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Derestricted
FTAA.ngcp/inf/03/Rev.2
March 22, 2002
Original: Spanish-English
Translation: non FTAA Secretariat
FTAA - Negotiating Group on Competition Policy
Inventory of Domestic Laws and Regulations relating to
Competition Policy in the Western Hemisphere
Prepared by:
Tripartite Committee
Organization of American States
Trade Unit
SUMMARY
Introduction
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This document compiles the laws on free competition in force
in the Western Hemisphere countries, in accordance with the methodology and
information agreed on and supplied by the Free Trade Area of the Americas
Working Group on Competition Policy at the first meeting held in Lima, Peru, May
16 and 17, 1996.
Competition policy deals with a variety of areas and aspects
of a market economy system. However, narrowly defined by the Working Group, it
refers to the set of laws and regulations aimed at ensuring that national
markets function correctly. To that extent, these laws prohibit commercial
practices (i.e., concerted agreements, abuse of dominant positions,
monopolization and economic concentration) which limit or restrict competition
to the detriment of consumers and efficient allocation of resources in the
economy.
The document is divided into thirteen (13) sections: (i)
legal framework, (ii) objectives of the laws, (iii) scope of application, (iv)
exceptions to scope of application, (v) general prohibitions, (vi) prohibited
conduct, including definitions, (vii) exceptions to prohibited conduct, (viii)
economic concentrations, (ix) enforcement bodies, (x) functions of enforcement
bodies, (xi) administrative and/or judicial procedures, (xii) administrative
and/or judicial sanctions, and (xiii) recourse or appeal.
A summary of these elements follows.
I. Legal Framework
The protection of competition is guaranteed in most of the
countries in the Hemisphere. On a constitutional level, many national
Constitutions promote competition with provisions related to freedom of
contract, commerce and private economic initiative. Some others prohibit
monopolies, except those established in favor of the state or by law, excessive
concentration of economic power and abusive manipulation of prices and other
market conditions.
On a legal level, thirteen (13) countries in the Hemisphere
have legislation and institutions on free competition: Argentina (1919, amended
in 1946 and 1980, and currently under review), Brazil (1962, amended in 1990 and
revised in 1994), Canada (1889, and subsequent legislation and amendments),
Colombia (1959, supplemented in 1992), Costa Rica (1994), Chile (1959, amended
in 1973 and revised and incorporated in 1979), Jamaica (1993), Mexico (1934,
replaced in 1992), Panama (1996), Peru (1991, modified in 1994 and 1996),
Uruguay (2001), Venezuela (1991) and United States (1890 and subsequent other
legislation and amendments).
Furthermore, Bolivia, Ecuador, Honduras, El Salvador,
Guatemala, Nicaragua, Dominican Republic, and Trinidad and Tobago are actively
designing and debating respective draft legislation on the issue.
II. Objectives of the Laws
The laws on competition in the Hemisphere can have various
overall objectives: promotion and defense of competition, promotion of economic
efficiency and consumer welfare, freedom of initiative, opening up of markets,
fair and equal participation for small and medium enterprises, deconcentration
of economic power, and prevention of monopolies and abuses of dominant position.
III. Scope of Application
In regard to persons, the laws of the Hemisphere apply to all
national or foreign, public or private persons, enterprises or corporations. In
regard to practices, the laws apply to all conduct, agreements, acts or
transactions pertaining to production and marketing of goods and services. In
regard to territory, the laws apply to practices carried out inside the
countries’ national territory. In some countries the laws also apply to
practices originating abroad that affect internal or external trade.
On a subregional level, the Andean Community and
MERCOSUR countries apply a common regime when practices produce effects that
limit competition in the sub-regional market. By the same token in countries
with a federal system like the United States, state laws apply parallel to
federal ones when anti-competitive practices occur within the market of a state.
IV. Exceptions to Scope of Application
In regard to persons, in Brazil, Colombia, Chile, Jamaica,
Mexico, Panama and Peru, it is allowed the existence of State monopolies,
sectors reserved for strategic or national security reasons and the exclusive
exploitation of intellectual property rights. Nonetheless, it is equally
recognized in such countries that these monopolies are subject to the
competition laws when they incur in abuses of dominant position or monopolistic
practices beyond the nature of the scope provided.
In regard to practices, in Canada, Colombia, Costa Rica,
Jamaica, Mexico, United States and Venezuela specific sectors and economic
activities like agriculture, professional sports, labor organizations and export
activities have been exempted from competition laws. In regard to territory, in
the United States, State laws apply parallel to federal ones when
anti-competitive practices have effects within the market of a State.
V. General Prohibitions
The laws of the Hemisphere, in general, prohibit all
commercial conduct that limits, restricts, or distorts competition.
VI. Prohibited Conduct
The laws of the Hemisphere prohibit certain horizontal
practices consisting of any type of collusive agreements between enterprises
competing in the same sector, as they do certain vertical practices deriving
from agreements between enterprises that perform their activities at different
stages of the production process.
Many laws provide a specific list of prohibited conduct which
include: (i) fixing prices and other sale conditions, (ii) imposing barriers to
market access, (iii) collusive tenders, (iv) limiting production or sale by
fixing or distributing quotas, (v) concerted refusal to purchase products,
provide services, or admit new participants to the market, (vi) allocation of
markets, (vii) discriminatory and predatory agreements, (viii) tied-in
acceptance of supplementary services, (ix) exclusive agreements, (x) abuse of
dominant position or monopolization, and (xi) boycotts.
Commonality and divergence in this area depend on the law
adopted by each country as well as on the case law developed by each national
enforcement body. There are absolute, non-authorizable or per se
prohibitions and relative, authorizable or rule of reason prohibitions.
VII. Exceptions to Prohibited Conduct
The enforcement bodies, on a case-by-case basis, may
examine conduct which might otherwise be prohibited to determine if it could be
justified by its pro-competitive and efficiency-enhancing effects.
The practices for which such exception is allowed
include, economic concentration, certain vertical agreements on conditions not
relating to prices like territorial representation or exclusive agreements,
agreements that help improve production, quality, and marketing of goods and
services, development of research and technology, and utilization of economies
of scale.
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In some countries the criteria and procedures are
established in regulations or judicial precedents, whereas in other countries
these elements are left to the agencies’ discretion. In these countries, the
concepts and criteria to grant exemptions may vary from country to country.
VIII. Economic Concentrations
The laws of the Hemisphere, with the exception of Argentina,
Chile, and Peru (control regime for the electricity sector), contain provisions
for controlling economic concentration deriving from joint ventures, mergers,
acquisition or incorporation of companies, when their effect is to diminish,
harm or impede competition.
To this end Brazil, Canada, Colombia, Costa Rica, Jamaica,
Mexico, and Venezuela have merger control regulations based on either mandatory
prior notification or voluntary notification in order to assess the degree of
concentration and its effects on competition.
IX. Enforcement Bodies
Generally, the laws of the Hemisphere are enforced by
independent bodies or agencies in the form of commissions (Argentina, Brazil,
Canada, Costa Rica, Chile, Jamaica, Mexico, Peru, and the United States) or
superintendencies (Colombia and Venezuela). This autonomy is technical and
operational with regard to conducting investigations and procedures and law
decision-making and enforcement. The decisions on investigations are reached in
a collegiate manner, in the case of Commissions, or by a single person, in the
case of Superintendencies. The enforcement bodies are assisted by technical
units or secretariats.
In Brazil, Canada, Chile, Peru and the United States
the laws empower other agencies with enforcement responsibilities. In Brazil,
there are the Secretariat of Economic Law and the Secretariat of Economic
Surveillance. In Canada, there is the Attorney General with respect to criminal
cases and the Competition Tribunal. In Chile, there is the Economic National
Prosecutor. In Peru, there is INDECOPI´s Tribunal of Competition and
Intellectual Property.
In all the countries tribunals and courts are charged
with reviewing decisions adopted by the administrative bodies that enforce the
laws or adjudicate the case themselves. In the case of the United States and
Canada, courts and tribunals are charged with resolving cases brought by the
Department of Justice and the Bureau of Competition respectively, against
anti-competitive conduct.
X. Functions of Enforcement Bodies
In broad terms, the function of enforcement bodies is to
ensure fulfillment of provisions relating to competition. For these functions,
enforcement bodies in most countries have broad powers to enact preventive
measures, and demand testimony, documents or information pertaining to private
persons and public bodies. The enforcement bodies may also issue injunctions or
seek them in court.
In Brazil, Colombia, Costa Rica, Canada, Chile, Peru, Mexico,
the United States and Venezuela the enforcement bodies may provide comments and
opinions on regulations, policy and programs which might prove adverse to
competition, and recommend their amendment or elimination ("Advocacy of
Competition").
XI. Administrative and/or Judicial Procedure
In all countries the procedures for conducting investigations
and resolving cases of prohibited conduct are administrative or judicial and may
be initiated ex officio by the body or on the petition of an interested
party. The laws establish the instances, modalities, evidence, sanctions, and
time periods for resolving cases or authorizations. Additionally, Uruguay
stipulates arbitration procedures to solve disputes arising from wrongful acts
of competitors prohibited under her competition law.
The laws also resort to judicial procedures established by
ordinary law for cases of judicial review of acts and determinations by
administrative enforcement organs. In Argentina, Canada, Jamaica, and the United
States sanctions for violations of their laws are determined by tribunals and
courts, after a finding of the enforcement bodies or their decision to sue.
XII. Administrative and/or Judicial Sanctions
The sanctions stipulated by the laws of the Hemisphere are
pecuniary and criminal, as well as administrative and judicial, depending on the
body that applies them. Most of the laws authorize enforcement bodies to apply
administrative fines to those committing prohibited conduct and imposing
forcible binding commitments.
The maximum amounts vary depending on the type of
infringement and their effects on the market harmed. They may be pre-determined
according to the turnover of the infringing company, or indexed based on the
minimum wage, as occurs in Brazil and Mexico.
