By: Angelica Noboa Pagán.
Translation: Yeli Martínez.
Since 2004, the Regulatory
Briefing newsletter (Actualidad Regulatoria, or AR) has been circulating
offering brief contributions on issues of Economic Public Law, especially on Competition
Defense, a legal and economic subject of our great interest.
Contributing to the cultural
diffusion of the new law which sets basic elements of the social and democratic
state governed by the rule of law in the area of market regulation, is the
essential mission of the newsletter.
In this task, the publication
went from fliers to blog, physical circulation to distribution through emails
lists; to finally having its own accounts in social networks such as Facebook
and Twitter, consolidating its autonomous and free status.
With this issue, AR is re-launched
using a combination of multimedia, including written and audiovisual material,
to keep up with the new social communication trends. Posts on the blog are now
accompanied by short videos, which will also be uploaded on our YouTube
channel.
Also, as from this issue, is
produced from the Mexican capital. Our sojourn in this admired country, "The
Defining Brother"[1],
at a time when a rethinking of the Mexican Constitution of 2014, and new and
more effective guarantees for the fundamental right to free competition arise,
through a set of substantive and procedural reforms, is a happy fortune that we
will certainly take advantage of.
In 2015, we are greeted by a
Mexico where various centers for debate and think tanks in Mexico City,
Monterrey and other cities, have been debating constantly in public forums, in
the most exquisite intellectual and critical level, the correct implementation
of their competition policy and the role of this defense system vis-à-vis the
growth and development of all Mexicans.
Competition Law is an important
sources of wealth for society, which remains unexplored in countries like the
Dominican Republic. Furthermore, it’s a basic dimension of economic democracy
which, in countries such as the Dominican Republic, requires long-overdue
attention, with appropriate public, legal and administrative policies and the
corresponding effective remedies. It is, in short, an instrument of human
development.
A decade ago, when AR began its
still modest circulation, the Dominican business culture and collective
behavior of citizens regarding their acts of consumption were less aware of
these possibilities for growth.
Nevertheless, through different
factors and institutional achievements, which we could be considered petty if
we wouldn’t recognize them, such as the integration of Competition Law
constitutional block and the enactment of an organic law for their protection
and guarantees (General Law for the Defense of Competition, No. 42-08), has
raised the level of understanding of the majority on the collective benefits of
this system market system.
However, discouragement abounds
among the members of the Dominican professional class - where we have formidable legal experts, economists and policy makers-
in relation to competition law, which is considered inexistent or unenforceable
owing to a profound institutional crisis brought about by a reigning impunity.
Without ignoring their valid
points of view, we call upon our fellow Dominican colleagues to rethink their
role in promoting a culture of competition, even though the implementation of
its procedural law has been delayed for seven years.
Although it has taken many years
to be able to fully implement the General Law for the Defense of Competition
No. 42-08 of the Dominican Republic, while we await for the National
Competition Defense Commission (Pro-Competencia) to be able to pursue
anticompetitive practices, this “wait-and-see” phase should not be lost on the
public debate.
By contrast, while the political
will that impedes its progress is aligned to the general will, which will always
favor any initiative to provide greater benefits and welfare for our country
and population, there are a number of issues related to the implementation of
Law No. 42-08, which should already occupy a leading place in both the economic
and institutional agendas.
Public debate is called upon to
support the Pro-Competencia, who is ready to start working, by publicly
denouncing allegations of acts sanctioned by Law No. 42-08, in order to advance
its expected full empowerment.
The Dominican Republic still
faces a challenge already achieved by most of its neighboring countries. The
demand for policies, and prosecution of violations of antitrust laws in the
rest of Latin America, are headline news, because of a diligent professional
class. In Mexico, as well as El Salvador, Peru or Colombia, this professional
class is responsible for educating ordinary citizens about antitrust’s high
public interest.
As of this edition, AR is headed
to a new stage, together with our firm. From our current posting, we believe it
is a timely moment to carry out benchmarking studies on the regulatory agendas
of both countries, the Dominican Republic and the United States of Mexico
(Mexico), our current place of residence.
