
(Article 7, LFCE Regulations).
A practice referred to in Article 10 is a violation of
this Act if: I. The economic agent or agents have substantial power in the
relevant market; and II. The practices in question involve goods or services
pertaining to that market. (Article 11).
Economic agents may represent to the Commission that
the profits derived from the relative monopolistic practice are beneficial
to the process of competitiveness and free competition, which must take into
account assessment of the behaviors referred to in Article 10 of the Law
(Article 6 of the LFCE Regulations).
The following criteria shall be used to determine the
relevant market: I. the possibilities for substituting other goods or
services, whether domestic or foreign, for the relevant goods or services,
taking into account technological possibilities for producing the substitute
good or service, the extent to which consumers have access to the
substitute, and the time required to make the substitution; II. the
distribution costs, cost of inputs and complementary products and,
substitutes, domestic or foreign, taking into account freight and insurance
costs, tariff and non-tariff barriers, restrictions imposed by the economic
agents or their associations, and the amount of time required for goods and
services from other regions to reach the market; III. the cost to
purchasers, and their access to other markets; and IV. the federal, local or
international restrictions that limit the access of purchasers to other
sources, or suppliers to other customers. (Article 12). The following
criteria shall be used to determine whether an economic agent has
substantial power in the relevant market: I. the agent’s share of the market
and whether it can unilaterally set prices or substantially restrict the
flow of goods or services in the relevant market, under conditions in which
its competitors do not have and are not likely to develop the capacity to
counteract such action; II. The existence of barriers to entry, and any
foreseeable changes in these barriers and in the goods and services offered
by other competitors; III. the existence and market power of its
competitors; IV. the access of the economic agent and its competitors to
sources of necessary inputs; V. the economic agent’s recent conduct; and VI.
such other criteria as are established in the regulations implementing this
Act. (Article 13). |
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Exceptions to Prohibited Practices
|
(1) Subject to subsection (2), any person who
proposes to enter into or carry out an agreement or to engage in a business
practice which in the opinion of that person is an agreement or practice
affected or prohibited by this Act, may apply to the Commission for an
authorization to do so.
(2) In respect of an application under subsection (1),
the Commission: (a) may, notwithstanding any provision of this Act, if it is
satisfied that the agreement or practice, as the case may be, is likely to
promote the public benefit, grant an authorization subject to such terms and
conditions as it thinks fit; or (b) may refuse to grant an authorization and
if it does so, the Commission shall inform the applicant in writing of its
reasons for refusal. (Section 29).
While an authorization granted under section 29 remains
in force, nothing in this Act shall prevent the person to whom it is granted
from giving effect to any agreement or any provision of an agreement or from
engaging in any practice to which the authorization relates. (Section 30).
In addition to the granting of Authorizations by the
Commission the Act contains other limited exceptions in the form of defences
to specific offences. They include the following:
(i) Agreements which substantially lessen competition:
provisions of agreements having the effect of lessening competition will be
enforceable if the Commission is satisfied that it - (a) contributes to the
improvement of production or distribution of goods and services; or the
promotion of technical or economic progress, while allowing consumers a fair
share of the resulting benefit; or (b) imposes on enterprises concerned only
such restrictions as are indispensable to the attainment of the objectives
mentioned in paragraph(a); or (c) does not afford such enterprises the
possibility of eliminating competition in respect of a substantial part of
the goods or services concerned. (Section 17)
(ii) Abuse of Dominance: an enterprise shall not be
treated as abusing a dominant position - (a) if it is shown that its
behaviour was exclusively directed to improving the production or
distribution of goods or to promoting technical or economic progress; and
consumers were allowed a fair share of the resulting benefit. (b) by reason
only that the enterprise enforces or seeks to enforce any right under or
existing by virtue of any copyright, patent, registered design or trademark.
(Section 20)
(iii) Exclusive Dealing and Market Restriction: these
practices are not considered offensive where they will be engaged in only
for a reasonable period of time to facilitate entry of a new supplier of
goods or new goods into a market or when engaged in between or among
interconnected companies. (Section 33)
(iv) Conspiracy: a conspiracy, agreement or arrangement
which relates only to a service and to standards of competence and integrity
that are reasonably necessary for the protection of the public -
(a) in the practice of a trade or profession relating
to the service; or (b) in the collection and dissemination of information
relating to the service. (Section 35)
(v) Consumer protection provisions: the defences to a
sale at bargain price without adequate stock are that the person took
reasonable steps to obtain an adequate supply, did obtain an adequate supply
but demand surpassed reasonable expectations, or undertook to and did supply
the product or a reasonable substitute within a reasonable time. (Section
40). |
The LFCE admits no exceptions to prohibited practices.
|
|
Economic Concentrations (Mergers,
Acquisitions, Joint Ventures)
|
Economic concentrations are analyzed under the Fair
Competition Act in terms of dominance. The Act defines a dominant company
as one which “occupies” such a position of strength in the market as will
enable it to operate in the market without effective constraints from its
competitors or potential competitors”.
However, simply being dominant does not constitute a
breach of the Act. An enterprise must be found to have abused its dominant
position and that such abuse has had or is likely to have the effect of
lessening competition substantially in the marketplace.
The Act states that the enterprise “abuses its dominant
position if it impedes the maintenance or development of effective
competition in a market” it goes on to outline specifically, conduct which
would be considered evidence of an enterprise’s abuse of its dominant
position. The list in the Act is illustrative only. |
For purposes of this Act, a concentration is defined as
a merger with or acquisition of control over another firm, or any other act
joining together companies, associations, stockholders, business
partnerships, trust companies or assets in general, which is carried out
between competitors, suppliers, customers, or any other economic agents,
whose purpose or effect is to diminish, harm or impede competition with
respect to identical or substantially similar goods and services. (Article
16).
When investigating consolidations, the Commission will
regard as indicative of the assumptions to which the preceding article
refers any act or attempt that:
I. Gives or can give the merging party, buyer or
business resulting from the consolidation the power to fix prices
unilaterally or to curtail a significant portion of the supply on the
relevant market, without the competition being able, either in fact or in
theory, to counter that power;
II. Is or can be intended to drive out the competition
or keep it out of the market in question unfairly; and
III. Has the actual or intended effect of making it
significantly easier for the parties to engage in the monopolistic practices
to which the second chapter of this law refers.
(Article 17).
In determining whether to deny approval of, or to
assess penalties under this Act, against a concentration, the Commission
shall consider the following:
I. the relevant market as defined in Article 12;
II. identification of
the economic agents supplying the market, analysis of their market power in
accordance with Article 13, and the degree of concentration within that
market; and
III. such other criteria and factors as may be
prescribed in the regulations implementing this Act. (Article 18).
The LFCE makes no exceptions to prohibited practices.
The following criteria will also be considered:
I) valuation in the
relevant market of the efficiency gains to be derived from concentration,
which must be proven by the economic agents making said gains; II) the
effects of concentration, both on the market in question and on other
competitors and sources of demand for the good or service and on other
markets and related economic agents; and III) shares held by the economic
agent(s) involved in the transaction in other economic agents that
participate directly or indirectly in the market in question or in related
markets (Article 15 of the LFCE Regulations).
If an investigation and the proceedings conducted under
this Act conclude that the transaction this Chapter, the Commission may, in
addition to applying applicable legal measures or penalties:
I. subject the concentration to such conditions as it
deems appropriate; or II. order the total or partial divestiture of the
concentration formed in violation of these provisions, the abandonment of a
control relationship, or the cessation of the relevant actions. (Article
19).
The Commission must be notified before any of the
following transactions is entered into:
I. where a transaction or series of transactions is
worth over 12 million times the basic minimum wage applicable within the
Federal District;
II. where a transaction or series of transactions
results in acquisition of 35 percent or more of the assets or shares of an
economic agent whose; or assets or sales are worth over 12 million times the
basic minimum wage in the Federal District; or
III. where two or more participants in the transaction
have total assets or annual sales in excess of 48 million times the basic
minimum wage applicable within the Federal District, and the transaction
involves the acquisition of capital or assets in excess of the equivalent of
4.8 million times the basic minimum wage applicable in the Federal District.
In order to register transactions in the commercial
Registry, economic agents to which any of the three sections of this Article
apply must either show that they have obtained a favorable determination
from the Commission or present proof that the Commission, having been duly
notified, has not issued a determination. (Article 20).
For purposes of the foregoing Article, the following
requirements must be met:
I. Notification must be in writing, accompanied by a
copy of the relevant legal documents for the transaction, including names of
the individuals and companies involved, their financial statements for the
most recent fiscal period, their market shares, and any other information
necessary for analysis of the proposed transaction;
II. The Commission shall have 20 calendar days from the
date it receives notification in which to request additional data and
documents, which must be supplied by the parties involved within 15 calendar
days after the request -- although this latter deadline may be extended
where justified;
III. The Commission shall have 45 calendar days from
the date on which notification or, where applicable, additional
documentation referred to in the preceding paragraph is received. Where no
ruling is issued during this period, the Commission shall be deemed to have
no objection;
IV. In exceptionally complex cases, the Chairman of the
Commission shall be authorized to extend the deadlines specified under II
and III above by up to an additional 60 calendar days;
V. A determination of the Commission and in accordance
with law shall include a statement of reasons;
VI. A favorable determination under this Article shall
not be considered a judgment as to the legality of other practices
prohibited by this Act, nor shall it relieve the economic agents involved
from liability for other anticompetitive practices. (Article 21).
Reporting under the terms of Articles 20 and 21 of the
Law shall not be required.
I) the legal acts
concerning shares or corporate equity in foreign companies, when the
economic agents involved in said acts do not acquire control of Mexican
companies, nor do they accumulate in the national territory shares,
corporate equity, participation in trusts, or assets in general, in addition
to those which they possessed, directly or indirectly, prior to the
transaction; and II) transactions in which an economic agent has direct or
indirect ownership and possession, for at least the preceding three years,
of 98% of the shares or corporate equity in the economic agent(s) involved
in the transaction. In this case, the economic agents need only report this
in writing to the Commission, within the five days following the transaction
(Article 21 of the LFCE Regulations).
The following are not subject to challenge under this
Act:
I. transactions which have received a favorable
determination, unless that determination was based on false information
provided to the Commission; and
II. transactions not requiring prior notification that
were entered into at least one year beforehand. (Article 22). |
Economic concentration shall be understood to mean a
merger, takeover or any act whereby corporations, partnerships, shares,
partners' shares, trust funds, establishments or assets in general are
combined, by suppliers, customers or other economic agents who compete with
one another.
Economic concentrations are prohibited which have or
may have the effect of diminishing, restricting, harming or unreasonably
impeding free economic competition and free competition with respect to
equivalent, similar or substantially related goods or services.
An exception to this prohibition is made in the case of
concentrations involving an economic agent who is in a state of insolvency,
provided that he can show that he tried unsuccessfully to find noncompeting
buyers.
Temporary partnerships formed for a given period of
time to carry out a specific project shall not be considered economic
combinations for purposes of this chapter. (Article 19).
Prior verification. Economic agents may report
and submit to the Commission for verification any plans for economic
concentration. Reporting prior verification does not require the economic
agents to suspend execution of the concentration process, without prejudice
to the Commission’s ruling. (Regulations, art. 14)
Investigation. When an economic concentration
effort has not been submitted for prior verification, the Commission may
initiate an investigation within a period of no more than three years
following its execution, provided that it suspects the existence of one of
the assumptions prohibited by the Law, under Articles 24, 25, and 26
thereof. During the investigation, the Commission may require economic
agents to provide any information it deems pertinent. The investigation must
be completed and a decision handed down during the same three-year period.
