jueves, 19 de septiembre de 2013

Comments on the draft Implementing Regulations to the Competition Law (Second Call by Pro-Competenci

N  O  B   O   A    P  A  G  Á  N   A  B  O  G  A  D  O  S

September 19th, 2013, Sto. Dgo, D.R., Year V, Volume VI

Comments on the draft Implementing Regulations to the Competition Law (Second Call by Pro-Competencia).
By: A. Noboa.
This time we will be focusing on specific observations relating to the subject matter of the proposed implementing regulations, in full knowledge and taking into full that after the consultation notice was published, a Law on the Rights of People in Their Relations with the Administration and Administrative Procedure No. 107-13 was promulgated.

Since this law modifies some of the procedural provisions of Law No. 42-08, it is only fair to allow for the institution to study how this legislative change would impact the content of the draft implementing regulation. Furthermore, fortunately, many of the principles and normative standards of the new law are already considered in the proposed implementing regulation published by the Honorable Council.

In that sense, we proceed to list the articles under subject to our comments:

Article 2. - Definitions.
Article 3. - Duty of cooperation and information.
Article 5. - The abuse of dominant position.
Article 6. - Unfair Competition against final consumers.
Article 7. - Unfair Competition related to Industrial Property Rights.
Article 11. Review of state legal acts and state aid.
Article 13. Powers of the Commission.
Article 12. Coordination with market regulators.


Article 2. Definitions. -
Economic Operators

PROPOSED TEXT: " Economic operator: Any person or group of persons, natural or legal, private or public, involved in economic activity. Economic operators shall also be business associations, unions, professional, technical and any other organization or association, to the extent that their actions, decisions or strategies may have an impact on any aspect of the market."

Comment: We suggest an adjustment in the last sentence of this definition, so that the proposed regulatory provision is consistent with the behavioral nature of the prohibitions set forth in Law No. 42-08.

RECOMENDATION: ".... to the extent that their actions, decisions or strategies may have an impact on the operation of the market. "

Effective Competition.

PROPOSED TEXT: "Effective competition. The competitive participation among economic operators in a market, in order to serve a specific portion thereof, by improving the quality and price offer for the benefit of the consumer. Effective competition assumes competitive participation among economic operators that act as suppliers and as demanders." (Emphasis added.)
The definition of effective competition, is an indeterminate legal concept, embodied in Law No. 42-08. It should not be modified through an implementing regulation with new conditions that apply, generally, to all cases.

This does not preclude Pro-Competencia, in weighing administrative acts to decide on individual cases of analysis, to include considerations such as the one provided in the draft regulation. Therefore, we suggest deleting the highlighted segment above, without this suggestion implying a correction to the idea contained in the sentence.

Consumer, final consumer and intermediate consumer

SUGGESTED TEXTS: "Consumer: natural person or legal entity, public or private, that demands products or services for use in production processes, distribution and retailing or for final consumption.

Final Consumer: An individual or entity, public or private, that purchases, consumes, uses or enjoys goods and services, for a consideration, as the end user, whether for personal, family or social purposes.

Intermediate Consumer: Natural or legal person, public or private that acquires, stores, eat or use products or services in order to integrate them into a production, processing, marketing or services to third."

We fully endorse the position of the National Association of Young Entrepreneurs (ANJE), for its acronym in Spanish), in the sense that the legal definition of consumer should not be different from that provided for in the General Law on Protection of Consumer or User Rights, No. 358-05. It is important to remember that both laws complement each other, each plays a roll in the fundamental rights system, in content and scope, establishing principles, standards, safeguards and procedures under the Economic Constitution.
Free Competition
SUGGESTED TEXT: " Free competition: The ability to access markets, to offer goods and services, given the lack of artificial barriers to entry for potential competitors. Free competition also requires the ability to access markets to demand goods and services, with no artificial barriers to entry for potential demanders.

We reaffirm the comment hereto earlier expressed about the definition of effective competition. Pro-Competencia will have countless opportunities to expand its views on the concept of free competition, which will serve as valuable precedents. Meanwhile, the normative definition of Law No. 42-08 shall be kept intact.

Article 3. Duty to cooperate.