In Argentina, Canada, Jamaica, Peru, and the United States,
apart from applying fines, they are authorized to hand down prison sentences to
those who are in breach of certain prohibited conduct. In these countries, the
determination and application of such sanctions falls to the courts and
tribunals.
Non-compliance with orders and decisions of the enforcement
bodies is sanctioned in all countries with fines.
XIII. Recourse or Appeal
All the countries guarantee, once the administrative
proceedings are exhausted, the right to any person, foreign or national, to
review acts or decisions by enforcement organs before the courts, including
appeals before superior tribunals or the Supreme Court of Justice, as
applicable.
In Costa Rica, Colombia, and Mexico those affected by a
decision of an enforcement body are granted a process review, either by the same
authority that determined there was a violation of the law ("recourse to
reconsideration") or by a higher organ ("hierarchical recourse or recourse to
review"), in conformity with laws of ordinary administrative procedure.
In Brazil, Chile, and Venezuela decisions are reviewed
directly before tribunals. In Chile, those affected may request judicial review
on criminally prohibited practices. In Peru, an appellant has the option of
seeking recourse to reconsideration before the Competition Commission, which may
review the decision, or recourse to appeal before the Tribunal for the Defense
of Competition and Intellectual Property. In countries Canada, Jamaica and the
United States, the review process takes place in ordinary courts, including
appeals.
Finally, all the countries recognize to some extent
the right of any interested party affected by an anti-competitive practice to
obtain compensation for damages and harm resulting from such action. In most
cases the enforcement body must determine the existence of a violation of the
law before compensation may be sought by the affected interested party in court.
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Regulatory Framework
| Law 25.156, on Protection of Competition
National Decree 1.019 of 1999 |
1. Constitution of Brazil, promulgated in
1988. Articles 170, 173, and 174.
2. Law No. 8,884 of June 11, 1994 (Enacted
originally in 1962 and amended in 1990 and revised in 1994). Transforms the
Administrative Council for Economic Defense (CADE) into an autonomous
government agency and provides for prevention and prosecution of infractions
against the economic order.
Complementary Legislation
3. Law No.
8,137 of December 27, 1990. Defines crimes against the tax and economic
order, and against relations of consumption.
4. Law No. 9,021 of March 30,
1995. Provides for implementation of the autonomy of the Administrative
Council for Economic Defense (CADE), established by Law 8,884 of June 11,
1994.
5. Law No. 7,347 of June 24, 1985, amended by the single paragraph of
article 88 of Law No. 8,884 of June 11, 1994. Regulates the civil action for
liability for damages caused to free competition or any other diffuse or
collective interest.
6. Government order No. 186 of the Ministry of Justice
of April 30, 1992. Approves the by-laws of the Administrative Council for
Economic Defense.
7. Directive No. 45 of August 11, 1999, amended by
Directive No. 9 of January 26, 2000.
8. Directive No. 305 of August 18,
1999.
9. Directive No. 849 of the Ministry of Justice of September 22, 2000.
Approves the regulations governing the competence of the Secretariat of
Economic Law Enforcement (SDE) of the Ministry of Justice concerning the
investigation of infringements of the economic order. 10. Law No. 10149 of
December 21, 2000. Amends Law No. 8884 of June 11, 1994.
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Political Constitution. Articles 134, 142 and
233.
Investment Law.
Sectoral Regulation Systems Law (Sirese). |
Objectives of the Law
| To guarantee the proper functioning of the
markets, ensuring free competition and sanctioning behaviors that limit,
restrict or distort competition or that constitute abuse of market position
in a way that could adversely affect the general economic interest. (Summary
of Law 25.156) |
To prevent and prosecute infractions against
the economic order as a means of promoting free competition and free
enterprise. |
The economic structure shall be in harmony
with principles of social justice with a view to ensuring that all residents
enjoy a humane standard of living (Constitution, Article 132)
To stimulate
and guarantee national and foreign investment to promote growth and economic
and social development (Law on Foreign Investment, Article 1).
To regulate,
control, and monitor activities in the telecommunications, electric, energy,
transportation and water sectors, as well as others that are included in the
System by law. To ensure that they operate efficiently, contribute to the
country's development, provide service to all, while enjoying the effective
protection provided in this law as they pursue the public interest.
(Sectoral Regulation System Law, Article 1). |
Scope of Application
Acts or behaviors, of any type, related to
the production or trade of goods or services, whose purpose or effect is to
limit, restrict, falsify or distort competition or market access, or that
constitute abuse of dominant position in a market, in a manner which may
result in harm to the general economic interest are prohibited and shall be
penalized.
The procuring of significant competitive advantages through
violation, declared to be such by administrative act or final judgment, of
other regulations is included in this article, provided the conditions
stated in the preceding paragraph occur.
(Article 1 of the Law on Protection
of Competition) |
This law is applied to practices in all or
part of the national territory, or that produce or may produce effects in
it.
All physical or juridical persons of public or private law, as well as
any associations of entities or persons, constituted de facto and by law,
albeit on a temporary basis, with or without juridical personality, even if
they exercise an activity under a legal monopoly regime, are subject to its
provisions.
It provides for the joint liability of companies of the same
economic group, and does not free directors or managers from individual
liability. The provisions of Law 8,884/94 do not
apply to dumping and subsidies cases addressed in the Agreements Relating to
the Implementation of Article VI of the General Agreement on Tariffs and
Trade (GATT), promulgated by Decrees 93941 and 93962 of January 16 and 22,
1987.
The bodies
entrusted with carrying out the law in this case will be the Ministry of
Industry and Commerce and the Ministry of Treasury.
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All persons and entities, as well as those
that violate the country's laws or commit crimes abroad whose effects are
felt in, or intended to be felt in, Bolivia. (Constitution and Criminal
Code).
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Exceptions to the Scope of Aplication
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The provisions of Law 8,884/94 do not apply
to dumping and subsidies cases addressed in the Agreements Relating to the
Implementation of Article VI of the General Agreement on Tariffs and Trade
(GATT), promulgated by Decrees 93941 and 93962 of January 16 and 22, 1987.
The bodies entrusted with carrying out the law in this case will be the
Ministry of Industry and Commerce and the Ministry of Treasury. |
Any corporation providing telecommunications,
electricity, energy, transportation, or water, and those in other sectors
that are not included in the system, as well as those which, pursuant to
Article 19 (exclusions) are duly authorized to merge to contribute to
increased production or better distribution of regulated goods and services,
without eliminating competition in a substantial part of the affected
production. (Sectoral Regulation System Law). |
General Prohibitions
Acts and behaviors, of any type, related to
the production or trade of goods or services that limit, restrict or distort
competition or constitute abuse of dominant position in a market, in a
manner which may result in harm to the general economic interest are
prohibited and shall be penalized.
The procuring of significant competitive
advantages through the violation, declared to be such by administrative act
or final judgment, of other regulations is included in this article,
provided the conditions stated therein occur. (Article 1) |
Brazilian legislation prohibits any practice
aimed at restricting, limiting, or prejudicial to free competition,
dominating the relevant market of goods or services, arbitrarily increasing
profits, or abusively exercising dominant market position. |
Private economic power shall not be allowed
to accumulate to the extent that it endangers the economic independence of
the state. No form of private monopoly is recognized. When public service
concessions are granted, as an exception to this policy, they shall not be
for longer than 40 years. (Constitution, Article 134).
As provided in the
Constitution, no form of private monopoly is recognized. Activities of
production, domestic marketing, export, import, and financial services
cannot seek protected status from the government. They must operate in a
framework of economic efficiency and competition. (Investment Law, Article
14).
Except as provided in the applicable sectoral legal provisions,
corporations and other entities engaged in telecommunications, electricity,
energy, transportation, or water sectors and others that come under the
scope of this law shall operate in a manner that ensures free competition,
avoiding actions that prevent, restrict, or distort competition. (Sectoral
Regulation System Law, Article 15). |
Prohibited Conduct
The following behaviors constitute practices
that restrict competition:
a. Setting, determining or manipulating, directly
or indirectly, the sale or purchase price at which goods or services are
offered or demanded on the market, as well as exchanging information with
the same objective or effect.
b. Establishing obligations to produce,
process, distribute, purchase or market a single restricted or limited
quantity of goods, or providing a restricted or limited volume or frequency
of services.
c. Dividing up regions, markets, clients and sources of supply
in a cross-sectional manner.
d. Pre-arranging or coordinating bids in
tendering procedures or competitive bidding.
e. Pre-arranging the limiting
or control of technical development or of investments intended for the
production or marketing of goods and services.
f. Impede, hinder or bar
third persons from entering or remaining in a market, or excluding them
therefrom.
g. Setting, imposing or implementing, directly or indirectly in
any form, in agreement with competitors or individually, prices and
conditions for the purchase or sale of goods, delivery of services, or
production.
h. Regulating markets for goods or services, through agreements
to limit or control technological research and development, production of
goods or delivery of services, or to hinder investments intended for
production or distribution of goods or services.
i. Conditioning the sale of
one good on the purchase of another, or on the use of a service, or
conditioning the delivery of a service on the use of another or on the
purchase of a good.
j. Conditioning purchase or sale on not using,
purchasing, selling or supplying goods or services produced, processed,
distributed or marketed by a third party.
k. Imposing discriminatory
conditions for the purchase or transfer of goods or services without sound
reasons based on trade usages or customs.
l. Unjustifiably refusing to fill
specific orders for the purchase or sale of goods or services, made under
current conditions in the particular market. m. Suspend the supplying of a
service with a dominant monopolistic position in the market to a provider of
public services or of services in the public interest. n. Transfer goods or
supply services at prices below their cost without sound reasons based on
their trade usages and customs, for the purpose of displacing competition in
the market or causing harm to the image, patrimony, or value of the
trademarks associated with the suppliers of those goods or services.
(Article 2) |
All forms of conduct the objective or
potential effect of which, even if not attained, is to: 1) limit, falsify,
or prejudice free competition or free enterprise; 2) dominate the relevant
market of goods and services; 3) arbitrarily increase profits; 4) abusively
exercise dominant position.