In a happy coincidence, Mexico is
precisely at the place we aspire the Dominican Republic will achieve, that is in
full implementation of its Federal Law of Economic Competition, published in
the Official Journal of the Federation, dated May 23, 2014.
This law constitutes a reform to
the bill enacted in 1992, and as enshrined in its Article 1, is "...
regulatory (or organic) of Art. 28 of the Political Constitution of the United
Mexican States, on free competition, economic competition, monopolies,
anti-competitive practices and mergers. It is a law of public order and social
interest, applicable to all areas of economic activity, and generally observed
throughout the Republic. [2]
Except the obvious differences
between the two countries, such as the size of their economies, population
density, available natural resources, as well as for the idiosyncrasies of the two
different legal regimes, we find abundant wealth in the benchmarking exercise.
Competition Law is not a matter
of private law. It is a matter of public law, intimately linked to obtaining
means (economic) necessary for the progress of people or citizens; and also it
is a corollary of equal treatment before the law, in the relationship between
competitors and of those directly associated with them. Both issues are of the
highest constitutional rank and public economic interest.
A few days ago, the Dominican
press reported on an exchange between public official Michelle Cohen and the
Senate, on the draft Law of Mobility, Land Transportation and Traffic, which would
regulate transport in the Dominican Republic. According to the press release, Mrs.
Cohen was received by Congressman Tobias Crespo, who shared with her as President
of the Pro-Competencia, the progress of that bill, currently under study by the
Commission of Public Works and Road Communication of the House of Representatives.
The note also added that the Commission of the House of Representatives and the
competition regulator will maintain a permanent coordination during the
legislative process. [3]
This is an excellent initiative
of both authorities, which we congratulate. It provides a starting point for a
benchmark analysis between the powers of competition advocacy of the Federal
Competition Commission (COFECE) of Mexico, and those which Law No. 42-08
attributes in this regard, to the homologous Pro-Competencia.
The COFECE already brings
considerable experience in the field of competition advocacy. It is
appropriate, therefore, to gain knowledge of its expertise as well as its administrative
dynamics to maintain a systematic and standardized control of the bills,
administrative acts or state contracts, before and even after their completion,
that can reverse the effects of free and fair competition.
Competition Advocacy. Comparative analysis (MX / RD).
My first impressions of the
progress of competition defense in Mexico are owed to the kind invitation to
participate, as a guest, in the first professional level educational program
organized by the Federal Competition Commission (COFECE) in the Autonomous
Institute of Technology of Mexico (ITAM), a remarkable "think tank"
and academic studies center.
The program is called "Economic
Competition" and is intended for students (or professional) of Law,
Economics or Political Science. It aims:
"To equip students with knowledge on competition policy in Mexico
with the practical approach, from a legal and economic perspective.
Additionally, seeks to provide a conceptual domain of business conducts that
may damage the process of free competition, as well as analysis and procedure
of protecting competition by the COFECE"
These theoretical and practical
classes have a resemblance to the dynamics and relevance of those courses in
Business Law organized by Dr. Luis Heredia Bonetti (RIP) and CEDEMPRESA, where
we were called upon to re-learn "new law", a generation of lawyers
who had to start from a positivist and nineteenth- century legal education to a
modern, developmental and inclusive career assessment and professional practice;
a "living law" as our beloved and well-remembered Dr. Heredia Bonetti,
used to call it.
In this case, the classes are
taught by the highest officials of the COFECE. Dr. Alejandro Faya, Chief of the
Planning, Liaison and International Affairs Unit of the COFECE, was in charge
of a brilliant exposition on the Promotion of Culture of Competition in Mexico.
Under chapters XII, XIII, XIV and
XV of Article 12 of the Federal Law of Economic Competition of Mexico, the
COFECE has the power to issue opinions when deemed appropriate, or at the
request of the Federal Government, directly or through the Secretariat, or
petition, or the Houses of Congress, as appropriate, regarding:
1. Programs or policies held by
public authorities, when they can have adverse effects to the process of free
competition and antitrust in accordance with applicable laws.