(Regulations, art. 15) |
Enforcement Bodies
|
The legislation establishes an agency known as the Fair
Trading Commission (FTC) that is empowered to enforce the provisions of the
Act. (Section 4). |
The Federal Competition Commission is an autonomous
administrative body of the Ministry. It shall act as a technically and
operationally independent agency charged with the prevention, investigation
and combating of monopolies, anticompetitive practices and concentrations
under the terms of this Act, and shall enjoy independence in making its
determinations. (Article 23). |
A special entity known as the Free Competition and
Consumer Affairs Commission is hereby created, hereinafter referred to as
"the Commission," as a public decentralized entity of the State, with its
own legal capacity, autonomy in its internal procedures, independence in the
exercise of its functions, and attached to the Ministry of Trade and
Industries. The Commission shall be subject to inspection by the Office of
the Controller General of the Republic, in accordance with the Constitution
and the laws. (Article 101). |
Enforcement Bodies / Structure
|
The Fair Trading Commission is comprised of two
distinct arms: the quasi-judicial arm represented by the four (4) appointed
Commissioners, and the investigative arm or Commission’s staff, headed by
the Executive Director, who directs three lawyers, three economists, two
research officers and a cost accountant.
(1) The Commission shall appoint and employ an
Executive Director who shall hold office for a period of seven years and may
be re-appointed for periods not exceeding five years at a time;
(2) The Executive Director shall be in charge of the
day-to-day management of the Commission; (...)
(6) The Commission may appoint and employ at such
remuneration and on such terms and conditions as it thinks fit, such other
officers and employees as it thinks necessary for the proper carrying out of
the provisions of the Act. (Section 15).
(1) The Commission shall consist of such number of
persons not being less than three nor more than five as the Minister may
from time to time appoint.
(2) The Executive Director shall be a member
ex-oficio of the Commission. (Paragraph 1. Schedule of the Fair
Competition Act).
(1) The members referred to in paragraph 1 shall be
appointed by the Minister.
(2) A member other than the Executive Director shall,
subject to the provisions of this Schedule, hold office for such period not
exceeding three years.
(3) The Minister shall appoint one of the members of
the Commission to be chairman thereof. (Paragraph 2. Schedule of the Fair
Competition Act). |
The Commission shall have five members, including the
Chairman. It shall sit as an executive body and reach decisions by majority
vote, with the Chairman having the tie-breaking vote.
The Commission shall have the necessary staff for
efficient handling of its tasks, in accordance with its budget allocation.
(Article 25).
The commissioners will be appointed to ten-year terms
of office which can be renewed and may only be removed for duly justified,
grievous cause. (Article 27).
The Commission, en banc, is its highest
decision-making body and consists of five commissioners, the Chairman
included. The presence of three members shall suffice for a session, but
the Commission shall not meet without the presence of either the Chairman or
the member who, under the rules, is to act in his or her stead.
Decisions of the plenary shall be unanimous or by a
majority of the commissioners present, who may only abstain when they have
some legal impediment. The Chairman of the Commission shall preside over
plenary sessions and, in the event of a tie, shall cast the deciding vote.
(Article 14 of the Internal Rules of the Federal Free
Trade Commission).
The Chairman of the Commission shall be appointed by
the head of the Federal Executive and will have the following authority: I.
to coordinate the work of the Commission; II. to implement, execute and
monitor the internal policies established for the Commission; III. to
publish an annual report on the work of the Commission, including the
results of their activities in defense of open competition and free access
to markets; IV. to request from Mexican and foreign authorities information
required to investigate possible violations of this Act; V. to act as the
legal representative of the Commission; to appoint and remove personnel; to
create the necessary technical units and administrative in accordance with
the Commission’s budget, and to delegate duties to these units; and VI. to
carry out such other duties as are conferred under the laws and regulations
of Mexico. (Article 28).
The Commission shall have an Executive Secretary
appointed by the Chairman, who will be responsible for administrative and
operational coordination. The Executive Secretary shall certify all its
acts. (Article 29).
To exercise its functions and discharge the duties
incumbent upon it, the Commission shall be equipped with the following civil
service staff, organs, and administrative units:
I. Plenary ; II. Chair; III. Executive Secretariat
IV. Functional General Departments
a) Legal Affairs; b) Economic Research ; c)
Concentrations
d) Investigations; e) Privatization and Tendering
Processes; f) Regional Coordination
V. General of Coordination and Administrative Support
Departments
a) International Regulations; b) Economic Standards;
c) Monitoring and Follow-Up
d) Administration; e) Social
Communication
(Article 8 of the Internal Regulations). |
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Enforcement
Bodies / Powers or Functions
|
(1) The functions of
the Commission shall be: (a) to carry out, on its own initiative or at the
request of any person such investigations in relation to the conduct of
business in Jamaica as will enable it to determine whether, any enterprise
is engaging in business practices in contravention of this Act and the
extent of such practices; (b) to carry out such other investigations as may
be requested by the Minister or as it may consider necessary or desirable in
connection with matters falling within the provisions of this Act; (c) to
advise the Minister on such matters relating to the operation of this Act,
as it thinks fit or as may be requested by the Minister; (d) to investigate
on its own initiative or at the request of any person adversely affected and
take such action as it considers necessary with respect to the abuse of a
dominant position by any enterprise; and (e) to carry out such other duties
as may be prescribed by or pursuant to the Act.
(2) It shall be the duty of the Commission: (a) to make
available (i) to persons engaged in business, general information with
respect to their rights and obligations under this Act; (ii) for the
guidance of consumers, general information with respect to the rights and
obligations of persons under this Act affecting the interests of consumers;
(b) to undertake studies and publish reports and information regarding
matters affecting the interests of consumers; (c) to co-operate with and
assist any association or body of persons in developing and promoting the
observance of standards of conduct for the purpose of ensuring compliance
with the provisions of this Act. (Section 5).
The Commission shall obtain such information as it
considers necessary to assist it in its investigation and, where it
considers appropriate, shall examine and obtain verification of documents
submitted to it. (Section 6).
(1) For the purposes of carrying out its functions
under this Act, the Commission is hereby empowered to: (a) summon and
examine witnesses; (b) call for and examine documents; (c) administer oaths;
(d) require that any document submitted to the
Commission be verified by affidavit; (e) adjourn any investigation from time
to time;
(2) The Commission may hear orally any person who in
its opinion, will be affected by an investigation under this Act, and shall
so hear the person if the person has made a written request for a hearing,
showing that he is an interested party likely to be affected by the result
of the investigation or that there are particular reasons why he should be
heard orally;
(3) The Commission may require a person engaged in
business or a trade or such other person as the Commission considers
appropriate to state such facts concerning goods manufactured, produced or
supplied by him or services supplied by him as the Commission may think
necessary to determine whether the conduct of the business in relation to
the goods or services constitutes an uncompetitive practice;
(4) If the information specified in subsection (3) is
not furnished to the satisfaction of the Commission, it may make a finding
on the basis of the information available before it. (Section 7).
(1) Where the Commission finds that an enterprise has
abused or is abusing a dominant position and that such abuse has had or is
having the effect of lessening competition substantially in a market, the
Commission shall: (a) notify the enterprise of its finding; and (b) direct
the enterprise to take such steps as are necessary and reasonable to
overcome the effects of abuse in the market concerned.
(2) In determining, for the purposes of subsection (1)
whether a practice has had, is having or is likely to have effect of
lessening competition substantially in a market, the Commission shall
consider whether the practice is a result of superior competitive
performance.
(3) For the purposes of this section, an act is not an
uncompetitive practice if it is engaged in pursuant only to the exercise of
any right or enjoyment of an interest derived under any Act pertaining to
intellectual or industrial property. (Section 21).
(2) Where on investigation the Commission finds that an
enterprise is engaging in tied selling, the Commission shall prohibit that
enterprise from so doing.
(3) Where on investigation the Commission finds that
exclusive dealing or market restriction, because it is engaged in by a major
supplier of goods in a market or because it is widespread in a market, is
likely to: (a) impede entry into or expansion of an enterprise in the
market; (b) impede introduction of goods into or expansion of sales of goods
in the market; or (c) have any other exclusionary effect in the market, with
the result that competition is or is likely to be lessened substantially,
the Commission may prohibit that supplier from continuing to engage in
market restriction or exclusive dealing and to take such other action as, in
the Commission’s opinion, is necessary to restore or stimulate competition
in relation to the goods.
(4) The Commission shall not take action under this
section where, in its opinion exclusive dealing or market restriction is or
will be engaged in only for a reasonable period of time to facilitate entry
of a new supplier of goods into a market or of new goods into a market and
this section shall not apply in respect of exclusive dealing or market
restriction between or among interconnected companies.(Section 33) |
The mandate of the Commission shall be as follows: I.
to investigate the existence of monopolies, cartels, anticompetitive
practices and concentrations prohibited by this Act -- in pursuit of which
it shall be empowered to request relevant information or documents from
private parties and other economic agents; II. to establish the necessary
coordination to combat and prevent monopolies, cartels, concentrations and
unlawful business practices; III. to issue rulings on cases within its
jurisdiction, assess penalties for violations of this Act, and report
unlawful conduct affecting competition to the Public Prosecutor’s Office;
IV. to offer opinions on the restructuring of programs and policies of the
federal government that are detrimental to competition; V. to offer
opinions, when requested to do so by the Federal Executive, on the
suitability of draft legislation and regulations in matters concerning
competition; VI. where it deems appropriate, to offer opinions on the effect
of laws, regulations, agreements, directives and administrative acts on
competition (such opinions are not legally binding, however, nor is the
Commission required to issue an opinion); VII. to prepare, and ensure
compliance with, manuals for the internal organization and procedures of the
Commission; VIII. to participate along with other competent agencies in the
signing of international treaties, agreements and conventions regulating
policies on competition, to which Mexico has acceded or intends to accede;
IX. to carry out such other duties as are assigned to it under the laws and
regulations of Mexico. (Article 24). |
The Commission shall have the following functions and
powers:
1. To determine its general policies and ensure that
they are carried out;
2. To create, in any part of the national territory,
such administrative units as are necessary for its operation, including
provincial offices, and to define the functions thereof;
3. To approve the general budget presented by the
director general and to submit it for the consideration of the Executive.
4. To issue internal regulations;
5. To approve the advertising and consumer education
program presented by the director general;
6. To authorize the conclusion of contracts and the
execution of expenditure in amounts greater than twenty-five thousand
balboas (B/.25,000.00);
7. To elect annually, from among its members, a
chairman and a secretary;
8. To investigate and penalize, within its sphere of
competence, such acts and behaviors as are prohibited by this Law;
9. To establish coordinating mechanisms for the
protection of consumers and for the prevention of unfair trade practices and
practices which hinder competition, as well as administrative penalties
within its sphere of competence;
10. To issue opinions concerning laws, regulations,
administrative acts and bills related to the subject matter of this Law;
11. To request documents, hear testimony and obtain
other evidence from institutions, whether public or private, and from
natural persons, within its sphere of competence.
12. To take cognizance of matters submitted for its
consideration by economic agents and consumers;
13. To conduct studies on market behavior in order to
identify distortions in the market economy system that affect consumers, and
to encourage the elimination of such practices, whether by publicizing them
or recommending legislative or administrative measures aimed at correcting
them;
14. To conduct consumer awareness campaigns, which may
be coordinated with consumer associations, business organizations, civic
clubs and trade unions;
15. To supervise the activities of traveling
commission sales agents and to penalize them for failure to comply with the
legal provisions in force, and to determine the liability of commercial
establishments for the actions of said agents;
16. To coordinate with the Executive, through the
Ministry of Trade and Industry, actions aimed at ensuring that technical
standards are applied to all products and services offered to consumers;
17. To promote compliance with the rules on guarantees
and advertising;
18. To take cognizance of complaints filed by
consumers, whether individually or collectively, related to guarantees on
the operation, repair or replacement of a product or the refund of amounts
paid by the consumer, when said product does not work properly during the
guarantee period, owing to a defect in the product or a cause attributable
to the manufacturer, importer or supplier, provided that the value of the
product is five hundred balboas (B/.500.00) or less.
Compliance with the decisions of the Commission in the
cases listed above shall be mandatory, and the Commission, subject to the
regulations in force, shall guarantee the right of appeal when necessary.