The "rule of reason" is always applied to
determine what circumstances make out a prohibited form of conduct. There
are no per se offenses.
All forms of conduct, to be considered illegal,
should have, or have the potential to bring about, the anti-competitive
effects described above, independent of fault.
For example, the legislation
lists some forms of conduct which, if harmful to competition, entailing
market domination, arbitrary increase in profits, or abusive exercise of
dominant position, will be prosecuted.
These include collusive practices,
setting up barriers to the entry of competitors, setting prices and sales
conditions, discrimination among purchasers and suppliers, discriminatory,
predatory, or conditional agreements, and unjustified price increases or
imposition of excessive prices, such as:
1. setting or adopting prices and
conditions on the sale of goods or delivery of services, in agreement with
one's competition, in any form;
2. obtaining or influencing the adoption of
uniform or coordinated commercial conduct among competitors;
3. dividing up
the markets for finished or semi-finished goods or services, or the supply
of raw materials or intermediate goods;
4. limiting or impeding the access
of new firms to the market;
5. creating difficulties to the chartering,
operation, or development of a competing company or supplier, purchaser or
financier of goods or services;
6. impeding the access of competitors to
sources of inputs, raw materials, equipment, or technology, as well as
distribution channels;
7. demanding or granting exclusivity for
disseminating advertising in the mass media;
8. pre-arranging prices or
shifting advantages in public or administrative contests;
9. using deceitful
means to cause the prices of third parties to fluctuate;
10. regulating
markets of goods and services, entering into agreements to limit or control
technological research and development, the production of goods, or the
delivery of services, or to hinder investment in the production of goods or
services, or in their distribution;
11. imposing on distributors, retailers,
and representatives in the trade in goods and services prices for resale,
discounts, payment conditions, minimum or maximum amounts, profit margin, or
any other marketing conditions relating to transactions with third persons;
12. discrimination among purchasers and suppliers of goods or services by
differential price setting, or operating conditions of sales or the delivery
of services;
13. refusing to sell goods or deliver services under payment
conditions that are normal in terms of commercial uses and customs;
14.
hindering or interrupting the continuity or development of commercial
relations for an indeterminate term because of the other party's refusal to
accept unjustifiable or anti-competitive commercial clauses and conditions;
15. destroying, rendering unserviceable, or withholding from the market raw
materials, intermediate or finished goods, as well as destroying, rendering
unserviceable, or hindering the operation of equipment for producing,
distributing, or transporting such materials and goods;
16. withholding from
the market or impeding the exploitation of industrial or intellectual
property rights, or rights to technology;
17. abandoning, causing the
abandonment of, or destroying crops or plantations without showing just
cause; 18. selling merchandise below cost without justification;
19.
importing any goods below cost in the exporting country which is not a
signatory to the GATT antidumping and subsidies codes;
20. interrupting or
significantly reducing production, without showing just cause;
21. ceasing
the activities of the firm partially or completely without showing just
cause;
22. withholding production or consumption goods, except to guarantee
coverage of production costs;
23. conditioning sales of one good on the
purchase of another, or on the use of a service, or conditioning the
delivery of a service on the use of another or on the purchase of a good;
24. imposing excessive prices, or increasing the price of a good or service
without just cause.
In determining whether excessive prices are being
charged or prices unjustifiably raised, the following pertinent economic
circumstances and market factors will be considered, inter alia: (a)
the price of the product or service, or the elevation thereof, is not
justified by the behavior of the cost of the respective inputs or by the
introduction of
improvements in quality; (b) the price of the product
previously produced, in the case of a successor resulting from changes that
are not substantial; (c) the prices of similar products and services or the
trend therein, in comparable competitive markets;
(d) the presence of any
arrangement or agreement that results in an increase in the price of the
good or service, or the costs thereof. |
1. Cartels. Companies and entities that carry
out activities in sectors regulated by the present law are prohibited from
engaging in joint agreements, contracts, decisions, or practices whose
intent or effect is to prevent, restrict, or distort free competition by: a)
joint price-setting, directly or indirectly; b) the setting of quotas or
dividing control of production, markets, supply sources, or investments; or
c) the carrying out of other similar anti-competitive practices. (Sectoral
Regulation System Law, Article 16).
2. Abusive practices. Companies or
entities subject to regulation under this law are enjoined from abusive
practices that have the intent or effect harming competitors, clients, and
users, resulting in non-competitive situations in one or more markets. Such
abusive practices may include: a) the direct or indirect fixing of sale or
purchase prices or other unfair trading practices; b) restraint on
production, sources of supply, markets, or technical development, to the
detriment of consumers; c) the application of discriminatory conditions for
similar operations, which put clients and users at a disadvantage; d) making
contracts contingent upon the party's acceptance of additional obligations
that by their nature, or in accordance with commercial practice, are not
relevant to the purpose of the contracts; e) requiring that someone
soliciting a regulated service become a partner or shareholder. (Sectoral
Regulation System Law, Article 17). |
Exceptions to Prohibited Practices
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Brazilian legislation makes an express
exception to cornering the market as the result of a natural process based
on the greater efficiency of economic actors.
It also allows the
Administrative Council for Economic Defense (CADE) to authorize acts,
whatever form they may take, that may limit or harm the competition or
result in the domination of relevant markets for goods and services.
This
authorization of the CADE, however, is subject to the following conditions:
1. The acts should have as their objective, cumulatively or alternatively,
increasing productivity, improving the quality of goods and services, or
promoting efficiency and technological or economic development.
2. The
resulting benefits should be distributed equitably between the participants
and the consumers, or end users.
3. The authorization should not entail
eliminating a substantial part of the relevant market for goods and
services.
4. They should observe the limits strictly necessary for attaining
the objectives sought.
In addition, acts that are necessary because of
prevailing concerns related to the national economy or the common good, if
at least three of these conditions are met and no harm results to the
consumer or end user. |
Public service concessions, granted as an
exception to policy, may not be for a period longer than 40 years.
(Constitution, Article 134).
With Congressional approval, the Executive
Branch can establish a state monopoly for certain exports, if this is in the
national interest. (Constitution, Article 147).
When so decided by the
Sectoral Superintendent, through the corresponding resolution, the
prohibition provided in this law shall not apply to mergers that contribute
to increasing the production or improving the distribution of regulated
goods and services or to stimulation of technical or economic progress for
the benefit of consumers and users without eliminating competition in a
substantial part of the affected production. (Sectoral Regulation System
Law). |
Economic Concentrations (Mergers, Acquisitions, Joint Ventures)
Economic concentration is understood to mean
the taking of control of one or more enterprises through the following acts:
a. Merger between enterprises;
b. Transfer of business assets;
c. The
purchase of property or any right to shares or other equity that confer any
type of right that is convertible to shares or other equity, or having any
influence on decisions of the person issuing these, when such purchase gives
the purchaser substantial control of, or influence over that person;
d. Any
other agreement or act that transfers to a person or economic group, either
artificially or legally, shares of an enterprise or gives that
person/economic group deciding influence in making ordinary or extraordinary
administrative decisions of an enterprise. (Article 6)
e. Economic
concentrations whose purpose or effect is or could be to reduce, restrict or
distort competition in a way that could harm the general economic interest
are prohibited. (Article 7) |
Brazilian legislation provides for controls
on all acts and contracts that may limit or in any way harm free competition
or result in the dominance of relevant markets of goods or services.
These
acts include those expressly aimed at any type of economic concentration, be
it through merger or incorporation of firms, chartering of corporation or
partnerships to exercise control of a firm, or any type of corporate
organization.
It requires measurement of market share by all companies or
groups of companies with more than a 20% share in the relevant market, or
gross annual receipts of at least R$ 400,000,000.00 (four hundred million
reals) on record for any market participants.
Notification can be a priori
or a posteriori, within a maximum term of 15 working days after the
transaction.
Oversight is exercised by the Administrative Council for
Economic Defense (CADE), which may authorize acts involving economic
concentration if it deems justified the increased economic efficiencies
invoked by the participants and the advantages to the consumers or end
users, so long as it does not eliminate a substantial part of the relevant
market, and abides by the limits strictly necessary for attaining the
objectives sought with the operation.
The efficacy of the acts submitted to
the CADE for review is conditioned on its approval, in which case it will be
retroactive to the date they were effectuated. If not reviewed by the CADE
in the time period established by law, they will automatically be considered
approved.
The approval may be reviewed if the decision is based on false or
deceitful information provided by the interested persons, if there is
non-compliance of any of the obligations assumed, or if the benefits sought
were not attained.
In case of non-approval, the acts not carried out subject
to suspension, or if they have already had effects on third persons,
including physical persons, the CADE will determine the appropriate measures
to undo them in their entirety, or in part. |
Private economic power shall not be allowed
to accumulate to the extent that it endangers the economic independence of
the state. No form of private monopoly is recognized. When public service
concessions are granted, as an exception to this policy, they shall not be
for longer than 40 years. (Constitution, Article 134).
As provided in the
Constitution, no form of private monopoly is recognized. Activities of
production, domestic marketing, export, import, and financial services
cannot seek protected status from the government. They must operate in a
framework of economic efficiency and competition. (Investment Law, Article
14).
Companies incorporated in the country, state enterprises, including
independent companies and citizens or foreigners resident or represented in
the country, may associate with each other in joint ventures for any
activity permitted under law. (Investment Law, Article 17).
Merger of
competitive companies and entities subject to regulation under this law
shall be prohibited if it would result in establishment, encouragement, or
consolidation of a dominant position in a given market.
For the purpose of
this law, a company or entity shall be considered to have a dominant
position in the market if it is the only buyer or seller of a given type of
regulated goods or services, or if not the only one, it lacks substantial
competition in the market. (Sectoral Regulation System Law, Article 18). |
Enforcement Bodies
Enforcement Authority
The National
Commission for the Defense of Competition [Tribunal Nacional de Defensa de
la Competencia] is hereby established as an autonomous body under the
nation’s Ministry of Economy and Public Works and Services for the purpose
of enforcing and monitoring compliance with Law 25.156. It shall be
headquartered in the city of Buenos Aires, but may act, be constituted and
meet at any location in the nation, through delegates designated by the
Commission’s Chair. The examining magistrates may be national, provincial or
municipal officials. (Article 17).
