Submitted by the OAS Trade Unit to the FTAA Negotiating Group on Competition Policies (NGCP).

Summary

This inventory gathers the fundamental provisions of free competition in the trade and integration agreements for the Western Hemisphere, in accordance with what was agreed upon by the member countries of the Group on Competition Policy in the Free Trade Area of the Americas.¹

The North American Free Trade Agreement (NAFTA), the Canada-Chile Free Trade Agreement and the Treaty on Free Trade of the Group of Three between the Republic of Colombia, the United Mexican States and the Republic of Venezuela (G-3), indicate the general principles governing the subjection of the enterprises of the contracting parties to the principles of free competition, particularly the practices of State enterprises. These agreements also provide for the creation of some Committees to review the development of competition policies within the framework of the treaties. In the G-3, the member countries, through their competition agencies, have made progress in their work to establish harmonized mechanisms and extra-territorial cooperation in the application of their respective national laws. In addition, the Agreement between the United States of America and the Government of Canada Regarding the Application of Their Competition and Deceptive Marketing Practices Laws establishes a framework to promote cooperation and coordination between the competent authorities to avoid disputes that may arise from the application of the laws and diminish the effect that those differences may have in each country. Similar provisions are also found in several agreements: i.e. the Agreement between the European Communities and the Government of Canada regarding the Application of their Competition Laws, the Cooperation Agreement on Competition Law Enforcement between the Governments of Canada and Mexico, and Memorandum of Understanding between the Commissioner of Competition (Canada) and the Fiscal Nacional Economico (Chile) regarding the Application of their Competition Laws.

The Mercosur Protocol and Decision 285 of the Andean Community establish common regime of rules for each of the member countries, prohibiting those trade practices that limit, restrict, affect or distort competition in the sub-regional market, including, specifically, the horizontal practices derived from collusive agreements between competing enterprises, practices that constitute the abuse of a dominant position, as well as economic concentrations arising from the merger, acquisition or the creation of enterprises as a whole. The Andean Community, in contrast to Mercosur, creates institutions and supra-national rules that regulate and apply to competition.

Protocol No. 8 of the CARICOM, which refers to the Competition Policies, Consumer Protection, Dumping and Subsidies, creates the Competition Commission that will establish, in the most appropriate way, the rules that will help control and prevent anti-competitive practices. The creation of supra-national competition institutions is one of its most unique characteristics.

The Treaty on Free Trade between the Republic of Chile and the Republic of Mexico also creates a Trade and Competition Commission entrusted with reporting and making recommendations on the relationship between the Laws and policies covering competition and trade.

The Treaty on Free Trade and Preferential Exchange between Panama and each of the member countries of the Central American Common Market refers to competition problems in Chapter IV, with which the necessary measures will be adopted to correct the possible weaknesses and distortions that could affect production and trade.

The Treaty on Free Trade between the Central American Common Market and the Dominican Republic with respect to its Competition Policy will create a Free Competition Committee that will be responsible to control and avoid anti-competitive business practices and will create mechanisms to facilitate and promote the development of that policy.

The Economic Complementation Agreement between the Republic of Bolivia and the Republic of Chile, in the chapter exclusively devoted to Unfair Trade Policies and Conditions of Competition, undertakes to follow the criteria and procedures stipulated in the framework of the General Agreement on Tariffs and Trade (GATT).

The Treaty on Free Trade between the Governments of Central America, which make up the Central American Common Market, and the Republic of Chile establishes the mechanisms to facilitate and promote the development of the Competition Policy and guarantees the application of its rules. Moreover, it shall endeavor to ensure that the benefits gained through this treaty shall not be undermined by anti-competitive business practices.

The Agreement between the European Community and the Government of the United States of America referring to the Principles of Positive Courtesy in the Application of Competition Rules stresses the importance of guaranteeing that trade flows and investment between the parties, as well as competition and the well-being of the consumers in their respective territories, are not hindered by anti-competitive activities.

In conclusion, the various agreements signed between the United States of America with Brazil, Mexico, Germany, Israel, Japan and Australia, as well as the Free Trade Agreement between the European Union and Mexico, express the same intent to promote mutual cooperation, including not only cooperation in the application of the laws to protect competition but also technical cooperation between the authorities in the field of competition, and to eliminate monopolistic activities.

NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)¹
CHAPTER FIFTEEN: COMPETITION POLICY, MONOPOLIES AND STATE ENTERPRISES

Article 1501: Competition Law

1. Each Party shall adopt or maintain measures to proscribe anticompetitive business conduct and take appropriate action with respect thereto, recognizing that such measures will enhance the fulfillment of the objectives of this Agreement. To this end the Parties shall consult from time to time about the effectiveness of measures undertaken by each Party.

2. Each Party recognizes the importance of cooperation and coordination among their authorities to further effective competition law enforcement in the free trade area. The Parties shall cooperate on issues of competition law enforcement policy, including mutual legal assistance, notification, consultation and exchange of information relating to the enforcement of competition laws and policies in the free trade area.

3. No Party may have recourse to dispute settlement under this Agreement for any matter arising under this Article.

Article 1502: Monopolies and State Enterprises

1. Nothing in this Agreement shall be construed to prevent a Party from designating a monopoly.
 
2. Where a Party intends to designate a monopoly and the designation may affect the interests of persons of another Party, the Party shall:

1. wherever possible, provide prior written notification to the other Party of the designation; and
2. endeavor to introduce at the time of the designation such conditions on the operation of the monopoly as will minimize or eliminate any nullification or impairment of benefits in the sense of Annex 2004
   (Nullification and Impairment).

3. Each Party shall ensure, through regulatory control, administrative supervision or the application of other measures, that any privately owned monopoly that it designates and any government monopoly that it maintains or designates:

1. acts in a manner that is not inconsistent with the Party's obligations under this Agreement wherever such a monopoly exercises any regulatory, administrative or other governmental authority that the Party has delegated to it in connection with the monopoly good or service, such as the power to grant import or export licenses, approve commercial transactions or impose quotas, fees or other charges;
2. except to comply with any terms of its designation that are not inconsistent with subparagraph (c) or (d), acts solely in accordance with commercial considerations in its purchase or sale of the monopoly good or service in the relevant market, including with regard to price, quality, availability, marketability, transportation and other terms and conditions of purchase or sale;
3. provides non-discriminatory treatment to investments of investors, to goods and to service providers of another Party in its purchase or sale of the monopoly good or service in the relevant market; and
4. does not use its monopoly position to engage, either directly or indirectly, including through its dealings with its parent, its subsidiary or other enterprise with common ownership, in anticompetitive practices in a non-monopolized market in its territory that adversely affect an investment of an investor of another Party, including through the discriminatory provision of the monopoly good or service, cross subsidization or predatory conduct.

4. Paragraph 3 does not apply to procurement by governmental agencies of goods or services for governmental purposes and not with a view to commercial resale or with a view to use in the production of goods or the provision of services for commercial sale.

5. For purposes of this Article "maintain" means designate prior to the date of entry into force of this Agreement and existing on January 1, 1994.

Article 1503: State Enterprises

1. Nothing in this Agreement shall be construed to prevent a Party from maintaining or establishing a state enterprise.

2 .Each Party shall ensure, through regulatory control, administrative supervision or the application of other measures, that any state enterprise that it maintains or establishes acts in a manner that is not inconsistent with the Party's obligations under Chapters Eleven (Investment) and Fourteen (Financial Services) wherever such enterprise exercises any regulatory, administrative or other governmental authority that the Party has delegated to it, such as the power to expropriate, grant licenses, approve commercial transactions or impose quotas, fees or other charges.

3.  Each Party shall ensure that any state enterprise that it maintains or establishes accords non-discriminatory treatment in the sale of its goods or services to investments in the Party's territory of investors of another Party.

Article 1504: Working Group on Trade and Competition

The Commission shall establish a Working Group on Trade and Competition, comprising representatives of each Party, to report, and to make recommendations on further work as appropriate, to the Commission within five years of the date of entry into force of this Agreement on relevant issues concerning the relationship between competition laws and policies and trade in the free trade area.

Article 1505: Definitions

For purposes of this Chapter:
designate means to establish, designate or authorize, or to expand the scope of a monopoly to cover an additional good or service, after the date of entry into force of this Agreement;
discriminatory provision includes treating:

a. a parent, a subsidiary or other enterprise with common ownership more favorably than an unaffiliated enterprise, or
b. one class of enterprises more favorably than another, in like circumstances;

government monopoly means a monopoly that is owned, or controlled through ownership interests, by the federal government of a Party or by another such monopoly;
in accordance with commercial considerations means consistent with normal business practices of privately held enterprises in the relevant business or industry;
market means the geographic and commercial market for a good or service;
monopoly means an entity, including a consortium or government agency, that in any relevant market in the territory of a Party is designated as the sole provider or purchaser of a good or service, but does not include an entity that has been granted an exclusive intellectual property right solely by reason of such grant;
non-discriminatory treatment means the better of national treatment and most favored nation treatment, as set out in the relevant provisions of this Agreement; and
state enterprise means, except as set out in Annex 1505, an enterprise owned, or controlled through ownership interests, by a Party.

