Defending your freedom to compete
Merry Christmas &
Happy New Year
Edition Nº 14
Of Our Contributors 2 December, 2017
The National Directorate of Free Competition in 2017
Case against the Laundries and Lavamatics of Chorrera
In Numbers 7
Statistics from January to December 2017
of the Unit of Analysis of cost increase
BOLETÍN de Libre Competencia PANAMÁ By: Harmodio A. Cedeño Espinosa
The National Directorate of Free Competition in 2017
National Director of Free Competition
At the end of 2017 it is necessary to take stock of our functions, activities,
executories, research, advocacy, in short, close the year with a review of the
management in 2017 versus the outlook for 2018.
In that sense, the year 2017 led to a series of investigations in various
markets, such as telecommunications, hydrocarbons, medicines, among
others, as well as in public tenders, which led to the opening of 15 new cases
of administrative investigation.
In terms of mergers, ex officio checks were carried out in sectors such as
hydrocarbons and beers and, in addition, a favorable concept was granted to
several commercial transactions such as insurance, airlines and soft drinks.
Regarding the functions of competition advocacy, several focused on public hiring events, in which, for example, it was
requested to modify bidding documents so that the conditions of participation were equal for all economic agents, without no
type of barriers, allowing a greater concurrence of bidders; In the same way, some market studies were carried out, we
participated in Law discussion projects and talks were given to both the university sector and legal professionals.
The feasibility consultation tool was also used, in order to know if a certain practice that is attempted to be carried out is
anti-competitive or not, which was carried out in the sector of authorized public accountants; Also, free competition audits
were carried out, which are those in which the Authority, without prior notice or judicial disposition, can verify the behavior of
economic agents, which occurred in the flour sector.
In other functions of the National Directorate of Free Competition, approximately 250 validations of increases in the price of
new homes were verified and about 300 financial analyzes were carried out in cases involving banks, furniture stores,
financial institutions and cooperatives in compliance with the protection regulations to the consumer and defense of
Regarding price information and verification, a total of 86 establishments were verified among supermarkets, mini supers and
grocery stores in order to offer the consumer price information on the different goods and services essential for consumption,
as well as surveys of prices to private schools, credit cards, fuels, minerals, among other markets.
In 2018 we expect the imposition of fines, in the brewing sector and the laundries, for example, and we hope to obtain
judgments from specialized courts in matters of free competition.
As our slogan: "Defending Your Freedom to Compete", we close a successful year 2017, sure that 2018 will come full of new
lessons and challenges for the employees of this Directorate and for the entire ACODECO family.
2 OF OUR CONTRIBUTORS
Case against the Laundries and Panama, confirms the Judgment No. 109-15 of December
Lavamatics of Chorrera 22, 2015 of the Ninth Civil Circuit Court, by which it is PANAMÁ
declared that the Economic Group formed by Cervecería BOLETÍN de Libre Competencia
Nacional, S.A. and its Subsidiaries Distribuidora
Comercial, S.A., Refrescos Nacionales, S.A. and
Financiera Pasadena, S.A. (merged with Refrescos
Nacionales, SA surviving the latter), incurred in relative
monopolistic practices, according to the provisions of
articles 5 and 14 numeral 4, both of Law 29 of 1996, now
articles 7 and 16 numeral 4 of the Law 45 of October 31,
It confirms what is stated in the judgment under appeal,
The Third Superior Court of Justice, through the Judgment where access to the claims of ACODECO, stated that the
of November 8, 2017, confirms the Judgment No. 60 of violations of the rules of competition originated in response
August 21, 2014 of the First Court of Civil Circuit of the to the economic group mentioned above, in the exercise of
Third Judicial Circuit of Panama, by which the commission its substantial market power, raised barriers to entry in the
was declared absolute monopolistic practices by a group of channel of distribution of the product called beer, and/or
Laundries and Lavamatics located in the sector of prevented the permanence and entry of their only direct
Chorrera. competitor, as well as other future competitors in this
The total of sixteen (16) Laundries and Lavamatics were
sued by ACODECO when incurring in the commission of It is also declared that the infractions to articles 5 and 14
an absolute monopolistic practice, typified in article 13, numeral 4, both of Law 29 of 1996, now articles 7 and 16
numeral 1 of Law 45 of October 31, 2007. numeral 4 of Law 45 of October 31, 2007, produced their
effects in the market, signing contracts for the supply of
The absolute monopolistic practice declared by the judicial beers conditioned by exclusivity agreements, which were
authorities consisted in the act, combination, arrangement presented in different modalities including the figure of the
or agreement with the purpose of concluding, agreeing and loan, with exclusive clauses regarding the sale of the beer
exchanging information tending to the fixing of the prices of product of the defendant group; monopolistic practices that
laundry service in cold water, hot water and drying of are classified as illegal, therefore prohibited, according to
clothes in the district of Chorrera, restricting in a prohibited the competition legislation in Panama.
and illicit manner the competition in that area and directly
affecting consumers. In accordance with the ruling issued by the Third Superior
Court of Justice, and once it has been enforced, it is up to
In accordance with the ruling issued by the Third Superior ACODECO to impose administrative sanctions for relative
Court of Justice, and once it has been enforced, it is up to monopolistic practices in accordance with the provisions of
ACODECO to impose administrative sanctions for the the law.
commission of absolute monopolistic practices as provided
by Law 45 of 2007.
Case against the companies Cervecería
Nacional, S.A. and its Subsidiaries Distribui-
dora Comercial, S.A., Refrescos Naciona-
les, S.A., and Financiera Pasadena, S.A.
