Sectoral Regulation of Public Services and Competition

18 de abril 2012, Sto. Dgo., R.D., Año III, volumen XXXXIX

Regulatory Briefing. Newsletter.

By: A. Noboa anoboa@npa.com.do

In the Dominican Republic various regulatory instruments impose requirements to companies and users of public services: telecommunications, energy and financial services providers. Regardless of the nature and market relationship, such laws enact the general interest of the State on these service activities, as well as others carried out by private or governmental, mining, water supply or transportation, companies.

The general and commonly admitted purpose of competition policy, according to N. Muhammad, is to minimize the economic inefficiencies created by anticompetitive behavior. In DR, this policy consists not only of Law No. 42-08, but includes also the policy framework consisting of those other sectoral laws, gathered under the same scope and reach, pursuant to the Principle of Uniformity of the Legal System, contained in its Article 2.

However, while the purpose of competition law and policy is to regulate non-competitive behavior by companies, sectoral regulation seeks to limit government intervention in markets to a minimum of technical, legal and economic provisions. The Dominican legislative model prioritizes solutions aimed at sustaining said purpose, general or ulterior (public interest), to sectoral institutions, and, supplementarily, to the institutions of Law No. 42-08.

The role of PRO-COMPETENCIA (the Dominican antitrust agency), regarding sectoral regulation, and according to the relationship mode, created by the Dominican legislator, is supplemental although mandatory, in two specific cases: 1. Regulation to promote competition. 2. Settlement of disciplinary proceedings regarding competition defense.

There is a method of dividing the works where, the elaboration of draft standards or settlement of disciplinary proceedings, rests with the relevant sectoral agencies (INDOTEL, CNE, SB, etc.), and is supported with the diligent participation of PRO-COMPETENCIA.

Consequently, we are not dealing with a model of complete independence, since the responsibility for decisions rely on the sectoral agencies, empirically better trained for the task, while PRO-COMPETENCIA remains with a temporary window of opportunity to issue non-binding advisory opinions.

However, in order to implement a strictly social or technical measure, there is a risk that sectoral agencies, unaware of certain protections granted to competition, issue acts, in principle prohibited by Law No. 42-08, invoking their internal regime. In that scenario, PRO-COMPETENCIA must safeguard any reduction in the scope of application of free competition that may not be economically reasonable.

Angélica Noboa.