In cases where the value of a product exceeds five
hundred balboas (B/.500.00), the consumer may either use the conciliation
process referred to in Chapter II, Title VII, or make use of the judicial
proceeding prescribed in Title VIII hereof;
19. To promote, regulate and supervise organized
consumer associations;
20. To denounce to the competent health authorities
the sale or distribution of articles that pose a threat or danger to health;
21. To take cognizance of the administrative
proceedings referred to herein;
22. To supervise the proper use of the discount codes
(claves de descuento) authorized by the Office of the Controller
General of the Republic, the Social Security Fund and autonomous State
entities. An exception to this provision shall be made for banks,
cooperatives and financial enterprises governed by Law 20 of 1986, provided
that they do not provide a discount subcode service (servicio de subclave
de descuento). The Commission shall have the power to order State
institutions to cancel the discount codes of suppliers or others who provide
a discount subcode service and who fail to comply with the requirements of
this Law;
23. The discretionary functions referred to in Article
236 and any others conferred on it by Law or the regulations issued for its
furtherance.
In indigenous communities and reserved areas, the
Commission shall take special steps to facilitate effective fulfillment of
the supplier's obligations toward consumers.
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Administrative or Judicial Procedures
|
The Fair Trading Commission is a law enforcement
agency, in practical terms, this means that the Commission is not the
adjudicator of individual disputes but rather it seeks to address matters of
national interest.
A complaint is received by the Commission and is
investigated or an investigation may be initiated internally. If the
investigation reveals to the Commission’s staff that a breach of the Fair
Competition Act has occurred, then the staff will usually recommend certain
remedial action to the Company in an effort to resolve the matter in a
non-adversarial manner. If, however, the company is reluctant to cooperate
with the Commission’s staff, it is served with a Notice of Examination to
appear before the Commissioners. Acting in their quasi-judicial capacity,
the Commissioners will meet with the company to determine the cause of the
lack of cooperation and inform the company of the Commission’s expectations
with a view to settling the matter. If settlement seems unlikely the
Commission’s staff requests the Commissioners’ approval to take the matter
to Court so that the matter may be adjudicated.
Not all matters are handled in the first instance by
the court. Breaches of section 20 (abuse of dominance) and section 33
(market restriction, tied selling and exclusive dealing) of the Act are
determined firstly by the Commissioners who sit as judges at a public
hearing and make findings based on the evidence presented by both sides.
Should the Commissioners find in the Commission’s staff’s favor, they may
issue any directions to the company they deem appropriate to correct the
breach. |
Proceedings before the Commission is administrative in
nature and may be started on its own initiative or as a result of a
complaint from an interested party. (Article 30).
A written complaint alleging
a violation of this Act may be submitted to the Commission by any person, in
the case of per se anticompetitive practices, or by adversely affected
parties, in the case of “relative” anticompetitive practices or
concentrations. The complaint must specify the alleged violator and the
nature of the practice or concentration complained of.
With respect to “relative”
anticompetitive practices and concentrations, the complainant must include
the relevant details of the practice or concentration and evidence of
substantial past or potential harm from the practice or concentration.
The Commission may reject
any complaint that is clearly legally insufficient. (Article 32).
Within the 10 days
following receipt of the report, an agreement must be issued I) ordering the
initiation of the investigation; II) fully or partially dismissing the
report; III) notifying the filer of the report, once only if the written
report omits items required in the Law or its Regulations’ to clarify or
complete said report within a time period not to exceed 15 days but which
can be extended by an equal period in cases where this is duly justified.
Following the response to said notification, the corresponding agreement
must be handed down within five days (Article 25 of the LFCE Regulations).
An extract of the agreement whereby the Commission
initiates an investigation shall be published in the Official Gazette of the
Federation within 10 days of its issue. The investigation period shall begin
starting with the publication of the agreement and may be no less than 30
and no more than 90 days long. In exceptionally complex cases, the
Commissions Plenary may extend the deadline for periods not exceeding 90
days (Article 27 of the LFCE Regulations).
After completion of the investigation, if there is
sufficient evidence to confirm the existence of monopolistic practices or
prohibited concentrations, the Chair and Executive Secretary shall issue a
writ of presumed liability summoning the party presumed to be liable
(Article 30 of the LFCE Regulations).
Proceedings before the Commission shall be conducted as
follows:
I. The alleged violator shall be given notice of the
investigation along with a copy of the complaint, where applicable; II. The
alleged violator shall have 30 calendar days thereafter to submit a
response, along with relevant documents or other evidence; III. Within 30
days of submission of this evidence, oral or written arguments shall be out
and presented to the Commission; IV. When these proceedings have been
completed, the Commission shall issue its ruling within 60 calendar days.
All such proceedings must
conform to the provisions of the regulations issued pursuant to this Act.
(Article 33).
Independently of the case being brought before the
Commission, economic agents who can demonstrate that during the process they
suffered damages and injury because of the monopolistic practice or unlawful
concentration may file suit in court to obtain compensation for said
damages. The courts may use the Commission’s estimate of damages for that
purpose. No judicial or administrative action shall be taken on the basis of
this law, unless established therein (Article 38).
|
A. Administrative Proceedings
1. Process of reviewing combinations
In all cases where the Commission reviews a
combination, the following procedure shall be followed:
a. The concerned economic agent shall submit the
corresponding notification in writing, together with a copy of the legal
transaction in question, indicating the names or trade names of the parties
involved, their financial statements for the last fiscal year, their share
of the respective market, and any other data necessary to identify the
transaction;
b. The Commission may request additional data or
documents, within the twenty (20) calendar days following receipt of the
notification;
c. As of the date of receipt of the notification, or
the date on which the additional data or documents are received, as
applicable, the Commission shall have up to sixty (60) calendar days to
render a decision. If this period expires without the rendering of said
decision, the combination shall be considered approved;
d. The Commission's decision must be duly justified and
well-founded in the law;
e. The Commission's favorable decision concerning the
combination shall not imply a pronouncement on the commission of other
monopolistic practices prohibited by law;
f. The Commission may reject a request for review, when
it is clearly pointless or when an opinion has already been expressed
concerning the same review. (Article 118).
B. Judicial Proceedings
1. Competence
Three (3) civil division [circuit] courts are hereby
created in the First Judicial District of Panama, which shall be known as
the Eighth, Ninth and Tenth Courts of the First Judicial Circuit of
[Panama], and one circuit court in Colón. In addition, a civil division
circuit [court] is hereby established in Coclé, Chiriquí and Los Santos,
[which] shall be known as the Second Court of Coclé, the Fourth Court of
Chiriquí, and the Second [Court] of Los Santos, respectively, to hear these
cases [in] their respective judicial districts. These courts shall take
cognizance exclusively (illegible) of the following cases:
a. Individual or collective claims filed in accordance
herewith;
b. Disputes which arise by virtue of the application or
interpretation of this Law and involving monopolies, consumer protection,
and unfair trade practices;
c. Disputes concerning intellectual property,
including, among others, those involving copyrights and related rights,
product or service brands and patents;
d. Disputes concerning agency, representation and
distribution relationships.
e. Disputes concerning unfair trade practices;
f. Actions seeking compensation for collective damages,
the return of things to their condition prior to the damage, and the
monetary recovery of damages caused generally to the group concerned;
g. To authorize the Commission to collect evidence,
examine the private documents of businesses, search premises and take any
other measure requested during the course of an administrative investigation
or for the taking of testimony;
h. To impose penalties for violations of the provisions
hereof and to order the cessation of violations;
i. To order the precautionary measures requested by
the Commission or individual petitioners.
Proceedings instituted in the rest of the national
territory in accordance herewith shall be heard by the respective circuit
court responsible for civil matters.
When the goods or communications subject of the
complaint have circulated in whole or in part within the district of the
First Judicial Circuit of Panama, the courts created hereby shall be
competent to take hear, at the election of the petitioner, together with the
corresponding court, any of the above cases.
Cases exclusively assigned to the Commission are
excepted.
Until the courts referred to in this article are
established, the respective circuit courts shall hear the corresponding
cases.
Two (2) municipal courts are hereby created in Panama
City and one (1) in the city of Colón, which shall solely and exclusively
hear consumer petitions involving amounts no greater than three thousand
balboas (B/. 3,000.00).
For these purposes, the procedure established in the
Judicial Code for regular proceedings involving small amounts shall be
followed.
Until the courts referred to herein are established,
the respective municipal courts of the provincial capitals shall hear the
corresponding cases.
2. Capacity
The following shall have the capacity to file a claim:
a. Any concerned person;
b. The Commission;
c. Organized consumer associations;
d. Collective management entities.
In each specific case, the judge shall rule on the
admissibility of the capacity cited, considering, as a matter of priority,
compliance with the following requirements:
a. That the group is made up of parties who have been
specifically harmed by the act or omission prejudicial to the collective
interest, in which case proof of the legal capacity of the group shall be
furnished within thirty (30) days, counting from the date of the decision
authorizing it to proceed;
b. That the group, pursuant to law, and as its express
purposes, provides for the defense of the specific type or nature of the
collective interest harmed;
c. That the group is territorially linked to the place
where the situation harmful to the collective interest arose;
d. That the number of members, the length of time in
their positions, their activities and the programs they have carried out and
any other circumstances reflect the seriousness and responsibility of the
group's actions in defending the collective interest. (Article 142) |
Administrative Sanctions
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The Commission may assess the following penalties:
I. Order to suspend, correct or eliminate the concentration practice in
question; II. Order the partial or total deconcentration (sic) of
what has been unduly concentrated notwithstanding the applicable fine, as
the case may be; III. Fine of up to the equivalent of 7,500 times the
general minimum wage in the Federal district for having declared falsely or
submitting false information to the Commission, regardless of any criminal
liability incurred therein; IV. Fine of up to the equivalent of
375,000 times the general minimum wage in the Federal district for having
incurred in absolute monopoly practices; V. Fine for the equivalent
of up to 225,000 times the general minimum wage in the Federal District, for
having engaged in relative monopoly practices and up to the equivalent of
100,000 times the general minimum wage in the Federal District, in the event
of the provision under Section 10 of this Law; VI. Fine up to the
equivalent to 225,000 times the general minimum wage in the Federal
District, for having incurred in concentrations forbidden by this Law; and a
fine up to the equivalent of 100,000 times the general minimum wage in the
Federal District for failing to notify a concentration when it should
legally be done; and VII. Fine up to the equivalent of 7,500 times
the general minimum wage in the Federal District to individuals who directly
participate in forbidden monopoly practices or concentrations, on behalf of
or on account of corporations.
In the event of repeated offense, an additional fine may be assessed up to
twice the initial amount. (Article 35).
When assessing fines, the Commission shall consider the
seriousness of the violation, the damage caused, the degree of
premeditation, the participation in the markets of the infringer (sic); the
size of the market affected; the length of the practice or concentration and
the recurrence or background of the infringer (sic), and also his financial
status. (Article 36).
In the event of the violations under Sections IV to VII
of Article 35 that, in the opinion of the Commission, are specially serious,
it may levy instead of the fines contemplated in them, a fine up to ten per
cent of the annual sales of the infringer (sic) during the previous fiscal
year or up to ten per cent of the value of the assets of the infringer
(sic), whichever is higher. (Article 37). |
Infractions shall be penalized in the following manner:
1. Absolute monopolistic practices, a fine of
twenty-five thousand balboas (B/.25,000.00) to one hundred thousand balboas
(B/.100,000.00);
2. Prohibited relative monopolistic practices, a fine
of five thousand balboas (B/.5,000.00) to fifty thousand balboas
(B/.50,000.00);
3. Trade practices in violation of consumer protection
provisions, a fine of one hundred balboas (B/.100.00) to ten thousand
balboas (B/.10,000.00);
4. Violations for which no specific penalty has been
established, a fine of fifty balboas (B/.50.00) to five thousand balboas
(B/.5,000.00).
To determine the amount of the fine to be imposed in
each case, the seriousness of the offense, the size of the enterprise,
whether the offense is a repeat offense and other such factors shall be
taken into account.