Annex 1505: Country-Specific Definitions of State Enterprises

For purposes of Article 1503(3), "state enterprise";

1. with respect to Canada, means a Crown corporation within the meaning of the Financial Administration Act (Canada), a Crown corporation within the meaning of any comparable provincial law or equivalent entity that is incorporated under other applicable provincial law; and
2. with respect to Mexico, does not include, the Compañía Nacional de Subsistencias Populares (National Company for Basic Commodities) and its existing affiliates, or any successor enterprise or its affiliates, for purposes of sales of maize, beans and powdered milk.

TREATY ESTABLISHING THE CARIBBEAN COMMUNITY AND
COMMON MARKET - CARICOM
PROTOCOL AMENDING THE TREATY ESTABLISHING
THE CARIBBEAN COMMUNITY

(Protocol VIII: Competition Policy, Consumer Protection, Dumping and Subsidies)

PREAMBLE

The States parties to the Treaty Establishing the Caribbean Community (hereinafter referred to as "the Member States"):

Noting that competition policy has become more important with the deepening of the integration arrangements and the liberalization of the markets of the Region;

Aware that the benefits expected from the establishment of the CARICOM Single Market and Economy (CSME) may be frustrated by anti-competitive business conduct whose object or effect is to prevent, restrict, or distort competition.

Determined to promote and maintain competition through the establishment and enforcement of applicable laws and rules.

Determined further to promote consumer interest and welfare;

Conscious that the provision of subsidies by Member States and the practice of dumping could have an adverse impact on the promotion and development of competition in the CSME;

Convinced that the application and convergence of national competition policies and the cooperation of competition authorities in the Community would promote the objectives of the CSME,

Have Agreed as follows:

PART I PRELIMINARY

Article I.
Use of Terms

1. In this Protocol, unless the context otherwise requires:

"anti-competitive business conduct" has the meaning assigned to it in Article 30(i);
"business" means any activity carried on for gain or reward or in the course of which goods or services are produced, manufactured or supplied;
"Commission" means the Competition Commission established by Article 30(c);
"Community" includes the CARICOM Single Market and Economy to be established by the Protocols amending or replacing the Caribbean Common Market Annex to the Treaty;
"Community Council of Ministers" (hereinafter referred to as "the Community Council") means the Organ of the Community so named in Article 8 (1) of the Treaty;
"competent authority" means the authority legally authorised to perform a function;
"Conference" means the Conference of Heads of Government of the Community;
"Council for Trade and Economic Development (COTED)" means the Organ of the Community so named in Article 6(2)(a) of the Treaty, and for the purposes of this Protocol shall be deemed to include the interim Committee established pursuant to Rule 34 of the Rules of Procedure of the COTED;
"Court" means the Court established by Article III of the Agreement Establishing the Caribbean Court of Justice;
"enterprise" means any person or type of organisation involved in the production of or the trade in goods, or the provision of services (other than a non-profit organisation);
"goods" means all kinds of property other than real property, money, securities or chooses in action;
"Regional Judicial and Legal Services Commission" means the Commission established by Article V of the Agreement Establishing the Caribbean Court of Justice;
"rules of competition" includes the rules set out in Articles 30(i), 30(h) and 30(k) of this Protocol and any other rules made pursuant to Article 30(b) 1(a)(i);
"Secretary-General" means the Secretary-General of the Community;
"services" means services provided against remuneration other than wages in an approved sector and "the provision of services" means the supply of services:

(a) from the territory of one Member State into the territory of another Member State;
(b) in the territory of one Member State to a service consumer of another Member State;
(c) by a service supplier of one Member State through commercial presence in the territory of another Member State; and
(d) by a service supplier of one Member State through the presence of natural persons of a Member State in the territory of another Member State;

"subsidies" includes the subsidies set out in Schedule V of Protocol IV - Trade Policy and shall apply only in relation to goods;
"trade" includes any business, industry, profession or occupation relating to the supply or acquisition of goods or services;
"Treaty" means the Treaty Establishing the Caribbean Community signed at Chaguaramas on the 4th day of July 1973 and includes any amendments thereto which take effect either provisionally or definitively (hereinafter referred to as "the Treaty").

2. Where in this Protocol there is a requirement for notification to be given, such notification shall be in writing.

Article II
Amendment

Replace Articles 19 and 30 of the Caribbean Common Market Annex to the Treaty with the following:

Article 30
Scope of Parts I, II and III

The rules of competition shall not apply to -

(a) combinations or activities of employees for their own reasonable protection as employees;
(b) arrangements for collective bargaining on behalf of employers or employees for the purpose of fixing terms and conditions of employment;
(c) business conduct within the meaning of Article 30(i) duly notified to the COTED in accordance with Article 30(b);
(d) negative clearance rulings within the meaning of Article 30(l) or exemptions within the meaning of Articles 30(m) and 30(o);
(e) activities of professional associations designed to develop or enforce professional standards of competence reasonably necessary for the protection of the public and approved by the Commission.

Article 30(a)
Objectives of Community Competition Policy

1. The goal of the Community Competition Policy shall be to ensure that the benefits expected from the establishment of the      CARICOM Single Market and Economy (CSME) are not frustrated by anti-competitive business conduct.
2. In fulfilment of the goal set out in paragraph 1 of this Article, the Community shall pursue the following objectives:

(a) promote and maintain competition and enhance economic efficiency in production, trade and commerce;
(b) subject to the Treaty, prohibit anti-competitive business conduct which prevents, restricts or distorts competition or
which constitutes the abuse of a dominant position in the market;
(c) promote consumer welfare and protect consumer interest;

Article 30(b)
Implementation of Community Competition Policy

1. In order to achieve the objectives of the Community Competition Policy,

(a) the Community shall:
(i) subject to the Treaty, establish appropriate norms and institutional arrangements to prohibit and penalise anti-competitive business conduct;
(ii) establish and maintain information systems to enable enterprises and consumers to be kept informed about the operation of markets within the CSME;
(b) Member States shall:
(i) take the necessary legislative measures to ensure consistency and compliance with the rules of competition and provide penalties for anti-competitive business conduct;
(ii) provide for the dissemination of relevant information to facilitate consumer choice;
(iii) establish and maintain institutional arrangements and administrative procedures to enforce competition laws;
(iv) take effective measures to ensure access by nationals of other Member States to competent enforcement authorities including the courts on an equitable, transparent and non-discriminatory basis.

2. A Member State shall establish and maintain a national competition authority for the purpose of facilitating the implementation of the rules of competition.

3. A Member State shall require its national competition authority to:

(a) co-operate with the Commission in achieving compliance with the rules of competition;
(b) investigate any allegations of anti-competitive business conduct being allegations referred to the authority by the Commission or another Member State .
(c) cooperate with other national competition authorities in the detection and prevention of anti-competitive business conduct, and the exchange of information relating to such conduct.

4. Nothing in this Article shall be construed as requiring a Member State to disclose confidential information, the disclosure of which would be prejudicial to the public interest or to the legitimate commercial interests of enterprises, public or private. Confidential or proprietary information disclosed in the course of an investigation shall be treated on the same basis as that on which it was provided.

5.   Within 24 months of the entry into force of this Protocol, Member States shall notify the COTED of existing legislation, agreements and administrative practices inconsistent with the provisions of this Protocol. Within 36 months of entry into force of this Protocol, the COTED shall establish a programme providing for the termination of such legislation, agreements and administrative practices.

PART II
COMPETITION COMMISSION

Article 30 (c)
Establishment of the Competition Commission

For the purposes of implementation of the Community Competition Policy, there is hereby established a Competition Commission (hereinafter called "the Commission") having the composition, functions and powers hereinafter set forth.

Article 30(d)
Composition of the Commission

1. The Commission shall comprise seven members appointed by the Regional Judicial and Legal Services Commission to serve on the Commission. The Regional Judicial and Legal Services Commission shall appoint a Chairman from among the members so appointed. Notwithstanding the foregoing, the Chairman and Members of the Commission shall be appointed by Conference on the recommendation of the COTED as long as the Parties to the Agreement Establishing the Caribbean Court of Justice are less than seven.

2. The Commission shall comprise persons, collectively having expertise or experience in commerce, finance, economics, law, competition policy and practice, international trade and such other areas of expertise or experience as may be necessary.

 3.  A Commissioner shall be appointed for a term of five years and such appointment may be renewed for a further period of not more than five years as determined by the Regional Judicial and Legal Services Commission.

4.  A Commissioner may be removed from office only for inability to perform the functions of his office or for misbehaviour.

5.  A Commissioner shall be removed only on the vote of the Judicial and Legal Services Commission that represents not less than three-quarters of all the Members of the Commission.