The National Commission for the Defense
of Competition shall be composed of seven members with adequate backgrounds
and qualifications to hold the post, of which at least two shall be
attorneys and two others professionals in economic sciences, all with more
than five years of practice in their respective professions. The members of
the Commission shall, except for teaching activities, dedicate their time
exclusively to these responsibilities. (Article 18)
The members of the
Commission shall be appointed by the national executive branch after public
competition that takes account of background and comparative qualifications.
(Paragraph from Article 19)
Members of the Commission shall serve for six
years. These posts shall be renewable on a partial basis every three years
and members may be reappointed through the procedures established in the
preceding article. (Paragraph from Article 20) |
The implementing agencies of Law No. 8,884/94
are:
1. CADE, a collegial body with an adjudicative function and
jurisdiction throughout the national territory, established by Law 4,237 of
September 10, 1962, and which became an autonomous federal government agency
linked to the Ministry of Justice, by force of the above-mentioned law (Law
No. 8.884/94).
2. The Secretariat for Economic Law (SDE), an organ for the
preparation, investigation, and oversight, a decentralized body of the
Ministry of Justice, established by Law 8,158 of January 8, 1991, and the
Secretariat for Economic Monitoring (SEAE) of the Ministry of Treasury.
3.
As regards the attributes of the organs that make up the system for the
defense of competition, administrative proceedings begin in the SDE/MJ,
which during the investigative phase receives technical support from the
SEAE/MF. They are only valid on a definitive basis once the conclusions of
the SDE/MJ are confirmed by the CADE. |
1. Common courts in the case of
constitutional provisions and foreign investment provisions.
2. Office of
the General Superintendent of the Sectoral Regulation System in the case of
the Sectoral Regulation System law. |
Enforcement Bodies / Structure
| |
The organizational structure of the SDE is as
follows:
1.Office of the Secretary, consisting of three Coordinating
Offices:
-Coordinating Office for Legal Affairs
- which prepares legal
opinions on matters to be submitted to the Secretary;
-Coordinating Office
for Administrative Affairs - coordinates the Secretariat's financial and
administrative affairs.
-Coordinating Office for Interagency Liaison -
handles relations between the Secretariat and other government agencies, the
Congress, and international bodies.
2. Department of Economic Protection and
Defense, responsible for enforcing Law No. 8,884/94 (Law on Protection of
Competition). This department consists of:
a) General Coordinating Office
for Legal Affairs; b) General Coordinating Office for Market Intervention;
c) General Coordinating Office for Prohibited Practices.
3. The Department
of Consumer Protection and Defense, responsible for enforcing Law No.
8,078/90 (Consumer Protection Code) is structured as follows:
a) General
Coordinating Office for Legal Affairs;
b) General Coordinating Office for
Inspection and Oversight; c) General Coordinating Office for Consumer
Relations
4. The Office of the Inspector General, which performs the
preliminary analysis of cases to be submitted to the departments of economic
protection and defense and consumer protection and defense, and which has
five regional inspectorates, is responsible for coordinating the affairs of
the Economic Law Secretariat in the states.
The CADE is structured as
follows: A Plenary Council, composed of six councilmen and one chairperson;
An Office of the Prosecutor, chiefed by an attorney general. |
|
Enforcement Bodies / Powers or Functions
The National Commission for the Defense of
Competition shall have the following functions and powers:
a. To conduct
market studies and research that it considers relevant.
b. To hold hearings
with those allegedly responsible, claimants, victims, witnesses and experts,
and to take statements from them and order confrontations, for which it may
request the assistance of the police.
c. To carry out necessary tests on
books, documents and other elements pertinent to the investigation, monitor
supplies, and verify the origin and cost of raw materials or other goods.
d.
To impose sanctions established by Law 25.156.
e. To promote study and
research on competition. f. When it considers it relevant, to issue opinions
in the area of competition and free competition, with regard to laws,
regulations, circulars and administrative acts, without such opinions being
binding.
g. Issue recommendations of a general or sectoral nature regarding
modalities of competition in the markets.
h. Act with the competent units in
negotiating treaties, international accords or agreements on regulations or
policies related to free competition. i. Prepare its internal regulations,
which shall establish, among other things, the method for selecting the
Chair, and the term thereof, who shall serve as the Commission’s legal
representative.
j. Organize the National Competition Registry, created by
Law 25.156.
k. Promote and encourage actions before the court, for which
purpose it shall appoint a legal representative.
l. Suspend the time periods
of Law 25.156 through reasoned ruling.
m. Gain access to locations to be
inspected, with the consent of the occupants or through judicial order.
n.
Request from the competent judge the precautionary measures it deems
relevant, which shall be resolved within 24 hours;
o. Sign agreements with
provincial or municipal agencies for authorizing provincial offices to
receive complaints;
p. The Chair of the Commission is charged with carrying
out the agency’s administrative functions, and may hire staff to carry out
specific or special tasks which can not be carried out by the regular staff,
setting the work conditions and pay.
q. Sign agreements with associations of
users and consumers to promote the participation of community associations
to defend competition and the transparency of markets. (Article 24 )
|
The plenary council of CADE
(Administrative Council for Economic Defense) is to:
1. ensure the
observance of Law 8,884/94 and its regulations, and of the By-laws of the
Council;
2. decide on where there has been an infraction of the economic
order, and apply the penalties provided for by law; 3. decide on the
proceedings initiated by the Secretariat for Economic Law of the Ministry of
Justice;
4. decide on the motions brought, sua sponte, by the Secretary of
the SDE; 5. order measures aimed at bringing an end to the infraction
against the economic order within the time period it determines;
6. approve
the terms of the commitment to end the practice, or the commitment to
perform, and to determine that the SDE should oversee compliance;
7. review,
on appeal, the preventive measures adopted by the SDE or by the
Counselor-Rapporteur;
8. Inform the interested parties of its decisions;
9.
request information of any public or private person, organ, authority, and
entity, respecting and maintaining legal secret when appropriate, as well as
to determine the proceedings that may become necessary in the performance of
its functions;
10. request of the organs of the federal executive, and of
the authorities of the states, municipalities, federal district, and
territories, the measures necessary to carry out this law;
11. oversee the
administration of examinations, inspections, and studies, approving in each
case procedural costs that must be paid by the company, if it should come to
be penalized under the law;
12. review the acts or conduct, however
manifested, subject to approval pursuant to Article 54, setting the
commitment to comply when appropriate;
13. request that the judiciary
enforce its decisions, in the terms of this law; 14. request services and
personnel of any organ or entity of the federal government;
15. determine,
in the case of the CADE counsel, the adoption of administrative and judicial
measures;
16. sign contracts and agreements with national organs or
entities, and submit beforehand to the Ministry of Justice those that should
be entered into with foreign or international bodies; 17. respond to
consultations on the subject matter of its competence;
18. instruct the
public on ways in which one can commit an infraction against the economic
order.
The SDE (Secretariat for Economic Law) has the competence to:
1. ensure compliance with the law, monitoring and studying market practices;
2. monitor, on an ongoing basis, the commercial activities and practices of
physical or juridical persons who held a dominant position in the relevant
market of goods or services to prevent infractions of the economic order, to
which end it may request the necessary infractions and documents,
maintaining legal secrecy, when appropriate;
3. proceed, when there are
indications of an infraction of the economic order, to preliminary inquiries
for bringing an administrative action;
4. decide that the indicia are not
substantive, and so close the record in the preliminary inquiry;
5. request
information from any persons, organs, authorities, and entities, public or
private, maintaining legal secrecy when appropriate, and determine the
procedures necessary for the performance of its duties;
6. bring an
administrative action to investigate and punish infractions of the economic
order;
7. recur sua sponte to the CADE when it decides to close a
preliminary inquiry or administrative proceeding;
8. transmit to the CADE,
for judgment, the proceedings that it initiates, when it understands a case
has been made suggesting an infraction of the economic order;
9. enter into
an agreement to cease, in the conditions it establishes, submitting it to
the CADE, and overseeing its implementation;
10. suggest to the CADE
conditions for entering into a commitment to comply, and oversee its
implementation;
11. adopt preventive measures that lead to the cessation of
the practice that constituted the infraction of the economic order, setting
the deadline for its implementation and the amount of the daily fine to be
imposed in case of continued non-compliance;
12. receive and investigate the
cases to be judged by the CADE, including consultations, and oversee
implementation of the decisions adopted by the CADE;
13. give guidance to
the organs of the public administration regarding the adoption of measures
necessary for carrying out the law;
14. undertake studies and research with
a view to orienting the policy for prevention of infractions of the economic
order;
15. instruct the public on the various ways of committing infractions
against the economic order, and the ways to prevent and prosecute them;
16.
examine beforehand consultations regarding acts that result in greater
concentration.
The SEAE (Secretariat for Economic Monitoring) has the
following competencies:
In the area of defending competition, and
without prejudice to its other attributes under the Ministry of the
Treasury:
1. to prepare technical opinions on transactions resulting in
economic concentration and, at its discretion, in cases of abusive conduct
it may issue an opinion on the matters in which it is specialized;
2. to
verify the existence of indicia of the occurrence of an unjustified increase
in prices, or imposition of excessive prices, and communicating its reasoned
findings to the SDE/MJ, which will determine whether to initiate an
administrative proceeding; and,
3. to request information of any person,
organ, authority, or entity, public or private, maintaining legal secrecy
when appropriate, so long as it is necessary for the performance of its
duties. |
The Office of the General Superintendent of
the SRS has the following duties:
a) to consider and rule on appeals
challenging decisions of the Sectoral Superintendents, sectoral legal
provisions and procedural rules; b) to monitor and issue findings on the
efficiency and effectiveness of the work of the Sectoral Superintendents,
and exercise due control over persons or entities that undertake regulated
activities under this law and the sectoral legal rules; c) to consider and
rule on matters referred to it by the Sectoral Superintendents; it may not
consider other matters on its own initiative or at the direct request of an
interested party; d) to adopt the necessary administrative and disciplinary
measures so the Sectoral Superintendents can carry out their duties pursuant
to this law, the sectoral legal rules, and applicable general law, free from
improper influence from any source. (Sectoral Regulation System Law, Article
7). |
Administrative Procedures
Administrative and/or Judicial Procedures
The procedure shall be started at its own initiative or as a result of a
complaint from any public or private natural or juridical person. (Article
26)
All terms in Law 25.156 shall be calculated in administrative work days.