Penalties for monopolistic practices shall be imposed
only when, in a final decision, it has been established that the
corresponding provisions have been violated.
The proceeds of these fines shall be deposited in the
National Treasury. (Article 112). |
Judicial Sanctions
|
Any person who, in any manner, impedes, prevents or
obstructs any investigation by the Commission under this Act or any
authorized officer in the execution of his duties under this Act is guilty
of an offence and liable on conviction in a Circuit Court to a fine or to
imprisonment for a term not exceeding five years or to both such fine and
imprisonment. (Section 42).
Every person who of records: (a) refuses to produce any
document, record or thing, or to supply any information, when required to do
so by the Commission under this Act; or (b) destroys or alters or causes to
be destroyed or altered, any document, record or thing required to be so
produced or in respect of which a warrant is issued under this Act, is
guilty of an offence and liable on conviction in a Circuit Court to a fine
or to imprisonment for a term not exceeding five years or to both such fine
and imprisonment. (Section 43).
Any person who gives to the Commission or an authorized
officer any information which he knows to be false or misleading is guilty
of an offence and liable on conviction in a Circuit Court to a fine or to
imprisonment for term not exceeding five years or to both such fine and
imprisonment. (Section 44).
Any person who: (a) refuses or fails to comply with a
requirement of the Commission under this Act; (b) having been required to
appear before the Commission: (i) without reasonable excuse refuses or fails
so to appear and give evidence; (ii) refuses to take an oath or make an
affirmation as a witness; (iii) refuses to answer any question put to him,
is guilty of an offence and liable on conviction before a Resident
Magistrate to a fine not exceeding twenty thousand dollars or to
imprisonment for a term not exceeding two years or to both such fine and
imprisonment. (Section 45).
(1) Pursuant to section 46 the Court may: (a) order the
offending person to pay to the Crown such pecuniary penalty not exceeding 1
million dollars in the case of an individual and not exceeding 5 million
dollars in the case of a person other than an individual; (b) grant an
injunction restraining the offending person from engaging in conduct
described in paragraph (a) or (b) of section 45, in respect of each
contravention or failure referred to in section 45.
(2) In exercising its powers under this section the
Court shall have regard to: (a) the nature and extent of the default; (b)
the nature and extent of any loss suffered by any person as a result of the
default; (c) the circumstances of the default; (d) any previous
[determination] against the offending person.
(3) The standard of proof in proceedings under this
section and section 47 shall be the standard of proof applicable in civil
proceedings. (Section 47).
(1) Every person who engages in conduct which
constitutes: (a) a contravention of any of the obligations or prohibitions
imposed in Parts III, IV, VI or VII; (b) aiding, abetting, counseling or
procuring the contravention of any such provision; (c) inducing by threats,
promises or otherwise the contravention of any such provision; (d) being
knowingly conceived in or party to any such contravention; or
(e) conspiring with any other person to contravene any
such provision, is liable in damages for any loss caused to any other person
by such conduct.
(2) An action under subsection (1) may be commenced at
any time within three years from the time when the cause of action arose.
(Section 48). |
The Commission is not empowered to impose judicial
sanctions. |
In all cases in which prohibitions have been violated,
the courts, through civil actions filed by the injured party, shall, for the
benefit of the latter or those concerned, impose a penalty on the economic
agent equal to three (3) times the amount of the damages caused as a result
of the illicit act, in addition to any costs incurred.
However, the court that hears the case may limit the
amount of the penalty to the amount of damages caused, or reduce it to two
times the amount of such damages, in both cases ordering the payment of
costs when it can be shown that the economic agent so penalized did not act
in bad faith or with the intent to cause harm. (Article 27). |
Recourse or Appeal
|
(1) Any person who is aggrieved by a finding of the
Commission may within fifteen days after the date of that finding appeal to
a Judge in Chambers.
(2) The Judge in Chambers may: (a) confirm, modify or
reserve the findings of the Commission or any part thereof; or (b) direct
the Commission to reconsider, either generally or in respect of any
specified matters, the whole or any specified part of the matter to which
the appeal relates.
(3) In giving any direction under this section, the
Judge shall: (a) advise the Commission of his reasons for doing so; and (b)
give to the Commission such directions as he thinks just concerning the
reconsideration or otherwise the whole or any part of the matter that is
referred back for reconsideration.
(4) In reconsideration of the matter, the Commission
shall have regard to the Judge's reasons for giving a direction under
subsection (1) and the Judge's directions under subsection (3). (Section
49).
Where an appeal is brought against any findings of the
Commission any directions or order of the Commission based on such findings
shall remain in force pending the determination of the appeal, unless the
Judge otherwise orders. (Section 50). |
Pursuant to this Law and contrary to the
resolutions issued by the Commission, an appeal for reversal may be filed
before the Commission within the 30 working days following the date in which
those resolutions are notified.
The objective of the appeal is to revoke, amend, modify or confirm the
resolution appealed and the judgtnents issued shall contain the assessment
of the act challenged, the legal basis that support them and the resolution
items. The regulations of this law shall establish the terms and other
requirements for the filing and substantiation of the appeal.
The appeal shall be filed through a document addressed to the Commission's
President, and it shall state the name and domicile of the appellant and the
offenses. It shall include the evidence deemed necessary, and also the
documents crediting the legal status of the petitioner.
The filing of the appeal shall stay the enforcement of the resolution
challenged. In the event of stay of the sanctions under Sections I and II of
article 35 and where third parties may suffer damages, the appeal shall be
granted if the petitioner provides sufficient guarantee to repair the
damages and to compensate the losses if the resolution is not favorable to
him.
The Commission shall issue and notify the resolution within sixty days of
the date in which the appeal was filed. It shall be understood that the act
challenged is confirmed if the Commission remains silent. (Article 39) |
A. Administrative Proceedings
1. Motions for appeal and the exhaustion of
governmental remedies. The only remedy against a final decision is that
of an appeal, which must be filed and defended before the full Commission,
within ten (10) working days of notification thereof.
A copy of the appeal shall be given to the parties
concerned within five (5) working days, to enable them to put forward any
arguments they may consider appropriate.
The full Commission shall have fifteen (15) working
days to rule on the motion for appeal, at which point the governmental
remedies shall have been exhausted, clearing the way for recourse under
administrative law.
The appeal shall be granted in the suspension of
execution of judgment. (Article 138).
B. Judicial Proceedings
The only remedy against the final decision is that of
an appeal, which must be filed and defended before the Superior Court of
Appeals, within ten (10) working days of notification thereof.
A copy of the appeal shall be given to the parties
concerned within five (5) working days, to enable them to put forward any
arguments they may consider appropriate.
The Superior Court of Appeals shall have fifteen (15)
working days to rule on the motion for appeal.
The appeal shall be granted in the suspension of
execution of judgment. (Article 169)
An appeal for the annulment of first appeal decisions
pronounced by the Superior Court of Appeals shall be heard in the following
cases:
1. When decisions are rendered which impose civil
sentences or order the dissolution of a combination;
2. When the decision in question was rendered in a
class action;
3. When decisions are rendered which impose penalties
of five hundred thousand balboas (B/.500,000.00) or more;
4. When decisions are rendered by the Superior Court of
Appeals in proceedings involving economic combinations.
Other decisions of the Superior Court of Appeals may
not be appealed.
The Superior Court of Appeals, having sole
jurisdiction, shall be competent to try cases involving economic
combinations. (Article 233). |
| Peru |
United States |
Uruguay |
Venezuela |
Regulatory Framework
|
1. Constitution of 1993. Articles 58, 60, and 61.
2. Decision 285 of the Board of the Cartagena
Agreement.
3. Legislative Decree No. 688 on Measures to Guarantee
Free International and Domestic Trade.
4. Legislative Decree No. 757 on principles and rules
for the expansion of private investment.
5. Decree Law No. 25,868 on the organization and
functions of INDECOPI.
6. Legislative Decree
No. 701 Against Monopolistic Practices, Controls, and Restraints on Free
Competition. "El Peruano"
Federal Register, November 7, 1991.
7. Legislative Decree No. 788, amending Legislative
Decree No. 701.
8. Legislative Decree No. 807, amending Legislative
Decree No. 701.
9. Law No. 26876 - Power Sector Antitrust Law. Official
gazette El Peruano, November 19, 1997.
10. Supreme Decree 017-98-ITINCI regulating the Power
Sector Antitrust Law. Official gazette El Peruano, October 16, 1998. |
1. Sherman Act, 15 U.S.C. Sections 1-7.
2. Clayton Act, 15 U.S.C. Sections 12-27.
3. Federal Trade Commission Act, 15 U.S.C. Sections
41-51.
4. Numerous other federal statutes govern the
antitrust treatment of particular sectors of the economy.
5. 49 states have enacted antitrust laws similar to
the federal laws. |
1. Law No. 17.243 of June 29, 2000, Articles 13, 14 and
15
2. Law No. 17.296 of February 21, 2001, Articles 157
and 158.
3. Decree Governing Defense of Competition of March 15,
2001.
|
1. Constitution, Article 96.
2. Law for Promotion and Protection of the Exercise of
Free Competition. Federal Register No. 34,880 of January 13, 1992.
3. Regulation No. 1 concerning the System of
Exceptions. Federal Register No. 35,202 of May 3, 1993.
4. Regulation No. 2 concerning the System of Economic
Concentration. Federal Register No. 35,963 of May 21, 1996.
5. Resolution No. 036-95 on the Blanket Exemption for
Agreements on Exclusive Supplies and Purchases. Federal Register No. 35,801
of September 21, 1995. |
Objectives of the Law
|
This law seeks to eliminate monopolistic practices,
controls, and restraints on free competition in the production and marketing
of goods and the provision of services, so that free private enterprise can
flourish for the greatest benefit of users and consumers. (Article 1).
The purpose of Legislative Decree 701 is to eliminate
monopolistic, controlling, and restrictive practices vis-à-vis free
competition in the production and marketing of goods and the provision of
services, allowing free private enterprise to develop so as to maximize the
benefits for users and consumers.
The purpose of Law 26878 is to subject to a reporting
process any vertical or horizontal concentration in the power generation
and/or supply industry that has the effect of reducing, impairing, or
inhibiting competitiveness and free competition on the markets for said
activities or on related markets. (Article 1). |
"The Sherman Act was designed to be a comprehensive
charter of economic liberty aimed at preserving free and unfettered
competition as the rule of trade. It rests on the premise that the
unrestrained interaction of competitive forces will yield the best
allocation of our economic resources, the lowest prices, the highest quality
and the greatest material progress, while at the same time providing an
environment conducive to the preservation of our democratic political and
social institutions." (The Supreme Court, Northern Pacific Railway Co. v.
United States, 356 U.S. 1, 4 (1958).
Other objectives have at times been expressed in
earlier periods in the history of U.S. antitrust law enforcement: fairness,
dispersion of economic power, and distribution of economic opportunities. A
strong consensus currently exists, however, that promotion of economic
efficiency and maximization of consumer welfare are the appropriate
objectives of U.S. antitrust policy. |
To prohibit agreement and coordination between economic
agents, joint decisions by business associations, and the abuse of a
dominant position by one or more economic agents, serving to impede,
restrict or distort competition and free access to the markets of
production, processing, distribution and trade of goods and services
(Article 14 of Law No. 17.243) |
The objective of this Law is to promote and protect the
exercise of free competition and the efficiency that benefits the producers
and consumers; and to prohibit monopolistic and oligarchic practices and
other means that could impede, restrict, falsify, or limit the enjoyment of
economic freedom. (Article 1). |
Scope of Application
|
The law applies to all persons and entities under
public or private law that undertake economic activities. It also applies
to all persons who direct or represent corporations, institutions, or
entities when they take part in the acts or practices prohibited by this
law. (Article 2). |
From the beginning of U.S. antitrust history in 1890,
there has been a strong presumption against exempting economic sectors from
the application of the antitrust laws. Accordingly, the vast bulk of U.S.
commerce is subject to antitrust discipline, and no sector is totally
excluded from the antitrust laws. Over time, however, some economic sectors
or types of behavior have been partially exempted from the antitrust laws,
through explicit statutory authorization or judicial decisions based on
statutory interpretation.
