sábado, 13 de junio de 2015

Interview with Alejandro Faya of COFECE on on Promotion of Competition in Mexico and our article "ADVOCACY OR PROMOTION OF COMPETITION Comparative analysis of the powers of COFECE and PRO - COMPETENCIA."


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

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