SUGGESTED TEXT: "Article 3. - Duty of cooperation and information: Given the scope described in Article 3 of the Law and in accordance with the powers conferred upon the Commission, economic operators, whether natural or legal persons, as well as the organs and institutions of public administration have a duty to cooperate with the Commission and are therefore required to provide, at its request, all the information and documents in their possession, for the purpose of conducting investigations, actions and proceedings pursuant to the Law. This duty of cooperation does not preclude economic operator to exert their right to require, through a duly motivated request, the classification of any documentation or information provided as confidential. Economic operators are not required to disclose information regarding formulas, inventions, or programs and plans for the future promotion and sale of their products and services. " (Emphasis added).

We reiterate the comments previously stated in our written comments and observations on the “Draft Implementing Regulations of the General Law on Competition Defense, No. 42-08, published by Pro-Competencia on July 23, 2012, for consultation purposes”, dated August 21, 2012[1],, submitted and received at Pro-Competencia on the occasion of the First Call for Public Consultation for the discussion of the draft Implementing Regulations of Law No. 42-08.

Pro-Competencia lacks the legal powers to compel economic operators – at any time, without having ordered an investigation according to the provisions of Law No. 42/08- to provide the information designated in the aforementioned Article 3 as proposed in the Second Call for Public Consultation, much less to fine them for non compliance.

Furthermore, it is an incorrect application of the regulatory reference technique, to claim such power as deriving from Article 3 of Law No. 42-08, which does no set out optional standards for the Commission, but relates to the scope of the Law

This is the most important and delicate observation that we would like to stress, with due respect, to the Honorable Council. The Commission should not attempt to include through an implementing regulation, on this occasion through an inappropriate referral to the provisions of Article 3 of Law No. 42-08, powers not so broadly provided for in the Law.

Pro-Competencia should strive to remain within the law and avoid their future administrative decisions to be rendered null and void, and declared unconstitutional.

We insist that the proposed regulatory measure is not necessary, since Law No. 42-08, provides the institution – with the help of the public prosecution office- with important procedural opportunities to investigate any economic operator, provided that there is prima facie evidence of the commission of anti-competitive practices.

Article 5 . - Abuse of Dominant Position

"SUGGESTED TEXT: Abuse of a dominant position: Pursuant to the general clause in Article 6 of the Law the abuse of a dominant position shall be deemed, in addition to the provisions set forth therein and without limitation, those made by economic operators with a dominant position in a relevant market, such as: predatory pricing and artificially increasing costs to their competitors. The complainant must present evidence that (i) the alleged conduct has anti-competitive effects, and (ii) an operator or operators have the individual or collective capacity to create barriers." (Emphasis added.)

The creation of new types of anti-competitive behaviors through regulation, whether it is different forms of acts of abuse of a dominant position, as the emphasized provisions, constitutes a serious violation of the Principle of typicity, for the reasons stated in our statement letter of August 21, 2012. We recommend its removal.

Article 6. - Unfair Competition against final consumers.

SUGGESTED TEXT: Article 6 -Unfair Competition against final consumers: In accordance with the provisions of Article 3 of both this Law and the Law on Protection of Consumer or User Rights, No. 358-05, the investigation of acts of unfair competition committed in detriment of the final consumer shall be the exclusive jurisdiction of the National Institute for the Protection of consumer Rights, "ProConsumidor ".

This proposal wrongly interprets the provisions of Law No. 42-08, as well as Law No. 358-05 and therefore must be eliminated. Acts of unfair competition under Chapter III of Law No. 42-08, affecting final consumers, must be addressed by Pro-Competencia whenever consumers resort to this agency to submit their claim, pursuant to the provisions of Article 12 of Law No. 42-08.

Pro-Competencia cannot forsake an attribution provided for by law through a regulation.

In addition, the acts of unfair competition, established in the Law 42-08 do not coincide with those contained in the Consumer Protection Law. However, both institutions could, in order to provide the expeditious administration of justice that final consumers deserve, agree especially common in those matters, there is coordination between the two institutions.

Article 7. - Unfair Competition linked to industrial property rights.