The U.S. antitrust laws apply to anticompetitive
business conduct that affects U.S. domestic or foreign commerce. Under the
effects doctrine, jurisdiction exists for import commerce when there are
actual or intended effects on the U.S. market; for non-import commerce, when
there is a "direct, substantial, and reasonably foreseeable effect" on U.S.
trade and commerce, or on U.S. export trade and commerce. |
Without prejudice to legal limitations imposed in
the national interest (Articles 7 and 36 of the Constitution of the
Republic) or arising from the public service nature of the activity in
question, all companies, regardless of their legal status, engaging in
economic activity are subject to the rules of competition. (Article 13 of
Law 17.243) |
Subject to this law are all natural or juristic
persons, public or private, engaged in profitable or non-profitable economic
activities within the country, or group of agents engaged in such
activities. (Article 4). |
Exceptions to the Scope of Application
|
|
Exceptions to the application of the antitrust laws
exist for certain activities in some sectors. In many cases a specialized
regulatory agency with sector-specific responsibilities applies competition
rules analogous to the federal antitrust laws, and the antitrust agencies
retain an advisory, competition advocacy role.
Sectors that retain some form of exemption from, or
special treatment under, the antitrust laws include: agricultural
cooperatives; fishermen’s cooperatives; banks and other financial
institutions; securities and commodities industries; insurance (to the
extent it is regulated by state law); newspapers; professional sports;
interstate motor, rail, and water carriers; ocean shipping; organized labor;
and air transportation. The clear trend is to reduce these exceptions, which
are narrowly construed by the courts; the vast bulk of U.S. commerce remains
subject to antitrust disciplines.
The federal government and its instrumentalities are
immune from the antitrust laws. Under the state action doctrine, private
action taken pursuant to a clearly articulated policy of one of the U.S.
states and subject to the active supervision of the state is immunized from
antitrust liability.
Congress has enacted special laws relating to export
activities. The jurisdictional reach of the U.S. antitrust laws does not
extend to U.S. export activities unless they have a "direct, substantial,
and reasonably foreseeable effect" on trade or commerce within the U.S., on
U.S. import trade or commerce, or on the export trade of exporters in the
U.S. The principal effect of the export-related legislation in this area is
to provide greater advance certainty regarding the federal and state
antitrust implications of export conduct. |
Companies that are subject to legal limitations imposed
in the national interest or arising from the public service nature of the
activity are excluded from the scope. (Article 13 of Law No. 17.243)
However, the regulations shall be enforced in any
situation in which market distortion is significantly inimical to the public
interest. (Article 14 of Law No. 17.243) |
The legal rules of the Cartagena Agreement will apply
to actions that restrict free trade in the Andean subregional market.
(Article 2).
Agricultural producers are authorized to associate for
the purpose of marketing their products. The President, through the Ministry
of Agriculture and Livestock, may encourage agreements between agricultural
producers and agribusinesses. (Article 1 of Decree No. 3,246 of November 18,
1993). |
General Prohibitions
|
Pursuant to the provisions of this law, acts or
behavior involving economic activities that constitute abuse of a dominant
market position or limit, restrain, or distort free competition in a manner
that injures the common economic interest in national territory are
prohibited and shall be punished. |
“Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce among the
several states, or with foreign nations, is declared to be illegal”.
(Sherman Act, Section 1).
It is unlawful to “monopolize, or attempt to
monopolize, or combine or conspire with any other person or persons, to
monopolize any part of the trade or commerce among the several states, or
with foreign nations”. (Sherman Act , Section 2).
“[U]nfair methods of competition in or affecting
commerce” are prohibited. (Federal Trade Commission Act, Section 5). |
Agreement and coordination
between economic agents, joint decisions by business associations, and the
abuse of a dominant position by one or more economic agents, serving to
impede, restrict or distort competition and free access to the markets of
production, processing, distribution and trade of goods and services are
prohibited. (Article 14 of Law No. 17.243)
|
Conduct, practices, agreements, conventions, contracts,
or decisions that impede, restrict, falsify, or limit free competition are
prohibited. (Article 5). |
Prohibited Conduct
|
Acts of abuse of a dominant position are: a)
unjustified refusal to satisfy demand for purchase or acquisition of goods
or services, or offer of sale or provision thereof; b) application in
business practices of discriminatory terms for similar services, which place
some competitors at a disadvantage with regard to others. It is not abuse of
a dominant position to grant discounts or bonuses common in generally
accepted business practice, such as those for prepayment, amount, volume, or
others granted generally, in all cases where conditions are equal; c) making
contracts contingent upon acceptance of supplementary payments that by their
nature and in comparison with business custom are not related to the purpose
of the contracts; d) other cases of a similar nature. (Article 5).
Anticompetitive practices are: a) direct or indirect
collusion among competitors to fix prices or other terms of trade or
service; b) division of the market or supply sources; c) application of
production quotas; d) agreement upon product quality when it does not relate
to national or international technical standards and negatively affects the
consumer; e) application in business practices of discriminatory terms for
similar services, which place some competitors at a disadvantage with regard
to others; f) making contracts contingent upon acceptance of supplementary
payments that by their nature and in comparison with business custom are not
related to the purpose of the contracts; g) unjustified refusal to satisfy
demand for purchase or acquisition of goods or services, or offer of sale or
provision thereof; h) collusion for limits or controls on production,
technical development, or investment; i) establishment of, agreement on, or
coordination of bids or lack of bids in public auctions, competitions, and
sales; j) similar situations. (Article 6). |
|
|
Acts or conduct of agents not specifically protected by
Law, that willfully impede or obstruct the entry or exit of firms, goods or
services into any or all areas of the market are prohibited. (Article 6).
Prohibited are all actions designed to restrict free
competition, induced third parties to refuse to supply goods or services;
obstruct access to goods or services; or refuse to sell raw materials or
factors inputs or offer services to others. (Article 7).
All conduct intended to manipulate factors of
production, distribution, technological innovation, or investments in such a
way as to be detrimental to free competition is prohibited. (Article 8).
Agreements or conventions entered into directly or
through unions, associations, federations, cooperatives, and other groups
subject to this Law which restrict or impede competition between their
members are prohibited.
Agreements or decisions taken in merchant or civil
associations which are contrary to the ends previously mentioned are also
prohibited. (Article 9). |
Prohibited Conduct / Definitions
|
|
The Sherman Act, which has been read into section 5 of
the FTC Act, prohibits agreements or understandings, express or implied,
between two or more persons or firms that unreasonably restrain trade in any
product or service. To determine whether an agreement unreasonably restrains
competition, courts have applied one of two methods of analysis, depending
on the type of agreement at issue.
Certain agreements (called "per se" offenses") are
deemed to be so inherently anticompetitive that they are always illegal,
regardless of the intent of the parties or the actual effect of the
agreements on competition. These agreements include agreements between
competitors to fix prices or the terms and conditions of credit and sales,
to allocate customers or territories, not to deal with any person or persons
("group boycotts"), and, in certain circumstances, to sell one product
conditioned on an agreement by the buyer to purchase a second, distinct
product ("tying"). Resale price maintenance is also per se unlawful.
The offense of unlawful monopolization has two
elements: possession of market power in the relevant market, and the willful
acquisition or maintenance of that power, as distinguished from growth or
development as a consequence of a superior product, business acumen, or
historic accident. Market power has been defined as the power to control
prices or exclude competition, and market share is the most
important factor in measuring market power, with shares
exceeding 70 percent usually considered sufficient for a finding of market
power, and shares of less than 40 percent generally insufficient. For the
second element, courts have required a showing of anticompetitive or
predatory conduct -- efforts to exclude rivals on some basis other than
efficiency. Examples of such conduct include -below cost- pricing, filing of
baseless litigation against competitors, or denial of access to an essential
facility.
The offense of attempted monopolization has three
elements: specific intent to control prices or destroy competition,
predatory or anticompetitive conduct directed at the unlawful objective, and
a "dangerous probability of success" in achieving a monopoly in the relevant
market. |
Agreement and coordination between economic agents,
joint decisions by business associations, and the abuse of a dominant
position by one or more economic agents, serving to impede, restrict or
distort competition and free access to the markets of production,
processing, distribution and trade of goods and services are prohibited.
This includes:
A) Permanently, imposing, whether directly or
indirectly, purchase or sale prices and other conditions attached to
transactions that harm consumers.
B) Unjustifiably restricting production, distribution
and technological development, to the detriment of companies or consumers.
c) Unjustifiably imposing
on third parties unequal terms for similar transactions, thereby creating a
significant competitive disadvantage.
D) Conditioning the
signing of contracts on the acceptance of additional or supplementary
conditions which, according to the nature of the contract or commercial
usage, bear no relation to the object of such contracts, and thereby harming
consumers;
E) Systematically selling goods or providing services
at a price below cost, with no reasons grounded in commercial usage, in
breach of commercial or tax obligations.
(Article 14 of Law No. 17.243) |
Agreements, decisions, collective recommendations or
concerted activities are prohibited if they: 1. Fix, directly or indirectly,
prices or other conditions essential to the sale or provision of goods or
services; 2. Limit production, distribution, and the technical or
technological development of investments; 3. Divide markets, geographical
areas, supply sectors, or supply sources between competitors; 4. Impose
unequal conditions, within any commercial or service transaction, for
identical supplies provided that disadvantage one customer over others; and
5. Attach, to any contract, ancillary conditions that because of their
nature or because of their accepted commercial use, exhibit no relation to
the objective of the contract. (Article 10).
Economic concentrations are prohibited, especially if
they arise from the exercise of a single activity, when as a consequence of
this activity free competition is restricted or a situation of dominance
results in the market or in any part of the market. (Article 11).
Contracts between persons subject to this Law, are
prohibited insofar as they set prices and contractual terms for the sale of
goods or provision of services to third parties, and are intended to have,
or have, or may have the effect of restricting, falsifying, limiting, or
impeding competition in all or part of the market. (Article 12).
Abuse on the part of one or several persons subject to
this Law who hold a dominant position in all or part of the national market
is prohibited, and in particular the following conduct is prohibited: 1.
Price discrimination and other conditions of sales or services; 2.
Unjustified limitations of production, distribution, or technical or
technological development, harmful to firms or consumers; 3. The unjustified
refusal to meet the demand of goods and services; 4. The imposition, in
business and service relations, of unequal conditions for equivalent goods
and services that disadvantage some competitors over others; 5. Attach, to
any contract, ancillary conditions that because of their nature or because
of their accepted commercial use, exhibit no relation to the objective of
the contract; and 6. Others of equivalent effect. (Article 13).
For the purposes of this law, a dominant position
exists when: 1. A specific economic activity is conducted by a single person
or a group of persons who are associated as buyers or as sellers or as
either providers or purchasers of services; and 2. There exists more than
one person conducting a specific type of activity but with no effective
competition between them. (Article 14).
The development of commercial policies which tend to
eliminate competitors through unfair methods of competition are prohibited;
especially in the following cases: 1. Misleading or false advertising
directed to impede or limit free competition; 2. The promoting of products
and services based on false declarations with regards to the disadvantages
or risks of any other competitor’s products or service; and 3. Bribery in
commerce, the violation of industrial secrets and the pirating of products.