 6. A Commissioner may at any time resign the office of Commissioner by writing under his hand addressed to the Chairman of the Judicial and Legal Services Commission.

7.  A Commissioner shall not enter upon the duties of the office unless he has taken and subscribed before the Chairman of the Judicial and Legal Services Commission, the Oath of Office set out in Annex V to this Protocol.

Article 30(e)
Functions of the Commission

1. The Commission shall:

(a) apply the rules of competition in respect of anti-competitive cross-border business conduct;
(b) promote competition in the Community and co-ordinate the implementation of the Community Competition Policy; and
(c) perform any other function conferred on it by any competent body of the Community.

2. In discharging the functions set out in paragraph 1, the Commission shall:

(a) monitor anti-competitive practices of enterprises operating in the CSME, and investigate and arbitrate cross-border disputes;
(b) keep the Community Competition Policy under review and advise and make recommendations to the COTED to enhance its effectiveness;
(c) promote the establishment of institutions and the development and implementation of harmonised competition laws and practices by Member States to achieve uniformity in the administration of applicable rules;
(d) review the progress made by Member States in the implementation of the legal and institutional framework for enforcement;
(e) co-operate with competent authorities in Member States;
(f) provide support to Member States in promoting and protecting consumer welfare;
(g) facilitate the exchange of relevant information and expertise; and
(h) develop and disseminate information about competition policy, and consumer protection policy.

3. The Commission may, by directions in writing and subject to such conditions as it thinks fit, delegate any of its functions to one or more of its members.

Article 30(f)
Powers of the Commission

1. Subject to Articles 30(g) and 30(h), the Commission may, in respect of cross-border transactions or transactions with cross-border effects, monitor, investigate, detect, make determinations or take action to inhibit and penalise enterprises whose business conduct prejudices trade or prevents, restricts or distorts competition within the CSME.

2.   The Commission may, in accordance with applicable national laws, in the conduct of its investigations:

(a) secure the attendance of any person before it to give evidence;
(b) require the discovery or production of any document or part thereof; and
(c) take such other action as may be necessary in furtherance of the investigation.

3. The Commission may, on the basis of its investigations, make determinations regarding the compatibility of business conduct with the rules of competition and other related provisions of the Treaty.

4.  The Commission shall, to the extent required to remedy or penalise anti-competitive business conduct referred to in Article 30(i):

(a) order the termination or nullification as the case may require, of agreements, conduct, activities or decisions prohibited by Article 30(i);
(b) direct the enterprise to cease and desist from anti-competitive business conduct and to take such steps as are necessary to overcome the effects of abuse of its dominant position in the market, or any other business conduct inconsistent with the principles of fair competition set out in this Protocol;
(c) order payment of compensation to persons affected; and
(d) impose fines for breaches of the rules of competition.

5. The Commission may enter into such arrangements for the provision of services as may be necessary for the efficient performance of its functions.

6.  Member States shall enact legislation to ensure that determinations of the Commission are enforceable in their jurisdictions.

 7. The Commission may establish its own rules of procedure.

Article 30(g)
Determination of Anti-Competitive Business Conduct:

Procedure of Commission on Request

1. A Member State may request an investigation referred to in paragraph 1 of Article 30(f) where it has reason to believe that business conduct by an enterprise located in another Member State prejudices trade and prevents, restricts or distorts competition in the territory of the requesting Member State.

2.   Where the COTED has reason to believe that business conduct by an enterprise in the CSME prejudices trade and prevents, restricts or distorts competition within the CSME and has or is likely to have cross-border effects, the COTED may request an investigation referred to in paragraph 1 of Article 30(f).

3.  Requests under paragraphs 1 and 2 shall be in writing and shall disclose sufficient information for the Commission to make a preliminary assessment whether it should proceed with the investigation.

4. pon receipt of a request mentioned in paragraph 3, the Commission shall consult with the interested parties and shall determine on the basis of such consultations whether:

(a) the investigation is within the jurisdiction of the Commission; and
(b) the investigation is justified in all the circumstances of the case.

5. The consultations shall be concluded within 30 days of the date of receipt of the request for investigation, unless the parties agree to continue the consultations for a longer period.

6. Where the Commission decides to conduct the investigation, the Commission shall:

(a) notify the interested parties and the COTED;
(b) complete the investigation within 120 days from the date of receipt of the request for the investigation; and
(c) where the circumstances so warrant, extend the time period for completion of the investigation and notify the interested Parties.

7. Where the Commission decides to conduct an enquiry following an investigation, the Commission shall afford any party complained of the opportunity to defend its interest.

8.  At the conclusion of an enquiry, the Commission shall notify the interested parties of its determination.

9.  Where the Commission determines that a party has engaged in anti-competitive business conduct, it shall also require the party to take the action necessary to remove the effects of the anti-competitive business conduct.

10. Where a specific course of action is required under paragraph 9, the enterprise concerned shall take the appropriate course of action within 30 days of the date of notification. If the concerned enterprise cannot comply, it shall notify the Commission and request an extension.

11.  If the enterprise cannot comply within the time period specified and fails to inform the Commission, the Commission may apply to the Court for an order

12.  A party which is aggrieved by a determination of the Commission under paragraph 4 of Article 30(f) in any matter may apply to the Court for a review of that determination.

Article 30(h)
Determination of Anti-Competitive Business Conduct;

Procedure of Commission Proprio Motu

1. Where the Commission has reason to believe that business conduct by an enterprise in the CSME prejudices trade and prevents, restricts, or distorts competition within the CSME and has cross-border effects, the Commission shall request the competent national authority to undertake a preliminary examination of the business conduct of the enterprise.

2.  Where a request is made under paragraph 1, the national authority shall examine the matter and report its findings to the Commission within such time as may be determined by the Commission.

3.  Where the Commission is not satisfied with the outcome of its request, the Commission may initiate its own preliminary examination into the business conduct of the enterprise referred to in paragraph 1.

4. Where the findings of the preliminary examination under paragraphs 2 and 3 require investigation, the Commission and the Member State concerned shall hold consultations to determine and agree on who should have jurisdiction to investigate.

5. If there is a difference of opinion between the Commission and the Member State regarding the nature and effects of the business conduct or the jurisdiction of the investigating authority, the Commission shall:

(a) cease any further examination of the matter; and
(b) refer the matter to the COTED for its decision.

6.  Nothing in this Article shall prejudice the right of the Member State to initiate proceedings before the Court at any time.

7.  Where there is a finding that the Commission has jurisdiction to investigate the matter, the Commission shall follow the procedures set out in paragraphs 5, 6, 7 and 8 of Article 30(g).

PART III
RULES OF COMPETITION

Article 30(i)
Prohibition of Anti-Competitive Business Conduct

1. A Member State shall, within its jurisdiction, prohibit as being anti-competitive business conduct, the following:

(a) agreements between enterprises, decisions by associations of enterprises, and concerted practices by enterprises which have as their object or effect the prevention, restriction or distortion of competition within the Community;
(b) actions by which an enterprise abuses its dominant position within the Community; or
(c) any other like conduct by enterprises whose object or effect is to frustrate the benefits expected from the establishment of the CSME.

2. Anti-competitive business conduct within the meaning of paragraph 1 includes the following:

(a) the direct or indirect fixing of purchase or selling prices,
(b) the limitation or control of production, markets, investment or technical development;
(c) the artificial dividing up of markets or restriction of supply sources;
(d) the application of unequal conditions to parties undertaking equivalent engagements in commercial transactions thereby placing them at a competitive disadvantage;
(e) making the conclusion of a contract subject to the acceptance by the other party to the contract of additional obligations which, by their nature or according to commercial practice, have no connection with the subject matter of the contract;
(f) unauthorised denial of access to networks or essential infrastructure;
(g) predatory pricing;
(h) price discrimination;
(i) loyalty discounts or concessions;
(j) exclusionary vertical restrictions; and
(k) bid-rigging.

3. Subject to Article 30, a Member State shall ensure that all agreements and decisions within the meaning of paragraph 1 of this Article shall be null and void within its jurisdiction.

4. An enterprise shall not be treated as engaging in anti-competitive business conduct if it establishes that the activity complained of:

(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 a fair share of the resulting benefit;

(b) imposes on the enterprises affected only such restrictions as are indispensable to the attainment of the objectives mentioned in sub-paragraph (a); or
(c) does not afford the enterprise engaged in the activity the possibility of eliminating competition in respect of a substantial part of the market for goods or services concerned.

Article 30(j)
Determination of Dominant Position
For the purposes of this Protocol:

(a) an enterprise holds a dominant position in a market if by itself or together with an interconnected company, it 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;

(b) any two companies shall be treated as interconnected companies if one of them is a subsidiary of the other or both of them are subsidiaries of the same parent company.