Article 7. - Unfair Competition Linked to Industrial Property Rights: The determination of the existence of acts of unfair competition from the registry of industrial property rights, shall be the responsibility of the National Office for Industrial Property (ONAPI, for its acronym in Spanish) in relation to acts committed, the competent judicial authority in accordance with Article 183 of Law 20-00 on Industrial Property.

The proposal needs to be better defined in order to avoid confusion regarding the validity of Article 12 of the Competition Law, which sets forth certain prerogatives upon Pro-Competencia, which can not be modified by an implementing regulation.

Based on the transitional provision of Article 69 of Law No. 42-08, both institutions, Pro-Competencia and ONAPI, should set forth a joint regulation, explaining the administrative procedure to be followed, taking into consideration the subject matter of both laws, the Industrial Property Law as well as the Competition Law, and the principles established in the new Law No. 107-13.

Furthermore, in our opinion, the issue deserves a special regulation, instead of just an article in draft proposal. We propose that this draft implementing regulation simply set forth the need to further regulate on the matter.

Article 11. - Review of actions.

SUGGESTED TEXT: "Art 11. - Review of state aid and legal state acts: For the purposes of Articles 14 and 15 of the Law, the Commission may review, submit reports and queries regarding legal state acts and state aid that have as purpose or effect to restrict and hamper competition, as well as to address to the public administration entities proposals for the amendment or repeal of restrictions on the free and effective competition resulting from their actions or for the maintenance or restoration of competition in the market.

As Pro-Competencia might know, and taking into consideration the new principles and rules contained in Law No. 107-13, all powers – even facultative ones as provided by Article 14 of the Law, excluding those set forth in Article 15 – need to be duly motivated.

The unjustified delay or rejection of requests for review of acts, pursuant to the aforementioned articles of the Law, could result in denial of administrative justice.

For these reasons, and given the supreme importance of the issue of State Aid under a competition law regime, as developed in other jurisdictions, and the timely enactment of Law No. 107-13, we recommend developing an administrative procedure (non-punitive, of course) such as the one elaborated by the European Union, to tend to this mandate established by law.

Article 13. Powers of the Commission

PROPOSED TEXT: d) Request in writing to all natural or legal persons, whether public or private, the data, information, documentation and relevant collaboration, noting the deadline for submission and granting its confidential treatment at the request of an interested party.

Pro-Competencia, nor any public administrative body created by law, can ascribe to themselves powers. If the proposed Article 13 of the Regulations were to be limited to merely repeating the same powers as set out in the legislation that created Pro-Competencia and hence sets the limit on their actions, it would worry us beyond an issue of redundance.

However, we regret to note that the literal d) proposed, is a dangerous alteration of Article 31h) of Law No. 42-08, which expressly and unequivocally refers to the scenario under Article 46, to provide the Commission powers to request information from economic operators.

Pro-Competencia must hasten to remove this provision as it violates the constitutional provisions governing the acts of public administration, through the principle of legality.

Article 14. Coordination with other regulators. Literal c)

PROPOSED TEXT: "c) The market regulator receiver reasoned opinion of the Commission shall, within thirty (30) working days required to implement the recommendations by the Commission, if any, report in writing recommendations not adopted and what are the grounds for not doing so.”

The spirit and text of Article 20 of the Law, is to create a mechanism for mandatory consultation of the sector specific regulatory body with Pro-Competencia. However, once Pro-Competencia has submitted its motivated opinion, there is no obligation to comply on behalf of the sector specific regulatory body.

It seems, perhaps, that the intention of Pro-Competencia is to propose that the legal act to be dictated by the sector regulator, whether it is to resolve a conflict or to draft regulations concerning the subject of competition law, includes the opinion given by Pro-Competencia.

Failure to accept the recommendations therein, the sector specific regulatory body should motivate such decision. We suggest a rewording of the text proposed in this regard.

Finally, we reiterate our suggestion that, for the sake of allowing a greater consulting exchange, to hold at least one public hearing or technical meetings with members of the Commission and participants in the process. Also, we like to stress the importance that the resulting decision include, among their revised documents and background, all documents produced by Pro-Competencia and submitted by stakeholders, for proper motivation.