N O B
O A P A
G Á N
A B O G A D O S
ACTUALIDAD REGULATORIA
BOLETIN INFORMATIVO
September 19th, 2013, Sto. Dgo, D.R., Year V,
Volume VI
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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.
COMMENTS AND OBSERVATIONS.
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.
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