Article 30(k)
Abuse of a Dominant Position

1. Subject to paragraph 2 of this Article, an enterprise abuses its dominant position in a market if it prevents, restricts or distorts competition in the market and, in particular but without prejudice to the generality of the foregoing, it:

(a) restricts the entry of any enterprise into a market;

(b) prevents or deters any enterprise from engaging in competition in a market;

(c) eliminates or removes any enterprise from a market;

(d) directly or indirectly imposes unfair purchase or selling prices or other restrictive practices;

(e) limits the production of goods or services for a market to the prejudice of consumers;

(f) as a party to an agreement, makes the conclusion of such agreement subject to acceptance by another party of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the agreement;

(g) engages in any business conduct that results in the exploitation of its customers or suppliers,
so as to frustrate the benefits expected from the establishment of the CSME.

2. In determining whether an enterprise has abused its dominant position, consideration shall be given to:

(a) the relevant market defined in terms of the product and the geographic context;

(b) the concentration level before and after the relevant activity of the enterprise measured in terms of annual sales volume, the value of assets and the value of the transaction;

(c) the level of competition among the participants in terms of number of competitors, production capacity and product demand;

(d) the barriers to entry of competitors; and

(e) the history of competition and rivalry between participants in the sector of activity.

3. An enterprise shall not be treated as abusing its dominant position if it is established that:

(a) its behaviour was directed exclusively to increasing efficiency in the production, provision or distribution of goods or services or to promoting technical or economic progress and that consumers were allowed a fair share of the resulting benefit;

(b) the enterprise reasonably enforces or seeks to enforce a right under or existing by virtue of a copyright, patent, registered trade mark or design; or

(c) the effect or likely effect of its behaviour on the market is the result of superior competitive performance of the enterprise concerned.

Article 30(l)
Negative Clearance Rulings

1. In any case where a Member State is uncertain whether business conduct is prohibited by paragraph 1 of Article 30(i), such a Member State may apply to the Commission for a ruling on the matter. If the Commission determines that such conduct is not prohibited by paragraph 1 of Article 30(i), it shall issue a negative clearance ruling to this effect.

2. A negative clearance ruling shall be conclusive of the matters stated therein in any judicial proceedings in the Community.

Article 30(m)
De Minimis Rule

The Commission may exempt from the provisions of this Part any business conduct referred to it if it considers that the impact of such conduct on competition and trade in the CSME is minimal.

Article 30(n)
Powers of the COTED Respecting Community
Competition Policy and Rules

Subject to the Treaty, the COTED shall develop and establish appropriate policies and rules of competition within the Community including special rules for particular sectors.

Article 30(o)
Exemptions

1. Where the COTED determines, pursuant to Article 30(n), that special rules shall apply to specific sectors of the Community, it may suspend or exclude the application of Article 30(i) to such sectors pending adoption of the relevant rules.

2. The COTED may, on its own initiative or pursuant to an application by a Member State in that behalf, exclude or suspend the application of Article 30(i) to any sector or any enterprise or group of enterprises in the public interest.

ANDEAN COMMUNITY²
DECISION 285: NORMS FOR THE PREVENTION OR CORRECTION OF DISTORTIONS IN
COMPETITION CAUSED BY PRACTICES THAT RESTRICT FREE COMPETITION

The Commission of the Cartagena Agreement,

HAVING SEEN: Chapter VIII of the Cartagena Agreement, Decisions 230, 258 and 281 and Proposal 226/Rev.1 of the Board. CONSIDERING:
That the Commission approved Decision 230, that contains the norms to prevent or correct practices that could distort competition;
That the Commission, as set out in Decision 258 and as proposed by the Board, will review the norms on commercial competition;
That the Commission, as set out in Decision 281, will establish, no later than 31 March 1991, as proposed by the Board, will review the norms on commercial competition established in Decision 230;
That to obtain the objectives of the integration process it is convenient to perfect the subregional norms on competition, in order to build efficient mechanisms that would allow prevention and correction of distortions arising from business behavior that restricts, impedes, or undermines competition.
That due to its origin and scope it is necessary to distinguish between the practices considered under this Decision and those practices related to dumping and subsidies, and export restrictions;
DECIDES:

I. Scope of Application

Article 1.- The purpose of the norms considered in this Decision is to prevent or correct distortions of competition arising from practices that restrict free competition.

Article 2.- Member Countries or companies that have legitimate interest may ask the Board for authorization or mandate to apply measures to prevent or correct imminent damages or damages to production or exports, resulting from practices in the subregion that restrict free competition, or practices of a company that carries on economic activity in a Member Country.
Practices in the subregion means practices of companies that engage in economic activity in one or more Member Countries. Intervention of a Member Country means a practice linking companies that carry out economic activity in one or more Member Countries and companies located outside the subregion.
This decision does not include practices undertaken by one or more companies located in a single Member Country that do not have effect in the subregion. These cases are subject to the respective domestic legislation.
For the purposes of this decision, imminent damage includes appreciable delay in starting production.

Article 3.- Practices which restrict free competition are those agreements, parallel actions, or joint practices among companies that produce or could produce the effect of restricting, impeding, or undermining competition.
The agreements mentioned in the preceding paragraph shall include horizontal or vertical ones entered into between parties linked to the companies.
For the purposes of this Decision, abusive exploitation of a dominant position in the market by one or more companies shall also be considered an anticompetitive practice.

A dominant position by one or more companies exists when they can act independently without regard for competitors, buyers, or providers, due to factors such as a significant participation by the companies in the respective markets, the characteristics of supply and demand of the products, the technological development of he products involved, the access of competitors to sources of funding and supplies, as well as distribution networks.

Article 4.- Agreements, parallel actions, or joint practices can consist of:

1. a. improper manipulation or direct or indirect fixing of prices or other market terms, in a discriminatory manner with regard to those prevalent in normal commercial transactions;
2. limitation or control of production, distribution, technical development, or investment. Also, limits or prohibitions on exports, imports, or competition;
3. allocation of the market or supply sources, particularly measures designed to disrupt the normal supply of raw materials;
4. the application in commercial relations of discriminatory conditions for similar services that place some competitors at a disadvantage with regard to others;
5. the making of contracts contingent upon supplementary conditions that by their nature or in accordance with usual business custom have no relation to the purpose of the contracts; and
6. other actions with similar effects.

Article 5.- Abuse of a dominant market position means:

1. a. improper manipulation or direct or indirect fixing of prices or other market terms, in a discriminatory manner with regard to those prevalent in normal commercial transactions;
2. limitation or control of production, distribution, technical development, or investment. Also, limits or prohibitions on exports, imports, or competition;
3. unjustified refusal to satisfy demands for the purchase of products, among others, the withholding of inputs from companies in competition for the market of the final product;
4. the application in commercial relations of discriminatory conditions for similar services that place some competitors at a disadvantage with regard to others;
5. the making of contracts contingent upon supplementary conditions that by their nature or in accordance with usual business
   custom have no relation to the purpose of the contracts; and f. other actions with similar effects.

II. Procedures

Article 6.- Requests can be presented by:

1. the Member Countries through their respective liaison organs; and
2.  the company or companies that have legitimate interest, to the extent permitted by domestic legislation.

The request shall include the following information:

• the nature of the restrictive practices and the length of their duration;
• the characteristics of the products or services involved in the practices;
• the characteristics of the products affected;
•  the companies involved;
• evidence that makes it possible to presume the existence of damage or imminent damage to production or exports from anticompetitive practices;
• the type of measures requested.
  After receiving the complaint, the Board shall send it to the national liaison organs in the country where the companies involved in the investigation carry out their economic activity.

Article 7.- The Board will not begin an investigation if the request is incomplete. In such a case, within ten working days after the presentation of the request, the Board should inform the complainant, giving details of the missing information.
If the request is considered to be complete, within ten days after the presentation of the request, the Board shall issue a explanatory Resolution. Likewise, the complainant company or companies will be notified of said Resolution.

Article 8.- In the course of the investigation, the Junta may request and collect evidence and information from the national agencies and, through them or directly, from the producers, exporters, importers, distributors or consumers who may have legitimate interest in the investigation. Likewise, they may submit information or present allegations to the Junta.
In the cases in which the Junta requests, collects or receives evidence and information directly, it shall communicate it to the respective national bodies.

Article 9.- In use of the Junta authority to request and collect evidence, it may give confidential treatment to such an information in regard to the aspects requested by the provider once justified such a treatment on the basis of likely unfavorable consequences.
Likewise, internal documents elaborated by the Junta or the member countries shall enjoy confidential treatment in regard to the parts of such a nature.
When pretending to provide confidential treatment to an evidence, the person soliciting it shall provide a brief of the information likely to be divulged or an explanation justifying the reason by which it is not possible to brief it. In the latter case, the Junta may not accept such a justification and disregard such an evidence.
By the same token, and notwithstanding the request being justified, the Junta may not take the information into consideration if who provided it does not also provide a non-confidential brief of it, if possible.
The interested parties in the investigation may request by writing the information provided or elaborated during the application of this Decision so long as they do not have confidential character.
The present article does not restraint the dissemination of general information and, particularly, of the motives on which are based the Resolutions referring the present Decision, so long as they are requested in the course of a judicial proceeding. This dissemination shall not reveal commercial secrets of the parties with legitimate interest in the investigation.