(Article 27)
a. The complaint shall contain:
b. The name and domicile of the
presenter;
c. The reason for the complaint, stated precisely;
d. The facts
on which it is based, explained clearly;
e. Brief statement of the legal
basis. (Article 28)
Where the procedure is begun on the Commission’s own
initiative, a report on the facts and basis for the action shall be
provided. (Paragraph from Article 29)
Once arguments have been heard, or
when the time period has expired, the Commission shall rule on the
admissibility of the preliminary investigation. (Article 30)
If the
Commission considers the reasons satisfactory, or if, once the investigation
is completed, there is insufficient basis to proceed, the case shall be
shelved. (Article 31)
Once the preliminary investigation has been completed,
the Commission shall notify those against whom the allegation has been made,
so that they may, within 15 days, present a defense and offer any evidence
they consider relevant. (Article 32)
The decisions of the Commission
regarding evidence are unappealable. (Article 33)
The Commission’s ruling
represents the final administrative remedy. (Article 34) The National
Commission for the Defense of Competition shall decide to call for a public
hearing when it considers it appropriate to the progress of the
investigation. (Article 38) Any person who makes a false complaint shall be
subject to the sanctions envisaged in Article 46(b) of Law 25.156, when the
person making the complaint has used false information or documents for the
purpose of harming competition, without prejudice to any other civil and
criminal actions that may be appropriate. (Article 45) |
The prevention, investigation, and
prosecution of practices that hinder competition, based on Law 8,884/94, are
administrative acts.
The proceedings are initiated by the Secretariat
for Economic Law, sua sponte, upon complaint lodged by a third person
alleging injury or, in the case of acts subject to control, by the
interested parties. The SDE/MJ is responsible for the investigative stage of
the administrative proceedings, which include a technical opinion of the
SEAE/MJ, and forwards the record to the CADE for final decision.
The
decisions of the CADE, while not subject to review in the Executive branch,
may be reviewed by the Judiciary.
The administrative proceedings for
investigating and prosecuting infractions of the economic order provided for
in Law 8,884/94 are as follows:
Preliminary Inquiry:
The SDE will
undertake the preliminary inquiry sua sponte, or upon written and justified
representation of any interested person; none of the information so
collected will be disseminated when the indicia of an infraction of the
economic order are not sufficient to initiate an administrative proceeding
immediately.
In the preliminary inquiry, the Secretary of the SDE may adopt
any of the measures indicated in Law 8,884/94, including requesting
clarification of the information provided from persons subject to
investigation.
Once the preliminary inquiry is concluded, the Secretary of
the SDE has 60 days to decide whether to initiate an administrative
proceeding or whether to close the case; in the latter case, it shall recur,
sua sponte, to the CADE.
Where the petition is brought by the Committee of
the National Congress, or by any of its chambers, there is no need for a
preliminary inquiry, and the administrative proceeding is initiated
forthwith.
Administrative Proceedings
An administrative proceeding
will be initiated within a period no longer than eight days, counted from
the time the fact was reported, from the representation, or from the closing
of the preliminary inquiry, by reasoned order of the Secretary of the SDE,
which will specify the facts to be investigated.
The party represented will
be notified to present its defense within 15 (fifteen) days.
The initial
notification will include the entirety of the order to initiate an
administrative proceeding and the representation, as appropriate. The
initial notification will be by mail, with acknowledgement of receipt in
one's own name, or, if notification by mail is not successful, by edict
published in the Official Gazette (Diário Oficial da União) and in a large
circulation newspaper in the state in which the person in question resides
or is based; the deadlines will be counted from the time the acknowledgement
of receipt is attached, or from its publication, as the case may be.
Notice
of the other procedural acts will be by publication in the Official Gazette,
and should include the name of the person represented and of his or her
attorney.
The person represented may participate in the administrative
proceeding through its owner and its directors or managers, or through
legally qualified attorneys, who are ensured full access to the proceedings
in the SDE or the CADE.
A represented person who, once notified, does not
present any defense in the legal time period, shall be considered in
default, and shall be deemed to have confessed as to the facts, and all the
time periods shall be considered to run, independent of notification.
Whatever the phase of the proceeding, the defaulter may participate, without
the right to repetition of any act already performed.
Once the term for
presenting the defense has lapsed, the SDE shall determine the procedures to
follow and the production of evidence of interest to the Secretariat, as it
has the authority to request of the representative of any natural or
juridical person, organ, or public entity, information, clarifications, or
documents to be presented within fifteen days, maintaining legal secrecy as
appropriate.
The proceedings and evidence determined by the Secretary of the
SDE, including examination of witnesses, will be concluded within forty-five
days, which can be extended for a like period in case of justified need. The
federal authorities, directors of federal autonomous entities, foundations,
public companies, and mixed corporations, lest a determination of liability
be rendered against them, shall provide all the assistance and cooperation
requested of them by the CADE or the SDE, including preparing technical
opinions on the matters of their competence.
The person represented shall
present the evidence of its interest within the maximum term of forty-five
days counted from presentation of the defense, and may submit new documents
at any time prior to the conclusion of the investigative stage of the
proceedings.
The person represented may request the Secretary of the SDE to
designate a day, time, and place for hearing witnesses, if there are no more
than three.
The Secretariat for Monitoring the Economy, of the Ministry of
the Treasury, will be informed ex oficio of the initiation of the
administrative proceeding so that, if it so wishes, it may issue an opinion
on the matter of its specialization, which shall be presented prior to the
conclusion of the investigative phase of the proceeding.
Once the
investigative stage of the proceeding is concluded, the person represented
will be notified to present final arguments, within five days, after which
the Secretary for Economic Law, in a detailed report, will decide either to
forward the record to the CADE for judgment, or to close the case, recurring
ex-officio to the CADE in the latter case.
The preliminary inquiry and the
administrative proceeding should be conducted and concluded in the shortest
possible time that is compatible with clarifying the facts; the Secretary of
the SDE and the members of the CADE, as well as the staff and officers of
these organs shall so proceed, lest they be found liable for not doing so.
On the Preventive Measure and the Order to Cease: At any stage of the
administrative proceeding, the Secretary of the SDE or the
Counselor-Rapporteur of the CADE, at his own initiative or prompted by the
Prosecutor-General of the CADE, may adopt a preventive measure when there is
an indication or a well-founded concern fear that the person represented is
causing or may cause harm to the market, directly or indirectly, that is
irreparable, difficult to repair, or that would render the final outcome of
the proceeding ineffective.
In the case of a preventive measure, the
Secretary of the SDE or the Counselor-Rapporteur of the CADE will order the
immediate cessation of the practice, and will order, when materially
possible, reversion to the situation ex ante, setting a daily fine in the
case of non-compliance, in the terms of Law 8,884/94. There may be a
voluntary appeal of this decision, within a period of five days, to the
plenary of the CADE, without suspending its effect.
On the Commitment to
Cease: At any phase of the administrative proceeding the CADE or the
SDE, ad referendum of the CADE, may enter into a commitment to cease the
practice under investigation, which shall not be construed as a confession
as to the facts, nor acknowledgement that the activity under investigation
is wrongful. The proceeding will be suspended so long as the commitment to
cease is fulfilled, and will be closed at the conclusion of the term set, if
all the conditions established are met.
The commitment to cease constitutes
prima facie evidence; it is executed immediately in the case of
non-compliance or if obstacles are placed in the way of its oversight, as
prescribed in Law 8,884/94.
Judgment of Cases before the CADE
Once a
case is received, the Chairman of the CADE will distribute it, by lot, to
the Counselor-Rapporteur, who will submit it to the CADE counsel, who in
turn is to submit a statement within 20 days.
The Counselor-Rapporteur may
decide to undertake complementary proceedings or request new information,
pursuant to Article 35, as well as authorize the party to produce new
evidence when he finds the information in the record insufficient to form
his views.
Upon the Chairman's invitation, by indication of the Rapporteur,
any person may submit additional information to the CADE regarding the
matters in the case file before it.
In the act of judgment in plenary, the
date of which shall be conveyed to the parties with at least five days
anticipation, the CADE counsel and the represented person or his attorney
shall have, respectively, the right to speak for 15 minutes each.
The
decision of the CADE, which shall set forth its reasoning, whatever the
decision, shall contain the following elements when including a finding of
infraction of the economic order:
1. specification of the facts that
constituted the infraction found and an indication of the measures to be
adopted by the persons responsible for making it stop;
2. a time period
within with the measures referred to in the previous section should be
initiated and concluded;
3. stipulated fine;
4. daily fine in the case of an
ongoing infraction.
The decision of the CADE shall be published within five
days in the Official Gazette.
If the decision is not carried out, in full or
in part, the Chairman of the CADE will be informed of said non-compliance,
and order the CADE counsel to prepare its judicial execution.
The decisions
of the CADE shall be made by absolute majority, with the presence of at
least five members. The decisions of the CADE shall not be appealable in the
Executive branch; the decisions shall be executed, and shall immediately be
communicated to the Office of the Attorney General for whatever other
measures may be within its powers.
The Regulation and By-laws of CADE shall
set forth complementary provisions on the administrative proceeding. |
1. The common procedures established in the
Constitution, the Criminal Code, and the Investment Law.
