Nine years after the entry into force of the General Law 42-08 on the Defense of Competition and 18 after its promulgation, the Dominican Republic has made progress in sanctioning practices that limit free competition such as collusionwith six cases in progress. However, the rule It limits investigations to one year before they expire, which could represent a burden on the authorities’ ability to prevent and stop these behaviors.
The collusion is defined as a illicit agreement between companies or actors to distort market conditions and take advantage of it.
The investigations presented by the National Commission for the Defense of Competition (ProCompetencia) link to 19 economic agentsthe most recent case being that of three individuals who participated in a tender from the National Student Welfare Institute (Inabie).
The president of ProCompetencia María Elena Vásquez Taverasensures that the collusion It is one of the topics to which the institution has given prioritydue to the damage they generate in the market and to the detriment of the State Dominican.
The public purchases They represent between 15 and 20% of the gross domestic product (GDP) of the region, which for the Dominican Republic is not an exception.
“The collusion is one of the anti-competitive practices more harmful, because it affects precisely the most vulnerable,” the official noted.
“When you buy in processes in which competition has been manipulated, what happens is that the State You end up buying more expensively and spending more to acquire goods and services. This means that those resources that could have been invested to build schools, to buy medicines for hospitals… have to be allocated to public purchase“he added.
For this reason, the extension of the deadlines to investigate these and other anti-competitive practices is one of the main points that the institution has proposed in a reform project to law 42-08, which will now be delivered to the Legal Consultancy for analysis.
He stated that, although the Law 107-13 on Administrative Procedure establishes criteria that have allowed the board of directors of ProCompetencia make use of this law to make the deadlines, the anti-competitive practices They are serious behaviors that require a “prudent and reasonable” time determined by the rule that governs the entity.
ProCompetencia has established a strategic collaboration with the general directorates of Public Procurement and Contracting and of Ethics and Government Integrity, with the objective of training public officials who identify collusion practices. To this end, more than 800 public officials have been trained, including ethics officers and members of the purchasing and contracting committees. In addition, a methodological guide on collusion has been prepared, so that public employees know which institution to contact – whether Government Ethics and Integrity or ProCompetencia –, depending on the nature of the problem. Compras y Contrataciones also shares its database with ProCompetencia, which allows analyzing the history of economic agents and detecting collusion patterns, such as the rotation of companies’ participation in the purchasing and contracting processes, or withdrawals. surprises of those calls.
unfair competition
The unfair competition and the monopolytwo other practices also harmful to the freedom of business, continue to have a limited inspection in the country, which is why they are also contemplated in the bill.
Currently, if a natural or legal person incurs acts of unfair competition, ProCompetencia can only order “the cessation of the conduct” and offer technical advice to other public institutions linked to the investigation, he explained Vasquez Taveras.
The rule lacks direct sanctions for economic agents, companies or individuals repeat offenders in these practices, something “crying out for the various productive sectors“, according to the official.
It recognizes that this limits the influence of the institution in cases such as, for example, anti-competitive practices pointed out by sectors such as the industrial, hardware and commercial committed by stores and businesses with Chinese capital in the country, in which ProCompetencia offers technical support within the inter-institutional table that deals with this issue, coordinated by the Ministry of Finance.
In the case of already having the proposed modifications in the law, “ProCompetencia I could go directly to carry out the investigations; There would be an obligation on the part of public institutions to deliver all the information and it could, directly, start your investigation and sanction those merchants“, indicated Vásquez Taveras.
Even if the company were to dissolve –as the institution claims to have observed in other cases–, ProCompetencia would have the power to sanction the natural person recidivist in that action.
Monopolies in the country
Although the Constitution prohibits monopolies except for those in favor of Statethe Dominican Republic It is the only country in Latin America and the Caribbean that lacks a mechanism for concentration controlone of the issues that is raised as “number one” in the modification to the law.
“The objective of concentration control is, precisely, to avoid large concentrations of markets, which occur mergers and acquisitions between companies without competition authorityas happens today, can express any opinion, without any filter,” said the president of ProCompetencia.
He highlighted that the institution does have the power to sanction a natural or legal person if it is proven that they commit abuse of dominant position within the market, a conduct typified in article 6 of the Law 43-08.
They include aspects such as:
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More dissuasive fines: Today, it is punished with fines ranging from 30 to 3,000 minimum wages of the sector in which the sanctioned natural or legal person works. Instead, a percentage of the previous year’s turnover is proposed to make the fine more dissuasive.
Leniency programs: The incorporation of leniency programs is proposed, which have proven to be effective in prosecuting collusive conduct.
Information delivery: It is also established that public officials provide information to ProCompetencia on a mandatory basis in cases where it is necessary. Those public servants who do not cooperate with the entity could be subject to sanctions and financial liability.
National Competition Policy
One of the advances that the country has made in terms of free competition is the establishment of a National Competition Policya regulation that places the country as regional referenceto which is added that the Dominican Republic has recently assumed the pro tempore presidency of the Central American Network of Competition Authorities (Recac).
Established in the Decree 196-25the National Competition Policy seeks that free competition is a transversal public policy and focused on decision making strategic sectors –such as agroindustrial, energy, transportation and telecommunications–, among others, in addition to involving 34 state institutions.