Article 10.- In the course of an investigation, the Junta may call ex-officio or at request of the interested parties meetings aimed at procuring a direct settlement whose commitments and findings shall be recorded in a minute.
No interested party shall be bound to attend a meeting and his absent shall not be in detriment of his cause.
The Junta shall issue a motivated resolution indicating the commitments reached and, if the investigation is suspended or proceeds at the interested party’s request.
The firms or authorities of the country where the practice occurs, shall provide the relevant information to verify the fulfilment of the commitments reached. When the commitments do not fulfil or the information is not provided, the Junta shall proceed the investigation.

Article 11.- For the investigation, the Board has two months from the date of publication the Resolution referred in Article 7 of this Decision.
In cases of exception, the period may be extended up to two months in which case the Junta shall notify it to the interested party.

Article 12.- In its finding, the Board shall consider the relevant evidence with regard to:

1.  the anticompetitive practices;
2.  the damage or imminent damage; and
3.  the relation of cause and effect between the practices and the damage or imminent damage.

Article 13.- The determination of the existence of damage or threat of damage and the relation of cause and effect involving the anticompetitive practices shall be based on the following elements, among others:

1. the volume of trade in the products affected by the practices, particularly in order to determine whether its has changed significantly in absolute terms and in relation to the production and consumption in the affected member country;
2. the prices of the products and services affected by the practices, particularly to determine if they differ substantially from the prices of similar products or services in the absence of the practices; and
3.  the effects on production or exports affected by the practices, according to the real or apparent trends of the pertinent economic factors, such as: production, domestic sales, exports, distribution, market share, utilization of installed capacity, employment, stocks, and benefits.

Article 14.- At the conclusion of its investigation, within 10 working days of the time provided in Article 11, the Board shall issue a finding with explanation, setting forth its conclusions on the basis of available information.  The resolution shall indicate the measures adopted, the deadline for their adoption, and their duration. When appropriate, it shall also indicate the conditions that determine the duration of the measures.

Article 15.- Once the Junta verifies, at national authorities or parties interested’s request, that the causes that originated the Resolution referred in the above Article modified or ceased, it shall leave it partially or totally without effect, by modifying or abolishing it. For its decision, the Junta shall have two months.  The Junta likewise may verify ex-officio the causes that originated the Resolution modified or ceased, by modifying or abolishing it.

III. Measures

Article 16.- The Board shall issue an injunction when it determines the existence of an anticompetitive practice that causes damage or imminent damage. It may also decide to apply measures tending to eliminate or alleviate the distortions that gave rise to the complaint. The Member Countries shall adopt the necessary measures to halt the practices.
The corrective measures may consist of authorization for the countries in which the affected companies carry on their economic activity to apply preferential tariffs with regard to subregional tariff commitments, in cases of imports of products affected by the anticompetitive practice.

Article 17.- When the damage or imminent damage is evident, the Board may, in the course of its investigation, make recommendations to cause the practice to cease.

IV. Final Provisions

Article 18.- This Decision supersedes Decision 230 in those provisions related to preventing or correcting distortions to competition as a result of restrictive practices of competition.
Signed at Lima, Peru, on March 21, 1991.

COMMON MARKET OF THE SOUTHERN CONE (MERCOSUR)
PROTOCOL OF THE DEFENSE OF COMPETITION³

The Republic of Argentina, The Federal Republic of Brazil, the Republic of Paraguay, the Eastern Republic of Uruguay, henceforth designated as the States Parties
CONSIDERING
that the free movement of goods and services between the States Parties renders essential that adequate conditions of competition be assured in order to contribute to the strengthening of the Custom Union;
that States Parties must assure, in the exercise of their economic rights within their territories, equal conditions of free competition;
that balanced and harmonious growth of intra-zonal trade relations, as well as increased competitiveness among the States Parties will depend in large part upon the consolidation of a competitive environment in the integrated framework of the MERCOSUR;
that it is urgent that directives be established in order to provide guidance to States Parties and the enterprises situated within them in the defense of competition in the MERCOSUR, as an instrument capable of assuring free market access and a balanced distribution of the benefits of the process of economic integration.
RESOLVE

CHAPTER I
THE PURPOSE AND THE SCOPE OF APPLICATION

Article 1. - The purpose of the present Protocol is the defense of competition in the framework of the MERCOSUR.

Article 2.- The rules of this Protocol apply to actions taken by natural and legal persons under public and private law, and other entities whose purpose is to influence or to bring influence to bear upon competition in the framework of the MERCOSUR and consequently to influence trade between the States Parties;

Single Paragraph - Among the legal entities referred to in the preceding paragraph are included those enterprises which exercise a State monopoly, insofar as the rules of this Protocol do not prevent the regular exercise of their legal attributions.

Article 3.- The regulation of the acts carried out within their respective territory by natural persons or legal entities or by any other entity domiciled therein, and whose influence on competition is limited to same, falls within the exclusive competence of each State.

CHAPTER II
REGARDING THE RESTRICTIVE CONDUCT AND PRACTICES OF COMPETITION

Article 4.- Constitute an infringement of the rules of the present Protocol, regardless of guilt, individual or concerted acts, of whatever kind, the purpose or final effect of which is to restrict, limit, falsify or distort competition or access to the market or which constitute an abuse of a dominant position in the relevant goods or services market in the framework of the MERCOSUR, and which affect trade between the States Parties.

Article 5.- Mere market conquest resulting from the natural process of the most efficient economic agent among competitors does not constitute any violation of competition.

Article 6.- The following forms of conduct, inter alia, insofar as they embody the hypotheses advanced in article 4, constitute practices which limit competition;

I. to fix, impose or practice, directly or indirectly, in collaboration with competitors or individually, in any form, the prices and conditions of the purchase or sale of goods, the providing of services or production;

II. to procure or to contribute to the adoption of uniform business practices or concerted action by competitors;

III. to regulate goods or service markets, entering into agreements to limit or control research and technological development, the production of goods or the supply of services, or to hinder investments intended for the production of goods or services or their distribution.

IV. to divide up the markets of finished or semifinished goods or services, or the supply source of raw materials and intermediate products.

V. to limit or prevent access of new enterprises to the market;

VI. to agree on prices or advantages which may affect competition in public bids;

VII. to adopt, with regard to third parties, unequal conditions for equivalent services, thus placing them at a competitive disadvantage;

VIII. to subordinate the sale of one good to the purchase of another good or to the use of a service, or to subordinate the supply of a service to the use of another or to the purchase of a good;

IX. to prevent the access of competitors to raw materials, investment goods or technologies, as well as to distribution channels;

X. to require or to grant exclusivity with respect to the dissemination of publicity in the communication media;

XI. to subordinate buying or selling to the condition of not using or acquiring, selling or supplying goods or services which are produced, processed, distributed or marketed by a third party;

XII. to sell merchandise, for reasons unfounded on business practices, at prices below the cost price;

XIII. to reject without good reason the sale of goods or the supply of services;

XIV. to interrupt or to reduce production on a large scale, without any justifiable cause;

XV. to destroy, render useless or accumulate raw materials, intermediate or finished goods, as well as to destroy, render useless or obstruct the functioning of equipment designed to produce, transport or distribute them.

XVI. to abandon, cause to be abandoned or destroy crops and plantations without just cause.

XVII. to manipulate the market in order to impose prices.

CHAPTER III
ON THE CONTROL OF ACTS AND CONTRACTS

Article 7.- The States Parties shall adopt, for the purpose of their incorporation in the regulations of the MERCOSUR, within the period of two years, common rules for the control of acts and contracts, of any kind, which may limit or in any way cause prejudice to free trade, or result in the domination of the relevant regional market of goods and services, including which result in economic concentration, with a view to preventing their possible anti-competitive effects in the framework of the MERCOSUR.

CHAPTER IV
ON THE ENFORCEMENT BODIES

Article 8.- Application of the present Protocol is applied by the Trade Commission of the MERCOSUR, in accordance with the terms of article 19 of the Protocol of Ouro Preto, and by the Committee for the Defense of Competition.

Single Paragraph - The Committee for the Defense of Competition, an organ of intergovernmental nature, shall be constituted by the national organs for the application of the present Protocol in each State Party.

Article 9.- The Committee for the Defense of Competition shall submit the rules of procedure of the present Protocol to the Trade Commission for approval;

CHAPTER V
ON THE ENFORCEMENT PROCEDURE

Article 10.- The national organs of application shall initiate the procedure provided through the present Protocol ex officio or through reasoned presentation by the legitimately concerned party, which should appear before the Committee for the Defense of Competition and present a preliminary technical evaluation;

Article 11.- The Committee for the Defense of Competition, following a preliminary technical analysis, shall initiate an inquiry or, ad referendum of the Trade Commission of MERCOSUR, shelve the case.