2. To consider and
process complaints filed by users, regulated companies and entities, and
competent state organs concerning activities within the jurisdiction of the
SRS. (Sectoral Regulation Law, Article 10). |
Judicial Procedures
| |
Judicial Proceedings may be civil or
criminal.
The decisions of the CADE, while not subject to review in the
Executive branch, may be reviewed by the Judiciary.
- Decisions of the
plenary of the CADE imposing fines or imposing an obligation to do or not to
do a given act, constitute prima facie evidence. Where the sole purpose of
execution is to collect a monetary fine, it shall proceed pursuant to the
provisions of Law 6,830 of September 22, 1980.
Where the purpose of the
execution is not only collecting fines, but also entailing an obligation to
act or not act, the Judge shall grant the specific oversight of the
obligation, or shall determine measures that assure the practical result
equivalent to that of payment.
Execution shall be by all means, including by
intervention in the firm, when necessary.
The execution of the decisions of
the CADE shall be sought in the Federal Courts in the domicile of the person
against whom they are executed.
In view of the gravity of the infraction of
the economic order, and having set forth the grounds of irreparable damage,
or damage for which reparation is difficult, even if there has been a
deposit of the fines and a bond has been put up, the Judge may immediately
adopt, in full or in part, the measures stemming from the decision of the
plenary.
The process of executing the decisions of the CADE will have
preference over all other types of action, except habeas corpus and the
mandato de segurança.
- In addition to the review of the decisions of
the CADE, and to judicial execution of these decisions, actions may be
brought for civil liability for damages caused to the economic order,
regulated by Law No. 7,347 of July 24, 1985, as amended by the single
paragraph of article 88 of Law 8,884 of June 11, 1994. The law includes a
provision whereby the persons damaged may sue for compensation for losses
and damages, in civil court.
Said compensation, in addition to the fines
paid administratively in the ambit of defending the economic order, also
includes resources to be collected by the Fund for the Defense of Diffuse
Rights (FDD), whose Managing Council is situated in the SDE/MJ; it is
presided over the by secretary and vice-chairman or chairman of the CADE.
In
the criminal sphere, the definition and prosecution of crimes against the
economic order is regulated by Law 8,137 of December 27, 1990, which is
under the competence of the Attorney General's Office. |
Those established in the common system. |
Administrative or Judicial Sanctions
Natural or juridical persons not complying
with the provisions of Law 25.156 shall be subject to the following
sanctions:
a. Cessation of acts or behaviors envisaged in Chapters I and II
(Prohibited Practices and Dominant Position) and, as appropriate, the
elimination of their effects;
b. Those carrying out acts prohibited in
Chapters I and II and in Article 13 of Chapter III (Concentrations and
Mergers) shall be sanctioned with a severe fine. (That fine is stipulated in
Article 46)
c. Without prejudice to other sanctions that may be appropriate,
when it is verified that there have been acts constituting abuse of dominant
position or when it is established that a monopolistic or oligopolistic
position has been acquired or consolidated, in violation of the provisions
of Law 25.156, the Commission may impose conditions aimed at neutralizing
elements that distort competition, or may request of the competent judge
that the violating enterprises be dissolved, liquidated, or broken up;
d.
Those who fail to comply with the provisions of Articles 8, 35 and 36 shall
be subject to a fine of up to Arg$1 million per day. (Article 46)
Juridical
persons are liable for behaviors by natural persons who have acted on behalf
of, with the help of, or for the benefit of such juridical person, even when
the act that was the basis of the representation was without effect.
(Article 47)
Where the violations envisaged in the Law on Protection of
Competition are committed by a juridical person, the fine shall also be
applied jointly and severally to directors, managers, administrators,
trustees or members of the oversight committee, leaders or legal
representatives of such juridical person who, by their action or through
failure to carry out their responsibilities for control, surveillance or
monitoring, have contributed to, encouraged or permitted the violation to be
committed. (Article 48)
In imposing fines, the Commission shall consider the
seriousness of the violation, the harm caused, evidence of intentionality,
the violator’s market share, the size of the affected market, the duration
of the practice or concentration and the recidivism or background of the
responsible party, as well as that person’s economic capacity. (Article 49)
Persons who obstruct or impede the investigation or fail to comply with the
requirements of the Commission may be sanctioned with fines of up to Arg$500
per day. (Article 50)
Natural or juridical persons harmed by acts prohibited
by Law 25.156 may effect compensation for damages and injury, pursuant to
the standards of common law, before the judge competent in the matter.
(Article 51) |
In Brazilian legislation the sanctions for
infraction of the economic order are monetary, and also imply obligations to
act or to refrain from acting.
Among the penalties imposed by Law No.
8,884/94 is the fine imposed on companies and on managers.
Without prejudice
to pecuniary sanction, the following penalties may also be imposed, alone or
cumulatively:
- publication in the press of a synopsis of the decision
imposing liability;
- prohibition on contracting with public organs for five
years;
- non-concession of the dividing up taxes;
- canceling tax incentives
or public subsidies;
- granting of obligatory license for patents owned by
the infractor;
- break-up of the company, sale of assets, partial cessation
of activities, or transfer of corporate control;
- entry of the infractor in
the National Register for Consumer Defense.
Whether imposing a fine or an
obligation to act, the decision of the plenary of the CADE constitutes prima
facie evidence; implementation of the respective decision of the plenary can
be compelled by judicial action.
Where the sole purpose of execution is to
charge a monetary fine, execution will be in the terms of Law 6,830 of
September 22, 1980, which governs the judicial collection of debts
outstanding to the public treasury.
Where implementation has as its purpose
fulfillment of an obligation to act or refrain from acting, the judge will
grant a specific order to ensure the obligation is executed or will
determine the measures to be adopted for the payment of the obligation, and
may also, where it is impossible to obtain the practical results sought,
substitute compensation for the judicial judgment to act or not act, without
prejudice to the fine applied.
Judicial execution of the decision of the
CADE may go as far as intervention in the company, based on a judicial
decree, in cases in which such a measure is necessary to make possible
specific execution.
The criminal sanction, for imposing a monetary fine and
detention, is limited to the scope of application of the Attorney General's
Office in the cases under the criminal laws and to the Code of Criminal
Procedure. |
|
Recourse or Appeal
Commission rulings that may be appealed are
those that order:
a. The application of sanctions.
b. The cessation of a
behavior or abstention from committing a behavior. c. Opposition to or
conditioning of acts envisaged in Chapter III of Law 25.156. d. The
dismissal of the complaint by the Commission for the Defense of Competition.
Appeals envisaged in subparagraph (a) shall be granted with suspensive
effect, and those envisaged in subparagraphs (b), (c) and (d) shall be
granted with devolutive effect. (Article 52)
Appeals shall be lodged, and
reasons for the appeal presented to the National Commission for the Defense
of Competition within 15 days of notification of the ruling. That Commission
shall, within 5 days of the lodging of the appeal, transmit the proceeding
to the appropriate Federal Court. (Article 53)
The Commission may at any
stage of the proceeding mandate compliance with conditions establishing or
ordering the cessation of the injurious behavior or abstention from
committing such behavior. Where serious harm to the competition regime could
result, it may order measures that, according to the circumstances, are most
likely to prevent such harm. This ruling may be appealed with devolutive
effect, in the manner and under the terms envisaged in Articles 52 and 53.
Likewise, it may, on its own initiative, or at the request of a party,
suspend, modify or revoke measures provided by virtue of mitigating
circumstances or circumstances that could not be known at the time of their
adoption. (Article 35). |
The decisions of the CADE are not subject to
review in the Executive branch; their judicial execution follows immediately
upon a decision. The Attorney General's Office should be informed of this
decision so as to adopt the appropriate measures within its powers.
Nonetheless, the Judiciary, through the federal courts, may review the
decisions of the CADE.
Remedies and appeals in such cases are to the
Superior Tribunals. |
Appeals regarding unconstitutionality,
redress, and nullity. |
|
Canada |
Colombia |
Costa Rica |
Regulatory Framework
| |
1. Constitution of 1991, Articles 333 and
334.
2. Decree Law No. 2153 of 1992, which restructured the Superintendency
of Industry and Commerce.
3. Decree No. 1302 of 1964, which regulated Law
155/59 on restrictive trade practices.
4. Law No. 155/59 on restrictive
trade practices. Article 4 of this Law was amended by Article 118of Decree
2666 of 2000.
5. Decision 285 of the Commission of the Cartagena Agreement,
with Rules for Prevention or Correction of Distortion in Competition Caused
by Practices that Restrict Free Competition. |
1. Political Constitution of the Republic,
Article 46.
2. Law No. 7472 on Promotion of Competition and Effective
Consumer Defense of December 20, 1994. Published in the Federal Register of
January 19, 1995.
3. Unforeseen circumstances may, in addition, be subject
to provisions of the General Law No. 6227 on Public Administration of May 2,
1978. Published in the Federal Register of May 30, 1978 (hereinafter
referred to as “General Law”).
4. Executive Decree No. 25234-MEIC,
containing the Regulations of the Law on Promotion of Competition and
Effective Consumer Defense, 25 January 1996. Published in the Federal
Register on July 1, 1996 (hereinafter referred to as “Regulations”).
5. Law
No. 3367 on the Regulation of Judicial Proceedings: Executive Act of 12
March 1966. Published in the Federal Register on April 17, 1966 (hereinafter
referred to as the “Regulations Law”).
6. Law No. 7983 on Protection to
Workers, February 16, 2000 (article 47). |
Objectives of the Law
| The purpose of the Competition Act is to
maintain and encourage competition in Canada in order to promote the
efficiency and adaptability of the Canadian economy, in order to expand
opportunities for Canadian participation in world markets while at the same
time recognizing the role of foreign competition in Canada, in order to
ensure that small and medium-sized enterprise have an equitable opportunity
to participate in the Canadian economy and in order to provide consumers
with competitive prices and product choices. (Section 1.1). |
To ensure compliance with the provisions on
the promotion of competition and restrictive trade practices in domestic
markets in order to accomplish the following goals: to improve the
efficiency of the national production system; to ensure that consumers have
free choice and access to markets of goods and services; to ensure that
enterprises may participate freely in the market; and to ensure that there
is a variety of prices and qualities of goods and services in the market.