(Article 17). |
Exceptions to Prohibited Practices
|
|
Potentially anticompetitive practices which do not fall
into the per se category (exclusive dealing or requirements contracts and
other non-price vertical restraints, cooperative marketing activities, etc.)
are analyzed under a "rule of reason” standard, which requires an in-depth
analysis of the effect on competition in the relevant market. In rule of
reason analysis, competitive intent and effect are weighed along with the
business justification of the challenged activities to determine their
legality. It should be noted that a rule of reason analysis does not
"exempt" prohibited conduct, but rather determines whether conduct which is
not "per se" prohibited should fall within the prohibitions of the antitrust
laws. |
|
The President of the Republic, in Council of Ministers,
and having heard the opinion of the Superintendent for the Promotion and
Protection of Free Competition shall determine the norms under which the
following activities shall be allowed: 1. The fixing directly or indirectly,
individually or in concerted action of bid or offer prices of any good or
service; 2. The application, in commercial relations, of unequal conditions
for equivalent or similar services that fashion inequities into the
competitive process, especially if distinct from conditions which would
emerge naturally if there existed effective competition in the market,
except in the case of discounts granted from prompt payment, volume
discounts, less risk, and other conditions commonly found in commerce; and
3. Exclusive territory arrangements and franchises with exclusive dealership
provisions. (Article 18).
In establishing the norms under which the activities
indicated in the preceding subparagraphs may be conducted, the Executive
Branch shall concurrently comply with the following: 1. Authorization of
these activities, will have as objectives: contributing to production
improvements, commercialization and distribution of goods and services, or
promoting technical or economic progress; 3. Prior authorization of lawful
activities, and control over their implementation, by the Office of the
Superintendent; and 4. The authorization will contain the minimum required
to achieve intended goals. (Single Paragraph, Article 18).
The Office of the Superintendent may authorize
practices or actions that benefit the respective consumers or users,
contribute to increased economic efficiency of the persons who engage in
them, and comply with the requirements established in the Law: 1. The
agreements, decisions, collective recommendations or joint practices
specified in Articles 9 and 10 of the Law; 2. The agreements, decisions,
collective recommendations or joint practices specified in Articles 10 and
12 of the Law, which inhibit effective competition and have significant
impact on the respective market; and 3. Unilateral practices or conduct
specified in Articles 6, 7 and 8 of he Law. (Article 8 of Regulation No. 1).
With respect to exclusive distribution contracts, they
are not protected by this exception if:
a) the distributor is a competitor of the supplier in
the production of the goods identified in the contract;
b) the products subject of the contract can be obtained
by customers solely through the distributor, and competing products are not
available either within or outside the assigned territory;
c) there exists no effective competition for the
products subject of the contract;
d) there are restrictions on market access for other
producers of competing products
e) the supplier is in a position to determine, directly
or indirectly, the prices or the conditions of contract for resale of the
product to third parties; and
f) the contract is for an indefinite duration, or for a
period longer than five years.
Similarly, exclusive purchase contracts are excluded
from protection under this exception if:
a) the distributor is a competitor of the supplier in
the production of goods subject of the negotiation;
b) the products bear no relationship to each other,
either in terms of their nature or their commercial use;
c) the contract is for an indefinite duration, or for a
period longer than five years.
The Resolution provides, however, that exclusive
distribution and purchase contracts that are not protected by this exception
may nevertheless be authorized on an individual basis by the
superintendency, upon application by the interested party.
(Resolution No. SPPLC/036-95).
In addition, with the exception noted, Resolution
SPPLC/036-95 provides that in the case of exclusive distribution contracts,
the obligations, conditions or competition-restricting clauses that the
supplier may impose on the distributor are limited to the following:
a) not to manufacture or distribute products that
compete with those identified in the contract within the assigned territory;
b) to purchase the products identified in the contract
exclusively from the distributor. A simultaneous contract for exclusive
distribution and purchase would be considered to fall under this category;
c) to advertise the products identified in the contact,
within the assigned territory;
d) not to advertise the products identified in the
contract, outside the assigned territory;
e) to purchase complete runs, or minimum quantities of
the products identified in the contract, or to maintain minimum inventories
of such products;
f) to maintain a sales or warehousing network where so
required by the nature of the products identified in the contract;
g) to sell the product identified in the contract with
its own name, trademark and distinctive packaging; and
h) to offer warranties and provide customer servicing
for the products identified in the contract.
Finally, it establishes that in exclusive distribution
contracts, the distributor may impose obligations, conditions or
anti-competitive restrictions on the supplier only to the extent of
preventing him from supplying or selling the product identified in the
contract directly to customers in the assigned territory, and with respect
to exclusive purchase contracts, the distributor may require the distributor
[sic: the supplier?] to sell exclusively to him only the products
identified in the contract. A simultaneous contract of exclusive
distribution and purchase would considered to fall under this category. |
Economic Concentrations (Mergers,
Acquisitions, Joint Ventures)
|
The only regulations existing in Peru on the matter are
Law 26876 controlling corporate concentration in the power sector (November
19, 1997) and its regulating Supreme Decree 017-98-ITINCI (October 16,
1998).
According to that standard, concentration operations
are deemed to be mergers, the establishment of joint ventures, acquisition
of controlling interests (in terms of shares or management decision-making
power), acquisition of assets, and other acts of corporate combination. In
that connection, the regulations indicate that the growth of an enterprise
by investment of its own funds or financing from third parties that do not
participate, directly or indirectly, in the performance of its activities
shall not be viewed as corporation concentration. (Article 2).
Based on this premise, the enterprises directly or
indirectly involved are required to report any concentration operations,
taking into account the share of the market for power generation and/or
supply in Peruvian territory that said companies have individually or
through their affiliated enterprises, depending on whether the former or the
latter carry out said activities. The Law bases the existence of a link on
criteria of control and decision-making in enterprises.
Exempt from the
reporting requirement are those power sector enterprises which, before or
after the act of concentration, and either jointly or separately, hold less
than 15% of the market in cases of horizontal integration and less than 5%
in cases of vertical integration. Furthermore, reporting is not necessary
when the acquisition of productive assets does not exceed 5% of the total
value of the productive assets of the acquiring enterprise, and when the
acquisition of less than 10% of the voting shares or equity in another
enterprise does not give direct or indirect control of a company active in
the power industry to the acquiring enterprise. (Article 3).
It should be noted that if the concentration operation
was carried out in violation of the provisions of the law or its
regulations, notwithstanding the imposition of the corresponding penalties,
the INDECOPI Commission on Free Competition may initiate the pertinent
action with the relevant administrative or judicial authorities to nullify
said concentration and/or its effects. |
Mergers and acquisitions are prohibited "in any line of
commerce or in any activity affecting commerce in any section of the
country, (where) the effect of such acquisition may be substantially to
lessen competition, or to tend to create a monopoly..." (Clayton Act,
Section 7).
Mergers and acquisitions may also be challenged under
sections 1 and 2 of the Sherman Act and section 5 of the FTC Act.
Under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, notification to the
FTC and Department of Justice is required before the consummation of an
acquisition of stock or assets exceeding specified size of firm and, in some
instances, size of transaction thresholds. Generally, pre-merger
notification is required if all of the following conditions are met: 1)
either the acquiring person or the acquired person is engaged in interstate
commerce, 2) as a result of the acquisition, the acquiring party will hold
voting securities or assets of the acquired person valued at more than $50
million, and 3) in transactions valued at less than $200 million, one of the
parties has annual net sales or total assets of $100 million or more, and
the other has annual net sales or total assets of $10 million or more.
For transactions other than cash tender offers or
acquisitions of bankrupt firms, the waiting period prior to consummation is
30 days. When a second request for additional information has been issued by
the antitrust authorities within that period, the merger cannot be
consummated for 30 days after compliance with the request (in practice, the
time it takes to respond to a second request can vary widely depending on
the scope of the request and the merging parties' decision as to how quickly
to respond, among other factors). Cash tender offers and acquisitions of
bankrupt firms have a shorter waiting period -- 15 days (plus 10 days after
compliance with a request for additional information). The agencies'
enforcement policy is outlined in the 1992 Horizontal Merger Guidelines. If
an agency concludes that a proposed merger would violate the antitrust laws,
it must apply to a court to enjoin a merger prior to its consummation. |
|
Economic concentrations are prohibited, especially if
they arise from the exercise of a single activity, when as a consequence of
this activity free competition is restricted or a situation of dominance
results in the market or in any part of the market. (Article 11).
Regulation No. 2 concerning economic concentration
applies to all operations in which the volume of the business of the
corporations or divisions engaged in the operation exceeds the level set by
the Office of the Superintendent by means of a resolution. (Article 2 of
Regulation No. 2).
Total business volume is calculated by adding the value
of the sales of products and provision of services by the companies involved
during their last fiscal year. There are special rules for: a) fractional
acquisitions; b) interlinked companies; c) companies with joint branches; d)
banks and financial institutions; and e) insurance companies. (Article 3 of
Regulation No. 2).
The following actions constitute operations of economic
concentration: a) merger of two or more unrelated actors covered by this
law; b) formation of a common corporation by two or more unrelated actors
covered by this law, when the operation has as its result economic
concentration and the resulting company acts as an independent economic
actor, not simply for coordination of competitive behavior of the founding
companies among themselves, nor between them and the common corporation; c)
direct or indirect acquisition by an actor covered by this law to control
other corporations through purchase of stock, participating in capital, or
any other contract or legal device to gain control of the enterprise; d)
acquisition of tangible or intangible productive assets, and acquisition of
trade funds; and e) any other act, contract, or legal device, including
repossession, voluntary or forced liquidation of bequests or legacies, which
result in concentration of companies, divisions, or parts of companies,
trade funds, or productive assets in general. (Article 4 of Regulation No.
2).
The economic concentration operations to which this
Regulation pertains may be evaluated by the Superintendency for the
Promotion and Protection of Free Competition before they are performed or
executed. A request for prior evaluation does not require the enterprises
concerned to suspend the execution of an operation, without prejudice to the
provisions of Articles 13 and 15 of this Regulation. (Article 6 of
Regulation No. 2).
Requests for prior evaluation shall be accompanied with
the information and documents indicated in the “Instructions on Economic
Concentration Operations”, prepared by the Superintendency for the Promotion
and Protection of Free Competition, to be published in the Gaceta Oficial
de la República. (Article 7 of Regulation No. 2).
Pursuant to Article 42 of the Law to Promote and
Protect the Exercise of Free Competition, requested economic concentration
operations shall be evaluated in accordance with the ordinary procedure
provided for in Title III, Chapter 1 of the Organic Law of Administrative
Procedures.
If a request for prior evaluation lacks or omits the
requirements provided for in the “Instructions on Economic Concentration
Operations”, the applicants shall be notified in writing to make up such
defects and omissions within 15 days, in accordance with Article 50 of the
Organic Law of Administrative Procedures. (Article 8 of Regulation No. 2).
Requests for prior evaluation of economic concentration
operations shall be filed separately by each enterprise taking part in a
concentration operation. Each such enterprise shall also individually
comply with the “Instructions on Economic Concentration Operations” referred
to in Article 7 of this Regulation. (Article 9 of Regulation No. 2).
Agreements, decisions, collective recommendations or
joint practices among competitors with regard to goods or services do not
significantly alter behavior of the respective market: a) when they do not
exceed 15% of the volume of business done with identical products or those
deemed similar by the user in terms of their characteristics, price, or use;
and b) participating companies that have annual gross sales of not more than
30,000,000 bolivars each. (Resolution No. 05-93 for application of
Regulation No. 1). |
Enforcement
Bodies
|
The Commission on Free Competition is an agency with
technical and administrative autonomy, responsible for ensuring compliance
with the law against practices that are monopolistic, or designed to control
or restrict free competition. (Article 7).
The Commission on Free Competition has a Technical
Secretariat that serves as a liaison with the administrative structure of
INDECOPI. (Article 44 of the Law on Organization and Functions of INDECOPI).
The antitrust chamber of the Court for the Defense of
Competition of INDECOPI has the second and final administrative jurisdiction
for cases involving violations of Decree 701. |
The two federal agencies responsible for enforcing the
antitrust laws are the Department of Justice (DOJ), through its Antitrust
Division, and the Federal Trade Commission (FTC), an independent agency
established in 1914.
The FTC is composed of five Commissioners appointed for
seven year terms by the President with the advice and consent of the Senate;
the FTC is not part of the Executive Branch. A clearance procedure between
the two agencies ensures that the same parties or conduct are not subject to
investigation by both agencies at the same time.