Article 12.- The Committee for the Defense of Competition shall regularly submit reports on the state of negotiations on the cases under consideration to the Trade Commission of the MERCOSUR.

Article 13.- In case of emergency or threat of irreparable damage to competition, the Committee for the Defense of Competition of the MERCOSUR shall determine, ad referendum of the Trade Commission of the MERCOSUR, the application of preventive measures, including the immediate cessation of the practice subject to inquiry, and the reestablishment of the prior situation or other measures which it deems necessary.

1. In case of non observance of the preventive measure, the Committee for the Defense of Competition may define, ad referendum of the Trade Commission of the MERCOSUR, application of a fine of the infringing party.

2.  Application of the preventive measure or of the fine shall be effected by the national organ of application of the State in the territory of which the defendant is domiciled.

Article 14.- The Committee for the Defense of Competition shall establish, in each case investigated, guidelines for the definition of, among other aspects, the relevant market structure, the evidence regarding conduct and analytical criteria of the economic effects of the investigated practice.

Article 15.- The national organ of application of the State in the territory of which the defendant is domiciled shall carry out the investigation of the restrictive practice of competition, bearing in mind the guidelines set forth in article 14.

1. The national enforcement bodies undertaking the investigation shall disseminate regular reports on its activities.
2. The exercise of the right of defense shall be guaranteed to the defendant.

Article 16.- The national organs of application of the other States Parties are responsible for assistance to the national enforcement body responsible for the investigation through contribution of information, documentation and other means considered essential to the correct execution of the investigation procedures.

Article 17.- In case of differences regarding the application of procedures set forth in this Protocol, the Committee for the Defense of Competition may request MERCOSUR Trade Commission for an opinion on the matter.

Article 18.- Once the process of investigation has en concluded the national body responsible for the investigation shall present a conclusive ruling on the matter to the Committee for the Defense of Competition.

Article 19.- The Committee for the Defense of Competition, taking into account the ruling of the national enforcement bodies, ad referendum of the Trade Commission of the MERCOSUR, shall decide on the infringing practices and shall establish the sanctions to be imposed or any other appropriate measures.

Single Paragraph -If the Committee for the Defense of Competition should not arrive at a consensus, it shall bring its conclusions before the Trade Commission of the MERCOSUR, noting existing differences.

Article 20.- The Trade Commission of the MERCOSUR, taking into account the ruling or the conclusions of the Committee for the Defense of Competition, shall make a ruling through adoption of a Directive, setting forth the sanctions to be applied to the infringing party or other appropriate measures.

1. The sanctions shall be applied by the national enforcement bodies of the State Party whose territory the infringing party is domiciled.
2.  If a consensus were not reached, MERCOSUR Trade Commission shall bring the different proposed solutions before the Common Market Group.

Article 21.- The Common Market Group shall make a ruling upon the matter through adoption of a resolution.  Single Paragraph - If the Common Market Group should not arrive at a consensus, the interested State Party could resort directly to the procedure set forth in chapter IV of the Brasilia Protocol on the Settlement of Disputes.

CHAPTER VI
UNDERTAKING OF CESSATION

Article 22.- At any stage of the procedure, the Committee for the Defense of Competition may ratify, ad referendum of MERCOSUR Trade Commission, an undertaking of cessation of the practice under investigation, which shall not imply a confession as to the facts nor recognition of the illicit nature of the conduct under analysis.

Article 23.- The Undertaking of Cessation shall necessarily include the following paragraphs:

a) the obligations of the defendant, in the sense of the cessation of the practice being investigated within the established period.
b) the value of the daily fine to be imposed in case of noncompliance with the Undertaking of Cessation.
c) the obligation of the defendant to submit regular reports on his activities in the market, keeping the national enforcement bodies informed of eventual changes in the company’s structure, control, activities and location.

Article 24.- The procedure shall be suspended when compliance with the Undertaking of Cessation has been reached and will be shelved upon conclusion of the established period, if all the conditions listed in the Undertaking are complied with.

Article 25.- The MERCOSUR Committee for the Defense of Competition may ratify modifications of the Undertaking of Cessation if the latter should prove to be an excessive burden for the defendant, and if the new situation should not constitute any infringement of competition.

Article 26.- The Undertaking of Cessation, changes in the Undertaking and the sanction referred to in the present Chapter shall be executed by the national enforcement bodies of the State Party in the territory of which the defendant is domiciled.

CHAPTER VII
ON SANCTIONS

Article 27.- The Committee for the Defense of Competition, ad referendum of the MERCOSUR Trade Commission, shall determine the definitive cessation of the infringing practice within a period of time to be specified.

In case of noncompliance with the order of cessation, the daily fine to be determined by the Committee for the Defense of Competition, ad referendum of the MERCOSUR Trade Commission.
  The order of cessation as well as imposition of the fine shall be executed by the national organ of application of the State Party in the territory of which the infringing party is domiciled.

Article 28.- In case of violation of the rules of procedure of the present Protocol the following sanctions shall be applied, either cumulatively or alternatively:

I. a fine, based on the earnings obtained from commission of the infringing practice, gross revenues or the assets involved which would be paid to the national enforcement bodies of the State Party in the territory of which the infringing party is domiciled.

II. prohibition to participate in the systems of public procurement in any of the States Parties, for a period of time to be determined.

III. prohibition to enter into contracts with public financial institutions of any of the States Parties, for a period of time to be determined.

The Committee for the Defense of Competition, ad referendum of the Trade Commission of the MERCOSUR, may recommend to the competent authorities of the States Parties that no incentives of any kind or terms of payment of tax obligations be granted to the infringing party.
  The penalties set forth in this article shall be executed by the national enforcement bodies of the State Party in the territory of which the infringing party is domiciled.

Article 29.- As regards the levels of the sanctions established in the present Protocol, the seriousness of the fact of the case and the significance of the damage caused to competition in the framework of the MERCOSUR should be considered.

CHAPTER VIII
ON COOPERATION

Article 30.- In order to ensure application of the present Protocol, the States Parties shall, through the respective national enforcement bodies, adopt mechanisms of cooperation and of technical consultation, so as:

a) to systematize and strengthen cooperation between the national organs and authorities responsible for the perfecting of the national systems and of the joint defense instruments of competition, through a program of the exchange, as well as of the joint investigation of the practices harmful to competition, through a program of exchange of information and experience, of the training of technicians and the accumulation of case law relative to the defense of competition, as well as of the joint investigation of practices harmful to competition in the MERCOSUR.
b) to identify and mobilize, by means of agreements of technical cooperation in the area of the defense of competition with other States or regional groups, the necessary resources for the implementation of programs of cooperation referred to in the preceding paragraph.

CHAPTER IX
ON THE SETTLEMENT OF DISPUTES

Article 31.- To the settlement of differences regarding the application, interpretation or nonobservance of the provisions contained in the present Protocol, the provisions of the Protocol of Brasilia and of the General Procedure for Complaints before the Trade Commission of the MERCOSUR set forth in the Annex to the Protocol of Ouro Preto shall applied.

CHAPTER X
FINAL AND TRANSITORIAL PROVISIONS

Article 32.- The States Parties undertake, within a two year period following entry into force of the present Protocol, and for purposes of their incorporation in this instrument, to draft joint standards and mechanisms which shall govern State aid which is susceptible to limit, restrict, falsify or distort competition and to affect trade between the States Parties.
To this end, progress made on the subject of public policies which distort competitiveness and the relevant standards of the WTO shall be taken into consideration.

Article 33.- The present Protocol, as an integral part of the Treaty of Asuncion, shall enter into force thirty days after the second instrument of ratification has been deposited, with respect to the first two States Parties ratifying it and, in the case of the other signatories, on the thirtieth day after the respective instrument of ratification has been deposited.

Article 34.- No provision of the present Protocol shall apply to the restrictive practices of competition the study of which has been initiated by the competent authority of a State Party before the entry into force provided in Article 33.

Article 35.- The present Protocol may be revised of common accord, on the proposal of one of the States Parties.

Article 36.- Adherence on the part of a State to the Treaty of Asuncion shall imply, ipso iure, adherence to the present Protocol.

Article 37.- The Government of the Republic of Paraguay shall be the depository of the present Protocol and of the instruments of ratification, and shall send duly authenticated copies of same to the Governments of the other States Parties.
Similarly, the Government of the Republic of Paraguay shall notify the Government of the other States Parties of the date of entry into force of the present Protocol, as well as of the date of deposit of the instruments of ratification.
Done in the city of Fortaleza, on the seventeenth day of the month of December of 1996, in one original in the Spanish and Portuguese languages, both these texts being equally authentic.