2. Proposed draft provisions,
rules, agreements, circulars and other general administrative acts intended to
be issued by public authorities, when they may have adverse effects to the
process of free competition and antitrust in accordance with applicable laws.
3. On legal initiatives and proposed
draft regulations and decrees with regard to aspects of free competition and
antitrust.
4. With respect to laws,
regulations, agreements, circulars and administrative acts of a general nature
on free competition and antitrust.
The opinions of the COFECE, in
those cases, have no binding effect, nevertheless they are made public, as mandated
by the Law.
Meanwhile the Dominican Law
provides similar powers to the Pro-Competencia. Chapter IV on Promotion of a Competition
Culture, establishes various administrative tasks, to remove barriers to
competition originating from the state.
Article 13 establishes tasks to
simplify bureaucratic procedures that hinder free enterprise and competition,
including regulatory powers. According to Article 14, provides that a public
report may be addressed to the appropriate authority, suggesting the adoption
of corrective measures on the possible anti-competitive effects, in laws,
regulations, ordinances, regulations, resolutions and other legal acts issued by
public powers, whose purpose and effect, immediate or otherwise, is to arbitrarily
limit or undermine free enterprise, hindering competition.
Finally, Article 15 provides that
the State shall not adopt or maintain, for public companies or those to which it
accords delegations in any contractual form, any measure that might
unreasonably create barriers of entry to the market, or creates the possibility
of competing unfairly in the market.
In this regard, the
Pro-Competencia shall examine the effects on the terms of competition in subsidies,
state grants or incentives granted to public or private companies, out of
public resources, for which it will issue a report encouraging the removal or
modification of such subsidies, and the adoption of other measures for the
restoration of competition.
In the Dominican legislation,
Competition Advocacy is a power of the Board of Directors. According to the subparagraph
n, Article 31, provides that it is
for that body to perform activities of competition advocacy in with regards to
the functions performed by state bodies and agencies, through the issuance of
recommendation reports established in Articles 14 and 15 of this law.
Furthermore, it shall carry out competition
advocacy actions during the processes of drafting of laws and other regulatory
instruments of economic and commercial nature, as well as in other relevant
areas, whose effects may affect competition.
According to the findings by Dr.
Faya, the COFECE enforces the mandate of Law on competition advocacy through 4
channels of action:
1. Identifying the restrictions
that the policy would have on competition.
2. Developing alternatives to
minimize these restrictions.
3. Comparing the different policy
options.
4. Recommending similar
alternatives to the proposed objectives and with less impact on competition.
To this end, the COFECE performs
two types of analysis, which could also be developed by the Pro-Competencia:
1. Analysis ex-ante, i.e.
regulatory review before its entry into force, similar to the task currently
carried out by the Pro-Competencia and the House of Representatives, to analyze
the Transport Act; or,
2. Analysis ex-post, such as
market research, in which the behavior of competition is taken into account and
examined, in order to determine whether there is actually a competition
problem, to identify the source and solution.
3. Finally, sector reviews are
done to systematically examine and identify potential regulatory barriers.
Regulatory bodies have limited resources,
even in the case of the COFECE. Therefore, following international
recommendations to determine priority sectors of the economy in which the body
will direct its advocacy work, 6 parameters are taken into account:
1. Economic Growth. (Contribution
to the GDP).
2. Widespread consumption.
(Increased demand).
3. Cross Impact.
4. Households with lower incomes.
5. Regulated sectors.
6. Risks of monopolistic
policies.
In the
audiovisual podcast accompanying this post, Lic. Alejandro Faya grant us an
interview to discuss the experience of the COFECE, in its competition advocacy powers
in several specific cases.
[1] Name under which the
Dominican humanist, Pedro Henríquez Ureña baptized Mexico, in its cultural
relations with the rest of Latin America.
[2] The Dominican Law No. 42-08,
is also of public order nature (Art. 1), it applies to and must be observed by all
economic agents, whether natural or legal persons, carrying out activities in the
country. (Art. 3).
[3] “Congressman speaks on transport law.” Diario Libre Digital
http://www.diariolibre.com/noticias/2015/02/26/i1031571_legislador-habla-sobre-ley-transporte.html