(Article 2 (1) of Decree No. 2153/92). |
The law establishes that its objectives are:
a. Effectively protect the rights and legitimate interests of the consumer;
b. Monitoring and promotion of the process of competition and free
enterprise.
Article 1, referred to above, establishes the following
objectives, with a view to achieving the purpose of promoting competition:
a. The prevention and prohibition of monopolies, monopolistic practices, and
other restraints on efficient market operation;
b. The elimination of
unnecessary regulations affecting business. (Article 1) |
Scope of Application
| Apart from certain exceptions outlined below,
the Competition Act applies to business in all sectors of the Canadian
economy. The Competition Act is binding on and applies to an agent of Her
Majesty in right of Canada or a province that is a corporation, in respect
of commercial activities engaged in by the corporation in competition,
whether actual or potential, with other persons to the extent that it would
apply if the agent were not an agent of Her Majesty. (Section 2.1).
|
Encompasses the domestic market and any
natural or juridical person carrying out independent economic activity,
regardless of the legal form or nature of same. (Article 2 (1) of Decision
2153/92). |
The legal provisions concerning the promotion
of competition apply to all economic agents. (Article 9).
In the market, any
person or public or private legal entity engaged in any type of economic
activity as a buyer, seller, requester, or provider of goods or services, in
their own name or on behalf of others, regardless of whether they are
imported or domestic or whether they have been produced or provided by him
or by a third party. (Article 2). |
Exceptions to the Scope of Application
Nothing in the Competition Act applies in
respect of:
a. Combinations or activities of workmen or employees for their
own reasonable protection as such workmen or employees;
b. Contracts,
agreements or arrangements between or among fishermen or associations of
fishermen and persons or associations of persons engaged in the buying or
processing of fish relating to the prices, remuneration or other like
conditions under which fish will be caught and supplied to those persons by
fishermen; or
c. Contracts, agreements or arrangements between or among two
or more employers in a trade, industry or profession, whether effected
directly between or among the employers or through the instrumentality of a
corporation or association of which the employers are members, pertaining to
collective bargaining with their employees in respect to salary or wages and
terms or conditions of employment. (Section 4(1)).
Nothing in section 4.1
exempts from the application of any provision of the Competition Act a
contract, agreement or arrangement entered into by an employer to withhold
any product from any person, or to refrain from acquiring from any person
any product other than the services of workmen or employees. (Section 4(2)).
Sections 45 and 61 do not apply in respect of an agreement or arrangement
between or among persons who are members of a class of persons who
ordinarily engage in the business of dealing in securities or between or
among such persons and the issue of a specific security, in the case of a
primary distribution, or the vendor of a specific security, in the case of a
secondary distribution, where the agreement or arrangement has a reasonable
relationship to the underwriting of a specific security. (Section 5(1)).
The
Competition Act does not apply in respect of agreements or
arrangements between or among teams, clubs and leagues pertaining to
participation in amateur sport. (Section 6(1)). |
The sector of public services to residences:
Law 142 of 1993, which establishes the system of public services to
residences and other provisions.
The financial and insurance sector:
Executive Order 663 of 1993, which updates the Organic Statute of the
Financial System.Television: Law 182 of 1995. |
The chapter on Promotion of Competition shall
not apply to:
a. Agents who provide public services by virtue of a
concession, granted under law for undertaking the necessary activities for
provision of services, in accordance with the limitations established in the
concession and in special regulations; b. State monopolies created by law,
as long as there are special laws authorizing them to carry out specific
activities such as insurance, distilling alcoholic beverages and marketing
same for domestic consumption, distribution of fuel, telephone and
telecommunications services, electricity, and water. c. Municipalities, with
respect both to their internal rules and regulations and to their dealings
with third parties. (Article 9 and 69 of the Law and Article 29 of the
Regulations). |
General Prohibitions
| Prohibitions contained in the Competition Act
take two different forms: criminal offences and civil reviewable matters set
out under Prohibited Conduct. |
Article 1 of Law 155, as amended by Article
10 of Decree 3307 of 1963: It is prohibited to enter into any agreement or
accord that directly or indirectly aims to limit production, supply,
distribution, or consumption of national or foreign raw materials, products,
merchandise, or services; and, in general, to engage in any type of
practice, procedure, or system that aims to limit free competition and to
maintain or fix unfair prices. According to Article 46 of Decree No. 2153 of
1992: Law 155 of 1959 prohibits any conduct that affects free competition in
the markets which, pursuant to the terms of the Civil Code, are considered
to be illegal. |
(...) this law prohibit and penalize public
and private monopolies and monopolistic practices that impede or restrain
competition, access of competitors to markets or removal of competitors from
markets (...) (Article 10). |
Prohibited Conducts
1.Criminal offences include:
i. Conspiracies,
combinations, agreements or arrangements to lessen competition unduly in
relation to the supply, manufacture or production of a product (Section 45);
ii. Bid-rigging: bid-rigging is an agreement between parties whereby one or
more bidders will refrain from submitting bids in response to a call for
tenders, or bids are submitted which have been arranged between the parties
(Section 47);
iii. Knowingly engaging in a practice of discriminating
against competitors of a purchaser of an article by granting a discount or
other advantage to a purchaser that is not available to competitors
purchasing articles of like quality and quantity (Section 50(1)(a); iv.
Engaging in a policy of selling products in any area of Canada at prices
lower than those exacted elsewhere in Canada, where the effect or design is
to lessen competition substantially or eliminate a competitor (Section
50(1)(b);
v. Engaging in a policy of selling products at unreasonably low
prices where the effect or design is to lessen competition substantially or
eliminate a competitor (s. 50(1)(c));
vi. Granting to a purchaser an
allowance for advertising or display purposes that is not offered on
proportionate terms to competing purchasers (Section 51);
vii. Attempting to
influence upward or to discourage the reduction of the price at which
another person supplies or advertises a product, or refusing to supply or
otherwise discriminating against anyone because of that person's low pricing
policy (Section 6l(1));
viii. Attempting to induce a supplier to refuse to
supply a product to a particular person because of that person's low pricing
policy (Section 61(6));
ix. False or misleading representations, when a
representation is made to the public that is false or materially misleading
(the representation could influence a consumer to buy the product or service
advertised). (Section 52);
x. Deceptive telemarketing, which involves
person-to-person calls used to make false or misleading representation in
promoting the supply of a product or a business interest. (section 52.1).
Other provisions relate to the implementation of foreign directives,
agreements relating to participation in professional sport, agreements among
banks, and misleading advertising or deceptive marketing practices.
2. Civil
reviewable matters include:
i. Mergers: the Competition Act applies to every
merger in Canada, irrespective of whether ownership or control lies with
Canadians or foreigners. A merger which is believed to prevent or lessen
competition substantially may be taken to the Competition Tribunal
(Tribunal) for review and the application of remedies (Section 92).
ii.
Abuse of dominant position: This involves a situation where one or more
persons substantially or completely control a class or species of business,
and have engaged in or are engaging in a practice of anti-competitive acts
which have the effect of preventing or lessening competition substantially.
The Competition Act provides a non-exhaustive list of types of conduct
deemed to constitute anti-competitive acts (Section 78 and Section 79).
iii.
Refusal to deal: a situation where a person is substantially affected in his
or her business or is precluded from carrying on business by the refusal,
the person is willing and able to meet the usual trade terms of the
supplier, the product is in ample supply, and the inability to obtain
adequate supply is due to insufficient competition among suppliers in the
market (Section 75);
iv. Exclusive dealing: a situation where a purchaser is
required to deal only or primarily in particular products or refrain from
dealing in specific products as a condition of obtaining supply, the
practice is engaged in by a major supplier or is widespread, and competition
is or is likely to be lessened substantially (Section 77);
v. Tied selling:
a situation where a supplier as a condition of supplying a product requires
a purchaser to purchase a second product or to refrain from using a
particular brand of product in conjunction with the first product, the
practice is engaged in by a major supplier or is widespread, and competition
is or is likely to be lessened substantially (Section 77);
vi. Market
restriction: a situation where a supplier, as a condition of sale imposes
restrictions as to the market in which his or her customer may deal, the
practice is engaged in by a major supplier or widespread, and competition is
or is likely to be lessened substantially (Section 77);
vii. Delivered
pricing: a situation where a supplier engages in a practice of refusing
delivery of an article at any place where deliveries are made to other
customers, the supplier is a major one or the practice is widespread, and
the practice has the effect of denying a customer or potential customer an
advantage that would otherwise be available in the market (Section 80 and
Section 81); viii. Specialization agreements: the Tribunal may register an
agreement on the application of any party where it finds that the
implementation of an agreement is likely to bring about gains in efficiency
and the Commissioner of Competition has been given a reasonable opportunity
to be heard; a registration in this manner exempts an agreement from the
conspiracy and exclusive dealing provisions of the Competition Act (Sections
85 through 90).
Other non-criminal reviewable matters relate to consignment
selling, the implementation of foreign laws or directives and refusals to
supply by foreign suppliers
and misrepresentations to the public. |
Agreements: Any contract, accord, agreement,
or practice undertaken consciously or unconsciously in a parallel manner by
two or more enterprises. The following agreements, among others, are
considered to be contrary to free competition:
1. Those whose purpose or
effect is to directly or indirectly fix prices;
2. Those whose purpose or
effect is to determine discriminatory sale or marketing conditions for third
parties; 3. Those whose purpose or effect is to distribute markets among
producers or among distributors;
4. Those whose purpose or effect is to
allocate production or supply quotas; 5. Those whose purpose is to assign,
distribute or restrict the sources of supply of production inputs;
6. Those
whose purpose or effect is to limit technical development;
7. Those whose
purpose or effect is to condition the supply of a product to the acceptance
of additional obligations which, due to their nature, were not contemplated
in the purpose of the enterprise, without prejudice to what was established
in other provisions;
8. Those whose purpose or effect is to refrain from
producing goods or services or affect their production levels;
9. Those
whose purpose is to deceive in tendering or competitive bidding or those
whose effect is to distribute contract awards, distribute tenders or to fix
the terms of the tenders. (Art. 47, Decree 2153/92).