The antitrust laws are enforced principally through
proceedings brought in the federal courts, either by the Department of
Justice, by private parties, or by attorneys general of the various states.
The FTC conducts its own internal administrative proceedings to adjudicate
violations of the antitrust laws; but in those cases as well, the FTC must
go before the courts to obtain preliminary injunctive relief or to enforce
violations of its remedial orders. The courts thus have a major role in the
enforcement and interpretation of the U.S. antitrust laws, although the vast
majority of enforcement actions brought by the DOJ and FTC are settled prior
to contested proceedings in the courts.
The state governments also play an important role in
antitrust enforcement: each of the fifty states may sue to enforce federal
antitrust laws when an antitrust violation causes injury to the state itself
or to its citizens. In addition, 49 states have their own antitrust laws,
which may be enforced through suits brought by states or private parties in
the state courts. |
The Department of Commerce is the Executive Branch. By
decree signed by the President of the Republic in conjunction with the
Minister of the Economy and Finance, the Department of Commerce was
designated as the body authorized to enforce the regulations relative to
acts prohibited by the Law for the Defense of Competition. (Decree)
|
The Office of the Superintendent for the Promotion and
Protection of Free Competition with operational autonomy to act in matters
within its competence, attached administratively to the Ministry of
Development, is created. (Article 19). |
Enforcement Bodies / Structure
|
The Competition Commission is composed of six members,
including its President, who are appointed by the Chairman of the Board of
Directors of INDECOPI.
The duties and powers of the Secretariat are: a) to
issue an opinion on procedures in the event of violations of Legislative
Decree 701; b) to conduct investigations automatically or upon request to
determine whether prohibited practices are taking place; c) to carry out
studies and publish reports; (d) to prepare draft regulations and adopt
directives; e) to issue cautionary measures, automatically or upon request,
as part of the procedure; f) the powers of the Commission on Free
Competition set out in points d, e, and f above; and (g) to immobilize
documents in general or those of individuals or legal entities under
investigation, with the prior consent of the Commission, for two business
days, with the possibility of extension for a further two-day period; and to
remove said documents from the place where they are located for six business
days by court order (Article 14)
The Competition and Intellectual Property Defense Court
(Competition Defense Chamber) shall:
1. Hear first appeals against decisions of the
Commission on Free Competition.
2. Rule on competition disputes between the functional
arms of INDECOPI.
3. Recommend to the Chair of INDECOPI that the
necessary steps be taken with the competent authorities to adopt the legal
or regulatory measures needed to guarantee free competition.
4. Have recourse to the forces of law and order to
execute the decisions it hands down. |
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The Superintendency shall be administered by a
Superintendent who shall be appointed by the President of the Republic.
(Article 21).
The Superintendent will have an Assistant, appointed by
the President of the Republic. Both will exercise their office for four (4)
years, and they may be appointed to serve in future periods.
The Assistant shall assume Superintendent
responsibilities during any absences. (Article 22).
The Superintendent shall have a Tribunal [Sala de
Sustanciación] which shall have the powers indicated by this Law, its
Regulations, and the Internal Regulations of the Superintendency.
The Tribunal shall be under the Assistant
Superintendent and shall have a staff of professionals in sufficient number
to ensure promptness in resolving matters within the competence of the
Superintendency. (Article 25).
The appointment and removal of functionaries in the
Superintendency shall be carried out by the Superintendent. (Article 27). |
Enforcement
Bodies / Powers or Functions
|
Competition and Intellectual Property Protectional
Tribunal (Competition Protection Division):
1. Hear appeals against decisions of the Free
Competition Commission;
2. Rule on appeals regarding the adoption of corrective
measures and the imposition of sanctions;
3. Recommend to the Chairman of INDECOPI such action as
necessary before the competent authorities toward adoption of the legal or
regulatory measures needed to ensure free competition;
4. Request police assistance to enforce its decisions.
Sectoral Bodies for Regulation of Competition.
There is only one state agency with sole powers to
regulate free competition in public telecommunications services.
The Supervisory Agency for Private Investment in
Telecommunications (Organismo Supervisor de Inversión Privada en
Telecomunicaciones - OSIPTEL), established by the Telecommunications Law
(Supreme Decree 013-95-TCC, Codified Single Text of the Telecommunications
Law), is charged with regulating the behavior of operating enterprises and
the relations of these enterprises among themselves, guaranteeing the
quality and efficiency of the services provided to users, and regulating the
equilibrium of rate tariffs. Its functions include maintaining and
promoting effective and fair competition among providers of carrier, final,
broadcasting and value added services. |
The DOJ is an Executive Branch Department; it enforces
the antitrust laws (Sherman and Clayton Acts, but not the FTC Act) through
criminal prosecutions and civil law suits in the federal courts. The DOJ has
sole authority to prosecute federal criminal violations.
The FTC is an independent regulatory agency; it
enforces the antitrust laws (Clayton Act, FTC Act provisions on "unfair
methods of competition", but not the Sherman Act) principally through
administrative proceedings. The FTC also enforces provisions in the FTC Act
that protect consumers against unfair or deceptive acts or practices. In
addition to its adjudicative authority, the FTC has the power to promulgate
industry or trade regulation rules primarily for consumer protection
matters; in some cases, violation of such rules may result in civil monetary
penalties. The FTC's ultimate recourse for enforcement of its orders is
through the federal courts.
Both agencies have the power to compel testimony and
the production of evidence for use in antitrust investigations, subject to
strict rules for the protection of confidentiality. |
The Department of Commerce shall be empowered to
enforce regulations for the defense of competition as set out in Articles
13, 14 and 150 of Law No. 17.243 of June 29, 2000, and in Articles1570
through 1580 of Law No. 17.296 of February 21, 2001, and shall be authorized
to monitor the acts and activities prohibited by these laws. (Article 1 of
Decree Governing Defense of Competition)
The following duties
and powers shall be vested in the agency charged with enforcing the
regulations set forth in Articles 13, 14, and 15 of Law No. 17.243 of June
29, 2000:
A)
To request from national and municipal authorities and from private
individuals documents, information and assistance considered necessary for
the fulfillment of its mandate and in particular for the conduct of the
relevant market studies and research.
B)
To set up the specialized arbitration centers referred to in Article
15 of Law No. 17.243 of June 29, 2000.
C)
To issue opinions on matters submitted for its consideration or
examined by it by virtue of the authority vested in it and to inform and
advise on agreements, restrictive practices, business decisions and other
issues relevant to the defense of competition.
D)
To impose the sanctions established by this law.
E)
The agency shall have broad investigative and oversight powers and
may, for the conduct of inspections, investigations, expert assessments,
audits and verifications, request the assistance of specialized bodies. To
this end, it may summon persons under investigation as well as third parties
to appear before it and provide information
F)
To apply to a competent judge, upon good grounds, for any interim
equitable relief considered necessary. In such cases the agency shall not
be required to provide a bond for cost.
G)
To draft and submit to the Executive proceedings for substantiating
the commission of prohibited acts and practices and for imposing the
required sanctions, whether in the case of ex officio investigations or in
response to complaints made by interested parties having a legitimate
claim.
H)
To promote agreements, settlements or undertakings to cease, in
respect of matters submitted to it for consideration.
(Article 158 of Law No. 17.296)
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The Superintendency shall be responsible for monitoring
and controlling the practices that impede or restrict free competition.
Among others, it shall have the following powers and duties: 1. To resolve
matters assigned to it by this Law; 2. To conduct the investigations
necessary to verify the existence of anticompetitive practices, and prepare
case files concerning such practices; 3. To determine the existence or
nonexistence of prohibited practices of conduct, act to proscribe them, and
impose the penalties provided in this Law; 4. To adopt the necessary
preventive measures, at its own initiative or at the request of a concerned
party, to avoid the detrimental effects of the prohibited practices; 5. To
authorize those practices or conduct in those exceptional cases to which
Article 18 refers to, and always within the limits which are in effect; 6.
To propose to the Executive Branch the regulations necessary for the
application of the law; 7. To issue its internal regulations and the rules
necessary for its operation; 8. To issue an opinion on matters within its
competence when so requested by the judicial or administrative authorities;
9. To create and maintain the Register of the Office of the Superintendent;
and 10. Any other powers and duties indicated by the laws and regulations.
(Article 29). |
Administrative or Judicial Procedures
|
The procedure may be initiated on its own initiative by
the Technical Secretariat or at the request of a third party. Actions
against infractions of Legislative Decree 701 shall prescribe after five
years of the date of the infractions.
The Secretariat, if it believes there are reasonable
signs of violation of Legislative Decree 701, shall notify the party
presumed responsible for the investigated actions and inform it of the facts
attributed to it. Replies to the charges must be submitted within 15
working days, and any evidence deemed necessary may be offered; other
parties with a legitimate interest may become a party to the proceedings
during this period.
Within the reply period, the accused party or parties
may offer a commitment to cease or modify the investigated events. This
proposal is evaluated by the Secretariat and, if deemed appropriate,
submitted to the Commission with proposed relevant measures to guarantee
fulfillment of the commitment. The Free Competition Commission shall
approve or reject the proposal. Upon expiration of the accusation reply
period, the evidentiary period begins, which consists of 30 working days.
Upon expiration of the evidentiary period, the Technical Secretariat issues
a report on the amount demanded in the accusation and suggesting any
measures and sanctions to be adopted.
After receipt of the Secretariat’s report, the Free
Competition Commission shall have 5 working days to issue its ruling. The
Commission’s decisions are appealable to the Competition Protection Division
of the Competition and Intellectual Property Protection Tribunal.
Said Tribunal’s rulings may be challenged judicially
(administrative law) before the Civil Division of the Supreme Court of
Justice. This Division’s decision may in turn be appealed to the
Constitutional and Social Law Division of the Supreme Court.
For its part, the Regulations for Law 26876 establish
that, once a request for authorization is received prior to a power sector
concentration operation, the Technical Secretariat has five days in which to
determine whether the information accompanying the application is complete.
Once it has been determined that it is complete, the Commission will have a
thirty-day period, which may be extended by another 30 days, to decide
whether or not to authorize the reported concentration operation. Within the
15 days following the decision, it may be appealed before the Competition
Defense Chamber of the INDECOPI Court, which has a period of 30 days within
which to uphold or overturn the Commission’s decision (Articles 16, 18, 25,
and 29).
If the Commission fails to hand down its decision
within the initial 30-day period indicated above, the administrative veto by
silence shall apply and the request for authorization shall be deemed to
have been denied. However, if it is determined that the operation could have
negative effects on the power sector, the concentration may be permitted on
certain conditions or by ordering partial or total dissolution of said
concentration, termination of control, and/or invalidation of the acts
related to the concentration, if it has already taken place (Article 5 of
Law 26876 and Article 26 of the Regulations). |
The antitrust laws are enforced principally through
proceedings brought in the federal courts. The FTC conducts its own
administrative proceedings to adjudicate violations of the antitrust laws;
but in those cases as well, the FTC must go before the courts to obtain
preliminary injunctive relief or to enforce violations of its remedial
orders.
For federal criminal prosecutions, standard criminal
procedures -- including the grand jury and use of immunized testimony --
are used by the DOJ. In DOJ criminal prosecutions, defendants may request a
jury trial; in DOJ civil proceedings, ordinary rules of civil procedure
apply, but defendants are not entitled to a jury trial. |
Articles 2 to 12 of Decree:
Proceedings may be initiated ex officio or in response
to a complaint made by any person, natural or legal, public or private,
whose interests have been adversely affected.
Where an ex officio proceeding has been initiated, a
statement shall be prepared setting forth the facts of and the grounds for
the proceeding.
Where the proceeding is initiated in response to a
complaint, the complaint shall include: the name and particulars of the
person making the complaint and his address, the subject of the complaint,
the facts and provisions of the law upon which the complaint is based, an
enumeration of the elements required by the law accompanied by the available
forms of evidence.
The Department of Commerce shall rule on the
admissibility of a complaint within ten days. Where it so determines, the
Department shall, within ten days, grant a hearing to the alleged offender.