MERCOSUR/CMC/DEC No. 2/97

Annex to the Protocol For the Protection of Competition In MERCOSUR

HAVING SEEN: The Asuncion Treaty, the Ouro Preto Protocol, Decisions No. 21/94 and 18/96 of the Common Market Council, Resolution No. 129/94 of the Common Market Group, and the Minutes of the Twenty-first Meeting of the MERCOSUR Trade Committee,

CONSIDERING:
The importance of establishing criteria for quantifying the amount of fines provided for in the Protocol for the Protection of Competition in MERCOSUR, approved by Decision CMC No. 18/96,

The Common Market Council Decides:
Art. 1 To approve the following Annex to the Protocol for the Protection of Competition in MERCOSUR:

"ANNEX TO THE PROTOCOL FOR THE PROTECTION OF COMPETITION IN MERCOSUR":
Art. 1. The fines provided for in the present Protocol shall be equivalent to up to 150% of the profits obtained through the illegal practice; up to 100% of the value of the assets involved; or up to 30% of the value of the company's gross billing for its previous financial year, net of tax. Such fines may not be less than the advantage obtained, if quantifiable. Art. 2 In the specific cases referred to in Articles 13.1, 23.b, and 27.1 of the present Protocol, a daily fine of up to 1% of the company's gross billing for the previous financial period.

XII CMC - Asuncion, 18/VI/97

TREATY ON FREE TRADE OF THE GROUP OF THREE BETWEEN THE REPUBLIC OF COLOMBIA,
THE UNITED MEXICAN STATES AND THE REPUBLIC OF VENEZUELA⁴

CHAPTER XVI
POLICY REGARDING STATE ENTERPRISES

Article 16-01: Definitions

For the purposes of this Chapter:

designation means the establishment, authorization, or expansion of the scope of a government monopoly to include an additional good or service, after the date of entry into force of this Agreement;

enterprise means any entity constituted or organized under applicable law, whether or not for profit, including any corporation, trust, partnership, sole proprietorship, joint venture, or other association, with the exception of State enterprises;

State enterprise means an enterprise owned, or controlled through ownership interests, by a Party;

market means the geographic and commercial market for a good or service;

monopoly means an entity, including a government consortium or agency that has been designated in any relevant market in the territory of one of the parties as the sole provider or buyer of a good or service. This does not include an entity with exclusive intellectual property rights derived only from that grant.

government monopoly means a monopoly owned by a Party or another government monopoly, or under its control by virtue of ownership of part of its equity.

in accordance with commercial considerations means consistent with normal business practices of the private enterprises in the relevant industry;

non-discriminatory treatment means the better of national treatment and most-favored-nation treatment, as set out in the relevant provisions of this Agreement.

Article 16-02: Monopolies and State Enterprises

1. Each Party shall ensure that its State enterprises accord non-discriminatory treatment in its territory to the natural or legal persons of the other Parties in the sale of goods and the provision of services for similar commercial transactions.
    
2. Each Party undertakes to ensure that its government monopolies and its State enterprises:

1.  act solely in accordance with commercial considerations in the purchase or sale of the monopoly good or service in the relevant market in the territory of that Party, including with regard to price, quality, availability, marketability, transportation, and other terms and conditions of purchase or sale; and
2. do not use their monopoly position in their territory to engage in anti-competitive practices in a non-monopolized market that could adversely affect persons of the other Party.

1. Paragraph 2 shall not apply to procurement by government monopolies or State enterprises of goods or services for governmental purposes, and:

1. not with a view to commercial resale;
2. not with a view to use in the production of goods for commercial sale; or
3. not with a view to use in the provision of services for commercial sale.

1.  With regard to the sales price of a good or service, paragraph 2(a) shall apply only to the sale by government monopolies and State enterprises of:

1. goods or services to persons engaged in the production of industrial goods;
2. services to persons engaged in commercial resale; or
3. services to enterprises that produce industrial goods.

1. The provisions of paragraph 2(a) shall not apply to those activities of a government monopoly that are carried out in compliance with the terms of its designation and with the principles established in paragraphs 1 and 2(b).

Article 16-03: Committees

Within three months of the entry into force of this Agreement, the Commission shall establish the following committees:

1. a Committee on Competition, composed of representatives of each Party, which shall submit reports and recommendations to the Commission on further work on relevant issues concerning the relationship between competition laws and policies and trade in the free-trade area; and
2. a Committee which, with a view to detecting practices by State enterprises that could be discriminatory or inconsistent with the provisions of this Chapter, will draft reports and recommendations with regard to such practices.

AGREEMENT BETWEEN THE GOVERNMENT OF UNITED STATES AND THE GOVERNMENT OF CANADA REGARDING THE APPLICATION OF THEIR COMPETITION AND DECEPTIVE MARKETING PRACTICE LAWS

The Government of the United States of America and the Government of Canada (hereinafter referred to as "Parties");
Having regard to their close economic relations and cooperation within the framework of the North American Free Trade Agreement ("NAFTA");
Noting that the sound and effective enforcement of their competition laws is a matter of importance to the efficient operation of markets within the free trade area and to the economic welfare of the Parties’ citizens;
Having regard to their commitment in Chapter 15 of NAFTA to the importance of cooperation and coordination among their competition authorities to further effective competition law enforcement in the free trade area;
Recognizing that coordination of enforcement activities may, in appropriate cases, result in a more effective resolution of the Parties’ respective concerns than would be attained through independent action;
Having regard to the fact that the effective enforcement of their laws relating to deceptive marketing practices is also a matter of importance to the efficient operation of markets within the free trade area, and having regard to the potential benefits of increased cooperation between the Parties in the enforcement of those laws;
Noting that from time to time differences may arise between the Parties concerning the application of their competition laws to conduct or transactions that implicate the important interests of both Parties;
Noting further their commitment to give careful consideration to each others important interest in the application of their competition laws; and
Having regard to the long history of cooperation between the Parties in matters relating to competition law, including the bilateral Understandings of 1959, 1969 and 1984, as well as the 1986 Recommendations of the Council of the OECD Concerning Cooperation Between Member Countries on Restrictive Business Practices Affecting International Trade;
Have agreed as follows:

Article I: Purpose and Definitions

1. The purpose of this Agreement is to promote cooperation and coordination between the competition authorities of the Parties, to avoid conflicts arising from the application of the Parties’ competition laws and to minimize the impact of differences on their respective important interests, and, in addition, to establish a framework for cooperation and coordination with respect to enforcement of deceptive marketing practices laws.

2. For the purposes of this Agreement, the following terms shall have the following definitions:

1. "Anticompetitive activity(ies)" means any conduct or transaction that may be subject to penalties or other relief under the competition laws a Party;
2.  "Competition authority(ies)" means

1.  for Canada, the Director of Investigation and Research;
2.  for the United States of America, the United States Department of Justice and the Federal Trade Commission;

1. "Competition law(s)" means

1.  for Canada, the Competition Act, R.S.C. 1985, c. C-34, except sections 52 through 60 of that Act;
2. for the United States of America, the Sherman Act (15 U.S.C. §§ 1-7), the Clayton Act (15 U.S.C. §§ 12-27), the Wilson Tariff Act (15 U.S.C. §§ 8-11) and the Federal Trade Commission Act (15 U.S.C. §§ 41-58), to the extent that it applies to unfair methods of competition,

as well as any amendments thereto, and such other laws or regulations as the Parties may from time to time agree in writing to be a "competition law" for the purposes of this Agreement; and

1. "Enforcement activity(ies)" means any investigation or proceeding conducted by a Party in relation to its competition laws.

3. Any reference in this Agreement to a specific provision in either Party's competition law shall be interpreted as referring to that provisions as amended from time to time an to any successor provision thereof.  Each Party shall promptly notify the other of any amendments to its competition laws. Any reference in this Agreement to a specific provision in either Party’s competition law shall be interpreted as referring to that provision as amended from time to time and to any successor provision thereof. Each Party shall promptly notify the other of any amendments to its competition laws.

Article II: Notification

1. Each Party shall, subject to Article X(1), notify the other Party in the manner provided by this Article and Article XII with respect to its enforcement activities that may affect important interests of the other Party.

2.  Enforcement activities that may affect the important interests of the other Party and therefore ordinarily require notification include those that:

1. relevant to enforcement activities of the other Party;
2. involve anticompetitive activities, other than mergers or acquisitions, carried out in whole or in part in the territory of the other Party, except where the activities occurring in the territory of the other Party are insubstantial;
3. involve mergers or acquisitions in which

o one or more of the parties to the transaction, or
o a company controlling one or more of the parties to the transaction.

is a company incorporated or organized under the laws of the other Party or of one of its provinces or states;

1. involve conduct believed to have been required, encouraged or approved by the other Party;
2. involve remedies that expressly require or prohibit conduct in the territory of the other Party or are otherwise directed at conduct in the territory of the other Party;
3.  or involve the seeking of information located in the territory of the other Party, whether by personal visit by officials of a Party to the territory of the other Party or otherwise.