Act: Any conduct by
those who carry out economic activity. The following acts are considered to
be contrary to free competition:
1. Violation of advertising standards as
contemplated in the consumer protection statute;
2. Influencing an
enterprise to increase the prices of its products or services or to give up
its intention to lower prices; 3. Refusing to sell or render services to an
enterprise or discriminate against same when such an act may be understood
as retaliation for its price policy. (Article 48, Decree 2153/92).
Dominant
Position: The possibility of directly or indirectly determining market
conditions. (Article 45, number 5, Decree 2153/92).
The following conduct
constitutes abuse of a Dominant Position
1. Lowering of prices under cost
when the purpose is to drive one or several competitors out of the market,
prevent them from entering the market or keep them from expanding their
market share;
2. Using discriminatory conditions for equivalent operations,
which puts a consumer or supplier at a disadvantage vis-à-vis another
consumer or supplier with similar conditions;
3. Conduct whose purpose or
effect is to condition the supply of a product to the acceptance of
additional obligations, which, due to their nature, were not contemplated in
the purpose of the enterprise, without prejudice to what is established in
other provisions; 4. Selling to a buyer under conditions different from
those offered to another buyer when the intent is to reduce or eliminate
competition in the market;
5. Selling or providing services in an any part
of Colombian territory at a price different from the one offered in another
part of Colombian territory, when the intent or effect of such practice is
to reduce or eliminate competition in that part of the country and the price
does not correspond to the cost structure of the transaction. (Article 50,
Decree No. 2153/92). |
The law prohibits four types of conduct:
total monopolistic practices, partial monopolistic practices, concentrations
and unfair trade practices.
The law defines total monopolistic practices
as acts, contracts, agreements, understandings, or cooperation among
competing economic agents for any of the following purposes: a) Fixing,
raising, setting, or manipulating the buying or selling price at which goods
are sold or bought in the market, or exchanging information for the same
purpose or effect; b) establishing the obligation to produce, process,
distribute, or sell a set or limited quantity of goods or provide a
restricted or limited frequency, volume, or number of services; c) dividing,
distributing, designating, or imposing portions or segments of a present or
potential market for goods or services in terms of clients, suppliers, and
time or space determined or to be determined; d) establishing, agreeing
upon, or coordinating offers or abstention from bidding in public auctions,
competitions, or sales. (Article 11).
Acts of this kind are prohibited by
law and any person committing such acts shall be punished accordingly.
(Article 11).
Partial monopolistic practices shall be considered
those involving acts, contracts, agreements, understandings, or cooperation
whose effect is or could be improper displacement of other economic agents
from the market, substantial impediment to their market access, or the
establishment of exclusive advantage for one or several persons in the
following cases:
a) fixing, imposing, or establishing exclusive distribution
of goods or services in terms of the subject, the geographical area, or
specific time frames, including the division, distribution, or assignment of
clients or suppliers, among economic agents who are not competitors against
each other;
b) the setting of prices to other terms a distributor or
provider must comply with when selling or distributing goods or providing
services;
c) the sale or contingent agreement to sell, buy, acquire, or
provide goods or services available, which are normally offered to third
parties;
d) the sale or contingent agreement to not use, acquire, sell, or
provide goods and services available, which are normally offered to third
parties;
e) collusion among the various economic agents or the invitation to
them to exercise pressure on some client or supplier to discourage him from
a given act, or applying sanctions, or obliging him to act in a given
manner;
f) the production or marketing of goods and services at prices below
their normal value;
g) in general, any deliberate at that results in the
withdrawal of competitors from the market or bars their access thereto.
(Article 12). For such practices to be deemed in violation of the Law, it
must be proved that the economic agent committing them has substantial power
over the relevant market, and that the practice in question relates to goods
or services offered in or pertaining to that market (Article 13 of the Law).
In determining whether an economic agent has substantial power over the
relevant market, the following factors must be considered:
a) Relative
market share, and the ability to fix prices unilaterally, or to restrict
supply in the relevant market to a substantial degree, such as to render it
impossible for other economic agents, now or in the future, to
counterbalance that power;
b) The existence of barriers to market entry, and
circumstances that may be expected to alter those barriers or to affect
supply by other competitors;
c) The existence of competitors, and their
relative market power;
d) The ability of the economic agent in question, and
of his competitors, to gain access to sources of relevant inputs;
e) Recent
market behavior of the economic agent in question. |
Exceptions to Prohibited Practices
The Competition Act applies to all sectors of
the economy. The only exceptions relate to selected activities such as
collective bargaining, amateur sport, securities or fishing. Apart from
these general exemptions, several other more limited exceptions are found
throughout the Competition Act.
These exceptions take the form of exceptions
or defences to specific offences or non-criminal reviewable practices. A few
other exemptions limiting the application of the Competition Act are also
contained in laws other than the Competition Act.
Exceptions and defenses
contained in the Competition Act are the following:
i. Financial
Institutions: certain agreements between financial institutions are excepted
from the prohibition in section 49. Included are agreements made regarding
loans or deposits made or payable outside Canada, underwriting of
securities, exchange of statistics and credit information, participation in
federally or provincially insured loans programs, servicing customers
outside Canada, and agreements approved by the Minister of Finance for the
purpose of financial policy. Similarly, an amalgamation or acquisition
involving banks is exempt from the prohibitions relating to mergers if
certified by the Minister of Finance as being desirable in the interest of
the financial system. (Section 94(b)).
ii. Cooperative Associations: the
prohibition against price discrimination does not enjoin a co-operative
association, credit union, co-operative credit society or caisse populaire
from returning to its members, suppliers or customers any surplus arising
from its operations. (Section 50(3));
iii. Professional Services: agreements
that relate to a service and to standards of competence and integrity
reasonably necessary for the protection of the public in the practice of a
trade or profession or in the collection and dissemination of information
relating to the service are not contrary to the conspiracy provision of the
Competition Act. (Section 45(7));
iv. Specialization Agreements: agreements
exempted from the conspiracy and exclusive dealing provisions of the
Competition Act if the agreement is registered with the Tribunal. Section 85
to 90);
v. Intellectual Property: an act engaged in pursuant only to the
exercise of any right or enjoyment of any interest derived under the
Copyright Act, Industrial Design Act, Patent Act, Trade Marks Act, or any
other Act of Parliament pertaining to intellectual or industrial property is
not an anti- competitive act. (Section 79(5));
vi. Joint Ventures: joint
ventures undertaken for a specific project or program of research and
development are excepted from the merger provisions of the Competition Act.
A joint venture qualifies for this exception where: the project would not
otherwise have likely taken place; no change of control of any party may
occur; a written agreement exists to strict the activities of the venture,
govern the continuing relationship between the parties, provide for
contribution of assets by at least one party, and provides for termination
upon completion of the joint venture, and the combination does not, or is
not likely to, prevent or lessen competition except to the extent reasonably
required to complete the project or program. (Section 95(1));
vii. Franchise
Agreements: franchise agreements between affiliates are not subject to the
exclusive dealing, tied selling and market restriction provisions.
Similarly, franchise agreements between certain deemed affiliates are not
subject to review for market restriction. (Section 77).
viii. Export Cartel:
agreements that relate solely to the export of products from Canada benefit
from a defense from the conspiracy provisions of the Competition Act,
provided that they do not, or are not likely to, reduce or limit the real
value of exports of a product, restrict any person from entering into or
expanding the business of exporting, or lessen competition unduly in the
supply of services facilitating exports from Canada. (Sections 45(5) and
(6)).
ix. Restrictive Agreements: no conviction under section 45 may occur
if the agreement relates only to specified subject matter set out in
subsection 45(3). These exceptions do not apply where such an agreement is,
or is likely to (1) lessen competition unduly with respect to prices,
quantity or quality of production, markets or customers, or channels or
methods of distribution, or (2) restrict the entry into or expansion of a
business in a trade, industry or profession. (Section 45(4)). x. Mergers: an
exception exists to the application of the merger provisions where the
merger will likely bring about gains in efficiency that will be greater
than, and offset, the effects of any substantial prevention or lessening of
competition and where such efficiency gains would not be attained if an
order of the Tribunal against the merger was issued. Section 96 (2) lists
the factors which must be applied to determine whether such efficiency gains
are present. (Sections 96(1) and (2)).
xi. Bid-rigging: the bid-rigging
provisions do not apply to situations where the agreement is made known to
the tendering authority before bids are made, where the agreement involves
affiliated companies. (Section 47(3)).
xii. Refusal to Supply: a refusal to
supply a purchaser on the basis, of the purchaser's low pricing policy is
permissible if the supplier has a reasonable belief that the purchaser made
a practice of: using the supp1ier's products as loss-leaders; engaging in
misleading advertising in respect of the supplier's products; or not
providing the level of service that purchasers of that product might
reasonably expect. (Section 61(10)). xiii. Exclusive Dealing, Tied Selling
and Market Restriction: exclusive dealing and market restriction are not
offensive where they are engaged in only for reasonable period of time to
facilitate entry of a new supplier or product into a market. Tied selling
may be allowed where it is deemed reasonable having regard to the
technological relationship between the products to which it applies, or
where it is engaged in by a money lending business to better secure loans.
(Sections 77(4)(b) and (c)).
xvi. Deceptive marketing Practices: a due
diligence defense to bait and switch selling exists where a person took
reasonable steps to obtain an adequate supply, did obtain an adequate supply
but demand surpassed reasonable expectations, or undertook to and did supply
the product or a reasonable substitute within a reasonable time (Section
74.04(3). A sale above price is allowed where an advertisement prominently | |
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