Where an ex officio proceeding has been initiated, a hearing on the facts
and relevant grounds shall be granted within the same period. Upon
completion of the hearing or upon expiration of the prescribed deadline, the
Department shall, within ten days, issue a decision stating whether the
issue is to be pursued or closed for want of merit. This decision shall be
communicated to each party by personal notice.
Once the decision in favor of continuation of the
proceeding has been officially issued, all outstanding evidence shall be
collected within seventy days. The Department of Commerce shall be
authorized to reject any evidence which is clearly irrelevant and may
request, ex officio, other evidence.
Upon expiration of the period prescribed for the
submission of evidence both parties shall be granted a hearing within
fifteen days. The Department of Commerce shall issue its ruling within
seventy days.
At any stage of the proceedings the Department of
Commerce may summon the parties to a hearing in an effort to encourage the
conclusion of an agreement or settlement; order the temporary cessation of
the allegedly unlawful conduct or broker an agreement for the cessation or
modification of the conduct with the alleged offender, thereby suspending
the proceedings.
All the deadlines prescribed by this law shall be
calculated in terms of working days and shall be peremptory.
The provisions of Decree No. 500/991, of September 27,
1991, shall prevail in respect of all matters not specifically provided for
under this law.
Disputes arising from wrongful acts of competitors
prohibited under this law may be submitted, for the consideration of
appropriate arbitrators, to Specialized Arbitration Centers duly established
by the Department of Commerce.
The Specialized Arbitration Centers shall be staffed by
a minimum of twelve arbitrators who shall be persons known to be suitably
qualified in the areas of trade, economics or the law.
Arbitration proceedings shall be governed by the
provisions of Articles 4720 et seq. of the General Code of Procedure (Law
No. 15.982 of October 18, 1988)
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Proceedings shall be initiated at the request of a
concerned party or at the initiative of the Office.
The initiation of proceedings may be ordered only by
the Superintendent.
Whenever it appears that the rules provided for in this
Law may have been violated, the Superintendent will order the opening of the
corresponding proceeding, and shall initiate through the Tribunal the
investigation of the case when appropriate. (Article 32).
In granting the authorizations provided for in this
Law, and for the resolution of other matters for which a special procedure
has not been established, the regular procedure provided for in the Organic
Law on Administrative Proceedings shall be followed. (Article 42).
The Tribunal shall perform the necessary investigation
to clarify the facts and determine responsibility.
In the exercise of its powers, the Tribunal shall have
the broadest investigative and supervisory powers, and in particular the
following powers: 1. To summon any person to appear to testify on pertinent
matters related to the alleged violation; 2. To require any person to
present any documents or information that may be related to the alleged
violation; 3. During the investigation, to examine ledgers and documents;
and 4. To subpoena any person, through the national press, to appear who may
be able to furnish information with respect to the alleged violation.
(Article 34).
During the hearing of the case file, and before its
decision is handed down, the office of the Superintendent may adopt the
following preventive measures: 1. It may order the alleged prohibited
practice to cease; and 2. Dictate measures to avoid damages that may result
from the alleged prohibited practice. (Article 35). |
Administrative or Judicial Sanctions
|
The Commission on Free Competition may impose the
following fines on violators of this law: a) if the violation is determined
to be light or serious, a fine of up to one thousand (1000) UITs, provided
it does not exceed 10 percent of the gross sales or income of the violator
in the period immediately preceding the Commission's decision; b) if the
violation is determined to be very serious, a fine greater than 1,000 UITs,
provided it does not exceed 10 percent of the gross sales or income of the
violator in the period immediately preceding the Commission's decision.
If the entity or person being punished does not engage
in economic, industrial, or commercial activity, or has begun it since
January 1 of the preceding year, the fine shall in no case exceed 1,000
UITs. In addition to the penalty that the Commission may decide to apply to
a firm or entity in violation, each of its legal representatives or
directors may be fined up to one hundred (100) UITs to the extend they are
found liable for the violations committed.
In defining the degree of severity of the violation and
corresponding fine, the Commission shall use the following criteria: a) the
nature and effect of the anticompetitive practice; b) the size of the market
involved; c) the market share of the firm; d) the effect of the
anticompetitive practice on current and potential competitors, other parties
in the economic process, and users and consumers; e) the duration of the
restraint on trade; f) recurrence of the prohibited behavior. (Article 23).
The Law and Regulations controlling concentration in
the power sector establish that the Commission on Free Competition may
impose fines on the individuals or corporations that participate in the act
of concentration, up to 500 indexed tax units in the event of failure to
report and/or falsification and/or failure to submit information by
established deadlines. In addition, fines of up to 10% may be levied on the
gross income or sales of power companies involved in the concentration
operation when said act has an adverse effect on competition in the power
sector and is executed but not reported, is reported after the fact, is
executed after having been reported but before the corresponding
administrative decision or after having been prohibited by the Commission on
Free Competition or the Competition Defense Chamber of the INDECOPI Court
(Article 6 of Law 26876). |
Criminal penalties : criminal violations of the
Sherman Act are punishable by fines of up to $10 million for corporate
defendants and $350,000 for other defendants. Fines may also be set at
double the gross amount gained from violation of the law or lost by the
victim. Criminal violations of the Sherman Act are also punishable by up to
three years' imprisonment.
Injunctive relief : federal courts have the power
to order a party to do or refrain from doing a particular act, which can
include prohibiting repetition of past violations. Such orders may be
entered either after a contested proceeding or by consent of the parties.
The DOJ can obtain injunctive relief only through the courts; the FTC can
issue cease and desist orders, following either the respondent's consent to
the FTC's finding of facts or after an administrative trial on the merits,
enforceable by court-imposed civil penalties or contempt of court sanctions.
Damages : the private cause of action for
violations of the antitrust laws is a critical component of the U.S.
antitrust system, and is independent of any government action. If a private
suit follows a government action under the Sherman or Clayton Acts in which
the defendant has been found liable, however, the plaintiff may use the
earlier judgment as prima facie evidence of a violation. Private parties can
obtain injunctive relief and are generally entitled to treble damage relief
for violations of the antitrust laws, as well as recovery of reasonable
attorney's fees. The U.S. Government can also sue for treble damages to
recover for injury to its business or property resulting from an antitrust
violation.
Other relief : courts can order the restoration
of competitive conditions, including divestiture of assets and rescission of
contracts. Courts have broad power to order injunctive relief barring
prospective or ongoing violations of the antitrust laws. Specific financial
penalties, imposed by the courts, exist for failure to comply with premerger
notification rules. The FTC has broad discretion in fashioning remedial
cease and desist orders, enforceable by court imposed civil penalties or
contempt of court sanctions for noncompliance.
Remedies available under the state antitrust laws vary,
but are generally similar to federal antitrust law provisions; in addition,
many states provide for criminal penalties for violations of their antitrust
laws.
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The directives issued by the Executive shall set forth
which government agency will be given authority in respect of the acts and
activities prohibited under Article 14 of Law No. 17.243 of June 29, 2000.
Such acts and activities shall be sanctionable by:
A)
A warning,
B)
A warning published at the expense of the offender.
C)
An order to cease and desist from the prohibited act or activity and
to remedy the relevant breach.
D)
A fine ranging from 500 UR (five hundred adjustable currency units)
to 20,000 UR (twenty thousand adjustable currency units) depending on
whether the offense is minor, serious, or very serious.
One or more of the aforementioned penalties may be
imposed, as the circumstances of the case demand. Where the seriousness of
the offense so requires, and without prejudice to the right of any party to
initiate the appropriate administrative-law procedure, an order may be
issued for the temporary cessation of the prohibited act or activity.
The criteria to be taken into consideration in
determining the seriousness of the offense shall be the nature of the injury
caused, the nature and extent of the restriction on competition, the
offender’s market share, the duration of the prohibited practice, if the
offender is or is not a repeat offender, and the offender’s criminal record.
(Article 157 of Law No. 17.296)
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The administrative penalties referred to under this
Title shall be imposed by the Superintendency in the final decision that
terminates the proceeding. (Article 43).
The penalties provided for in this Title shall be
applied without prejudice to the penalties established in other laws.
(Article 44).
The authors, co-authors, accomplices, and instigators
of acts in violation of this Law shall be responsible personally for the
infractions they committed. (Article 45).
Persons involved in the prohibited practices and
conduct indicated in Sections I, II, and III of Chapter II of Title II of
this Law, may be punished by the Superintendency with a fine of up to ten
percent (10%) of the value of the violator’s sales, this quantity can be
raised up to twenty percent (20%). In case of repeat offenders, the fine
will be raised to forty percent (40%). The relevant sales figures to be
used in this calculation will be based on data obtained before the
resolution of the fine. (Article 49).
The amount of the penalty referred to in the preceding
article shall be established in keeping with the seriousness of the
violation, for which purpose the following shall be taken into account: 1.
The form and scope of the restriction on free competition; 2. The size of
the market affected; 3. The market share of the corresponding person subject
to this Law; 4. The impact of the restriction of competition on other actual
or potential competitors, on other parts of the economic process, and on
consumers and users; 5. The duration of the restriction on free competition;
and 6. The frequency of repeat offenses. (Article 50).
The Superintendency may impose, independently of the
penalties referred to in Article 49, fines up to one million Bolivars (Bs.
1.000.000,oo), on those persons who do not comply with the orders contained
in the decisions issued by the Superintendency in conformity with Articles
35 and 38. These fines may be raised by fifty percent (50%) of the original
amount for non-payment. (Article 51).
Without prejudice to what is indicated in the Single
Paragraph of this Article, persons affected by the prohibited practices may
turn to the competent courts to seek indemnification for damages that
occurred, once the decision of the Superintendency is final. (Article 55).
In case provisions of Section III of Chapter II of
Title II of this Law are violated, persons affected may turn directly to
competent courts without need to exhaust administrative appeals. However,
if the persons affected decide to initiate the respective administrative
proceeding in conformity with the provisions of Chapter I of Title IV of
this Law, they may not demand redress for any damages they may have suffered
as a consequence of the prohibited practices until after the decision of the
Superintendency becomes final. (Single Paragraph, Article 55). |
Recourse or Appeal
|
The following appeals may be lodged against the
decisions of the Commission on Free Competition, as recognized in the Law on
General Standards for Administrative Cases: a) reconsideration by the
Commission on Free Competition; and b) appeal to the Commission to refer the
matter to the antitrust chamber.
In matters within the sphere of competence of any of
the functional agencies of INDECOPI (The Commission on Free Competition),
there can be no recourse to the courts until the administrative procedures
are exhausted. For purposes of this Decree Law, administrative procedures
will be considered to be exhausted only upon the corresponding decision of
the Court for Defense of Competition and Intellectual Property. (Article 16
of the Law on Organization and Functions of INDECOPI).
Decisions of the Court for Defense of Competition and
Intellectual Property can be challenged in the courts, in the first
instance, in the civil chamber of the Supreme Court. Decisions by that
chamber may be appealed, in the second instance, to the Constitutional and
Social Law Chamber of the Supreme Court. (Article 17 of the Law on
Organization and Functions of INDECOPI). |
All DOJ and some FTC enforcement actions are brought in
the federal district courts and are subject to normal appellate review in
the federal circuit courts of appeals.
FTC administrative decisions are appealable directly to
the federal courts of appeals.
Private suits are also brought in the courts and
subject to appellate review.
In rare cases the Supreme Court exercises its
discretionary jurisdiction to review the judgment of a federal appeals court
in an antitrust case. |
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Decisions adopted by Superintendency exhaust the
administrative route, and the only remedy that may be undertaken has to be
finalized within the period of forty-five (45) calendar days. This remedy
is the contentious-administrative appeal in conformity with the Law on that
matter. (Article 53).
When the administrative law appeal is being undertaken
to review Superintendency resolutions that determined the existence of
prohibitive practices, the effects of the resolutions shall be suspended if
the appellant posts a bond. The amount of the bond shall be determined in
each instance in the final decision, in conformity with the second paragraph
of Article 38. (Article 54).
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