3. Notification pursuant to this Article shall ordinarily be given as soon as a Party's competition authorities become aware that notifiable

4. Where notifiable circumstances are present with respect to mergers or acquisitions, notification shall be given not later than

1. in the case of the United States of America, the time its competition authorities seek information or documentary material concerning the proposed transaction pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. 18a(e)), the Federal Trade Commission Act (15 U.S.C. 49, 57b-1) or the Antitrust Civil Process Act (15 U.S.C. 1312);
   and
2. in the case of Canada, the time its competition authorities issue a written request for the information under oath or affirmation, or obtain an order under section 11 of the Competition Act, with respect to the transaction.

5. When the competition authorities of a Party request that a person provide information, documents or other records located in the territory of the other Party, or request oral testimony in a proceeding or participation in a personal interview by a person located in the territory of the other Party, notification shall be given:

1. a. if compliance with a request for written information, documents or other records is voluntary, at or before the time that the request is made;
2. if compliance with a request for written information, documents or other records is compulsory, at least seven (7) days prior to the request, (or, when seven (7) days’ notice cannot be given, as promptly as circumstances permit); and
3. in the case of oral testimony or personal interviews, at or before the time arrangements for the interview or testimony are made.

Notification is not required with respect to telephone contacts with a person in the territory of the other Party where (i) that person is not he subject of an investigation, (ii) the contact seeks only an oral response on a voluntary basis (although the availability and possible voluntary provision of documents may be discussed) and (iii) the other Party’s important interests do not appear to be otherwise implicated, unless the other Party requests otherwise in relation to a particular matter.
Notification is not required for each subsequent request for information in relation to the same matter unless the Party seeking information becomes aware of new issues bearing on the important interests of the other Party, or the other Party requests otherwise in relation to a particular matter.

6. The Parties acknowledge that officials of either Party may visit the territory of the other Party in the course of conducting investigations pursuant to their respective competition laws. Such visits shall be subject to notification pursuant to this Article and the consent of the notified Party.

7. Notification shall also be given at least seven (7) days in advance of each of the following where notifiable circumstances are present:

1. in the case of the United States of America, the issuance of a complaint, the filing of a civil action seeking a temporary restraining order or preliminary injunction or the initiation of criminal proceedings;
2. in the case of Canada, the filing of an application with the Competition Tribunal, an application under Part IV of the Competition Act or the initiation of criminal proceedings;

1. the settlement of a matter by way of an undertaking, an application F.O. a consent order or the filing or issuance of a proposed consent order or decree; and
2. the issuance of a business review or advisory opinion that will ultimately be made public by the competition authorities.

When seven (7) days’ notice cannot be given, notice shall be given as promptly as circumstances permit.

8. Each Party shall also notify the other whenever its competition authorities intervene or otherwise publicly participate in a regulatory or judicial proceeding that is not initiated by the competition authorities if the issue addressed in the intervention or participation may affect the other Party’s important interests. Such notification shall be made at the time of the intervention or participation or as soon thereafter as possible.

9. Notifications shall be sufficiently detailed to enable the notified Party to make an initial evaluation of the effect of the enforcement activity on its own important interests, and shall include the nature of the activities under investigation and the legal provisions concerned. Where possible, notifications shall include the names and locations of the persons involved. Notifications concerning a proposed undertaking, consent order or decree shall either include or, as soon as practicable be followed by, copies of the proposed undertaking, order or decree and any competitive impact statement or agreed statement of facts relating to the matter.

Article III: Enforcement Cooperation

1. The Parties acknowledge that it is in their common interest to cooperate in the detection of anticompetitive activities and the enforcement of their competition laws to the extent compatible with their respective laws and important interests, and within their reasonably available resources.
2. The Parties further acknowledge that it is in their common interest to share information which will facilitate the effective application of their competition laws and promote better understanding of each other’s enforcement policies and activities.

1. The Parties will consider adopting such further arrangements as may be feasible and desirable to enhance cooperation in the enforcement of their competition laws.
2. Each Party’s competition authorities will, to the extent compatible with that Party’s laws, enforcement policies and other important interests,
   1. assist the other Party’s competition authorities, upon request, in locating and securing evidence and witnesses, and in securing voluntary compliance with requests for information, in the requested Party’s territory;
   2. inform the other Party’s competition authorities with respect to enforcement activities involving conduct that may also have an adverse effect on competition within the territory of the other Party;
   3. provide to the other Party’s competition authorities, upon request, such information within its possession as the requesting Party’s competition authorities may specify that is relevant to the requesting Party’s enforcement activities; and
   4. provide the other Party’s competition authorities with any significant information that comes to their attention about anticompetitive activities that may be relevant to, or may warrant, enforcement activity by the other Party’s competition authorities.

1. Nothing in this Agreement shall prevent the Parties from seeking or providing assistance to one another pursuant to other agreements, treaties, arrangements or practices between them.

Article IV: Coordination With Regard to Related Matters

1. Where both Parties’ competition authorities are pursuing enforcement activities with regard to related matters, they will consider coordination of their enforcement activities. In such matters, the Parties may invoke such mutual assistance arrangements as may be in force from time to time.
    
2. In considering whether particular enforcement activities should be coordinated, either in whole or in part, the Parties’ competition authorities shall take into account the following factors, among others:

1. a. the effect of such coordination on the ability of both Parties to achieve their respective enforcement objectives;
2. the relative abilities of the Parties’ competition authorities to obtain information necessary to conduct the enforcement activities;
3. the extent to which either Party’s competition authorities can secure effective relief against the anticompetitive activities involved;
4. the possible reduction of cost to the Parties and to the persons subject to enforcement activities; and
5. the potential advantages of coordinated remedies to the Parties and to the persons subject to the enforcement activities.

1. In any coordination arrangement, each Party’s competition authorities shall seek to conduct their enforcement activities consistently with the enforcement objectives of the other Party’s competition authorities.
    
2. In the case of concurrent or coordinated enforcement activities, the competition authorities of each Party shall consider, upon request by the competition authorities of the other Party and where consistent with the requested Party’s enforcement interests, ascertaining whether persons that have provided confidential information in connection with those enforcement activities will consent to the sharing of such information between the Parties’ competition authorities.
    
3. Either Party’s competition authorities may at any time notify the other Party’s competition authorities that they intend to limit or terminate coordinated enforcement and pursue their enforcement activities independently and subject to the other provisions of this Agreement.

Article V: Cooperation Regarding Anticompetitive Activities in the Territory of One Party That Adversely Affect the Interests of the Other Party

1. The Parties note that anticompetitive activities may occur within the territory of one Party that, in addition to violating that Party’s competition laws, adversely affect important interests of the other Party. The Parties agree that it is in their common interest to seek relief against anticompetitive activities of this nature.
    
2. If a Party believes that anticompetitive activities carried out in the territory of the other Party adversely affect its important interests, the first Party may request that the other Party’s competition authorities initiate appropriate enforcement activities. The request shall be as specific as possible about the nature of the anticompetitive activities and their effects on the interests of the Party, and shall include an offer of such further information and other cooperation as the requesting Party’s competition authorities are able to provide.
    
3. The requested Party’s competition authorities shall carefully consider whether to initiate enforcement activities, or to expand ongoing enforcement activities, with respect to the anticompetitive activities identified in the request. The requested Party’s competition authorities shall promptly inform the requesting Party of its decision. If enforcement activities are initiated, the requested Party’s competition authorities shall advise the requesting Party of their outcome and, to the extent possible, of significant interim developments.
    
4. Nothing in this Article limits the discretion of the requested Party’s competition authorities under its competition laws and enforcement policies as to whether to undertake enforcement activities with respect to the anticompetitive activities identified in a request, or precludes the requesting Party’s competition authorities from undertaking enforcement activities with respect to such anticompetitive activities.

Article VI: Avoidance of Conflicts
 

1. Within the framework of its own laws and to the extent compatible with its important interests, each Party shall, having regard to the purpose of this Agreement as set out in Article I, give careful consideration to the other Party’s important interests throughout all phases of its enforcement activities, including decisions regarding the initiation of an investigation or proceeding, the scope of an investigation or proceeding and the nature of the remedies or penalties sought in each case
    
2. When a Party informs the other that a specific enforcement activity may affect the first Party’s important interests, the second Party shall provide timely notice of developments of significance to those interests.
    
3. While an important interest of a Party may exist in the absence of official involvement by the Party with the activity in question, it is recognized that such interest would normally be reflected in antecedent laws, decisions or statements of policy by its competent authorities. A Party’s important interests may be affected at any stage of enforcement activity by the other Party.
    
4. The Parties recognize the desirability of minimizing any adverse effects of their enforcement activities on each other’s important interests, particularly in the choice of remedies. Typically, the potential for adverse impact on one Party’s important interests arising from enforcement activity by the other Party is less at the investigative stage and greater at the stage at which conduct is prohibited or penalized, or at which other forms of remedial orders are imposed.
    
5. Where it appears that one Party’s enforcement activities may adversely affect the important interests of the other Party, each Party shall, in assessing what measures it will take, consider all appropriate factors, which may include but are not limited to:

1. the relative significance to the anticompetitive activities