1. Introduction
Competition Law in El Salvador has been subject to 3 amendments since its entry into force in
2006. The last amendments were approved in November 2021. The main purposes of the
amendments were to adapt the Competition Law to the Administrative Procedures Law.
Among the most relevant modifications were the expansion of the Superintendency's faculties
and the inclusion of the use of technological means in the procedures handled by the authority.
TA to Support the Implementation of the Trade Pillar of the EU-CA Association Agreement
Legal review of the Central American Competition framework
14
This demonstrates an effort of the authority to update and periodically review the regulations
considering current economic circumstances to protect the correct functioning of the market.
In El Salvador, the current legal framework for competition is mainly comprised of the
Competition Law and its regulations,
the Central American Competition Regulations. However,
the Constitution contains specific reference to prohibition of monopolies and exceptions
thereof, as will be detailed below. At the same time, several regulations include in their articles,
provisions related to competition rules such as the Organic Law of Civil Aviation, General
Electricity Law, Telecommunications Law, General Maritime Port Law, Public Administration
Procurement and Contracting Law, Special Law on Public-Private Partnerships, Law to Facilitate
Financial Inclusion and the Law for the Promotion, Code of Commerce and Protection and
Development of Micro and Small Enterprises.
El Salvador ratified the Association Agreement between Central America and the European
Union on July 13, 2013, entering into force on October 1, 2013. Subsequently, on December
10, 2020, El Salvador signed the Central American Competition Regulation, which entered into
force in the country as of March 10, 2021, without reservations.
2. Competition Authorities (article 279 of the EUCAAA)
The competition authority in El Salvador is the Superintendency of Competition (SC).
According to Article 3 of the Competition Law, the Superintendency is a public law institution
which has its own legal personality, as well as administrative and budgetary autonomy. The
highest authority of the Superintendence is the Board of Directors, which is formed by the
Superintendent and two Directors, who are appointed by the President of the Republic (Art. 6
of the Competition Law).
The institution has its own budget which for 2022 is of $2,661,308.00
US dollars. 17
The Superintendency of Competition exercises its faculties through the Superintendent of
Competition and its Board of Directors. Among the faculties granted to it by the Competition
Law are the following: (i) review any circumstances in which competition in the market may be
affected, as well as handle any claims or investigations regarding the infringements to the
competition law; (ii) request from any economic agent, national or foreign authority any
necessary collaboration; and establish coordination mechanisms with other regulatory entities,
(iii) authorize, reject, or condition requests for economic concentration.. Furthermore, several
laws grant powers to the Superintendency of Competition, to intervene in specific markets
such as the aviation and electricity markets.
The Superintendency of Competition of El Salvador has signed memorandums of
understanding with institutions in other countries among them are the following: Peru, Mexico,
Panama, Costa Rica (SUTEL), and Ecuador.
In relation to the agreements that the Superintendency has signed with other entities, it has
included within the provisions of the signed agreements, rules related to the exchange of nonconfidential information. For example, the agreement between El Salvador and Costa Rica,
regulates that the parties, to the extent compatible with their legislation, must provide to the
other party any significant information on anticompetitive practices that may be relevant or
17 Data taken from the transparency portal of the Superintendence of Competition available at
https://www.transparencia.gob.sv/institutions/sc/documents/presupuesto-actual
TA to Support the Implementation of the Trade Pillar of the EU-CA Association Agreement
Legal review of the Central American Competition framework
15
justify the enforcement measures of the competition law of the other party. Similar provisions
are found in the agreement with Panama and the other agreements signed between countries
of the region. To that effect the Superintendency has sought to establish mechanisms that
enable and facilitate the exchange of information between the parties according to art. 281 of
the Central America-European Union Association Agreement.
3. Anticompetitive Conducts and Concentrations (article 279 of the EUCAAA)
Agreements/Cartels: These types of conducts are defined as “agreements between
competitors”. Article 25 of the Competition Law prohibits the 4 types of agreements seen as
Hardcore Cartels in international doctrine: price fixing, restrict output, submit collusive
tenders, and divide markets. The law also offers a leniency program. Fines applicable to
conducts such as these could be set for up to USD$18,250,000.00, depending on the severity
of the infringement. On July 5, 2018, the Superintendency of Competition sanctioned the
companies Constructora Gaitán, S. A. de C. V., and Perforaciones Vivas, S. A. de C. V. for having
fixed prices in a public bidding process conducted by the Ministry of Justice and Public
Security. On May 8, 2019, the Superintendence of Competition fined Droguería Americana,
S.A. de C.V. and C. Imberton, S.A. de C.V. 18 for agreeing on gross wholesale distribution prices
of the drugs Cataflam, Diovan and Lamisil, the amount of the fine was USD $171, 000.00 for
Droguería Americana and $228,000.00 for C. Imberton. The proceeding was instituted ex
officio, based on the indications found in previous actions carried out by the Superintendency,
which were initiated based on information submitted by the National Directorate of Medicines
related to the price behavior of certain economic agents participating in the wholesale
distribution of certain medicines.
Abuse of Market Power: These conducts are described as “anticompetitive practices
between non-competitors”. The Law describes a series of conducts, but it is only seen as a
series of examples of these types of conducts, and therefore allows for other conducts to be
considered as anticompetitive. Among the conducts listed by the law, it is possible to find; a)
Creation of obstacles to the entry or to the expansion of competitors. b) Actions with the
purpose of limiting, preventing or displacing competition c) Lowering prices below costs to
eliminate or avoid competition.; d) The sale or provision of services in a certain part of the
territory at a price different from that offered in the rest of the country, with the objective of
affecting competition in that geographical sector. The maximum fine is the same for cartels: a
maximum of USD$18,250,000.00, depending on the severity of the infringement. On
September 18, 2019, the company Digicel, S.A. de C.V. was sanctioned for having committed
the anticompetitive practice of abuse of dominant position in the market of national and
international call termination, imposing a fine of USD $375,000.00. 19 The case was initiated by
the complaint of the company TVC Network, S.A. de C.V., who informed about Digicel's refusal
to allow interconnection to its network for international traffic with the purpose of terminating
national and international calls in Digicel's network, despite the fact that TVC complied with
the indispensable requirements to obtain the interconnection in accordance with the
Telecommunications Law and its regulations.
Digicel based its decision on the fact that the
negotiation for national and international traffic could not be done in parallel, however, it was
determined in the process that Digicel incurred in an anticompetitive practice for having
18 Board of Directors of the Superintendence of Competition. Resolution of May 8, 2019 in the process of reference
SC-020-O/PI/R-2017. Retrieved from SC-020-O/PI/R-2017 - ResoluciónSC - Sitio Oficial SC 19 Board of Directors of the Superintendence of Competition. Resolution of September 18, 2019 in the process of
reference SC-036-D/PI/R-2017. Retrieved from SC-036-D/PI/R-2017 - ResoluciónSC - Sitio Oficial SC
TA to Support the Implementation of the Trade Pillar of the EU-CA Association Agreement
Legal review of the Central American Competition framework
16
hindered the entry of new competitors or the expansion of the existing ones in the market of
wholesale international call termination services. In both cases there is no record of a judicial
appeal of the resolutions.
0 Comments