Through the ruling of November 30, 2017, the Third
Superior Court of Justice of the First Judicial District of
BOLETÍN de Libre Competencia PANAMÁ The National Directorate of Free Competition, received complaint filed by the economic agent Obrigado Medical
Imposition Sale of Rice
Group Inc., on the existence of a possible monopolistic
practice relative, made by the National Commission of
National Registry of Bidders (Commission) of the Ministry
through the Coclé Regional Office, information on a
of Health (MINSA) by repeatedly requesting the
possible anti-competitive practice in the sale of rice.
made by the manufacturers, that their company represents
From the information gathered, a possible relative complainant economic agent, to certify by means of a note
the commercial houses of the products that sells.
monopolistic practice was presumed, based on the
supposed imposition of sale of first-grade rice conditioned According to the complainant, such actions by the Ministry
on the sale of special rice by a mill through a memorandum, of Health, go against the rules of free competition.
within said company. This instruction was aimed at
customers (retailers) who buy their products, in this case Once the complaint was received, the corresponding
special rice and first-grade rice. analyzes were carried out, determining, among other
The case was things, that, since it is a public bidding act, the MINSA does
not present itself as an economic bidder subject to an
evaluated in the active activity in the economic activity, but as a buyer,
light of Law No. 45 therefore , is not seen as a direct competitor of the
of 2007, in the complainant.
d e t e r mi ni ng In this sense, it is important to clarify that, since it is an
whether the allegedly monopolistic practice, the norm is clear in
prohibition of establishing that they are considered to be in violation of
relative practices the Law, if the economic agent that exercises it has
(which typifies substantial power in the relevant market, a situation that
Article 16 of the does not it is configured in this case since the MINSA does
Law) is met, not have the status of economic agent that participates as
provided that the an active subject in the economic activity.
economic agent has substantial power individually or
collectively (Article 19), in the relevant market (art.18). For Similarly, it is important to note the fact that the initial
these purposes and according to the available information, complaint is part of the proceedings related to the
it was determined that the reported mill did not have registration of bidders carried out by the Commission,
substantial power in the relevant market, defined as whose governing body is the MINSA, and therefore it
first-grade rice in the city of Penonome, province of Coclé, escapes the competence of ACODECO. In addition, the
since, in the area there are others mills that sell rice to said complainant requests the suspension of the public act
minorities, including mills in the provinces of Veraguas, carried out by the MINSA, an aspect for which ACODECO
Chiriqui and Panama, which compete with it demonstrating has no jurisdiction.
in this way that does not meet the de facto assumption
established by law to determine that we are facing an Therefore, it is concluded that the act denounced does not
unlawful relative conduct. meet the requirements of Law 45 of 2007 for a relative
monopolistic practice to be established, given that the
For the aforementioned aspects, among other analyzes, entity denounced is not an economic agent that participates
we proceeded to recommend the non-opening of the case as an active subject in the activity economic
and the archiving of the investigation file.
Preliminary Investigation on possible
Relative Monopolistic Practice, in the
Supply of Spare Parts for Biomedical
Equipment (Autoclave) of the Public Bid No.
The National Directorate of Free Competition of the
Authority for Consumer Protection and Competition
Defense, (hereinafter, ACODECO), has come to know by
Competition Audit to Tropigas de Panamá, Merger between ASSA Insurance
S.A. and Manantial de Volcán, S.A. Company, S.A. and
GENERAL ASSURANCE, S.P.A. BOLETÍN de Libre Competencia PANAMÁ
On October 23, 2017, the National Directorate for Free
Competition (DNLC) simultaneously conducted a
competition audit of Tropigas de Panamá, S.A. and
Manantial de Volcán, S.A., by means of Resolution No.
DNLC-HCE-033-17 of October 12, 2017 that orders the
realization of the same. On September 8, 2017, ASSA COMPAÑÍA DE SEGUROS,
This is due to the fact that the companies signed an S.A. (hereinafter ASSA), and ASSICURAZIONI
extrajudicial settlement with ACODECO because they were GENERALI, S.P.A. (hereinafter GENERALI), through their
investigated by the DNLC for the alleged commission of an respective legal representatives, submitted a formal
illegal monopolistic practice against AGUA GAS ROBLE, request for prior verification of a Merger so that the
Authority for Consumer Protection and Competition
S.A., DISTRIBUIDORA NUEVO HORIZONTE, S.A., Defense (hereinafter ACODECO), issued a concept on the
MANANTIAL DE VOLCÁN, S.A., and TROPIGAS DE merger through which the assets and liabilities of
PANAMÁ, S.A., for irrationally establishing exclusive GENERALI, in the Republic of Panama, where transfered
advantages in favor of one or more economic agents (tied to ASSA.
sale), conduct defined in numeral 3 of article 16 of Law 45
of October 31, 2007. GENERALI, formalized the transaction in which 100% of its
operations in Panama, are transferred to ASSA Compañía
Result of this research, MANANTIAL DE VOLCÁN, S.A., de Seguros, S.A., a company with a presence in all Central
and TROPIGAS DE PANAMÁ, S.A. (hereinafter THE American countries. It is indicated that this operation aims
GROUP) decide to collaborate with ACODECO and offered to optimize the presence of GENERALI in the world,
commitments and guarantees through an extrajudicial focused mainly on an adequate distribution of resources. 1
settlement for the cessation of the conduct investigated
with respect to the commercialization of tied form of the During the process of analysis and approval or denial of the
25-pound gas tank and Bambito water in part of the Coclé regulatory authorities in Italy and Panama, each company
region, in such a way that distributors AGUA GAS ROBLE, will continue to operate independently until these approvals
SA were excluded from liability and DISTRIBUIDORA are formalized.
NUEVO HORIZONTE, S.A., in order to give an early
termination of the administrative investigation. In Panama, the National Directorate for Free Competition
of ACODECO through Resolution DNLC-HCE-039-17 of
In the extrajudicial settlement, a series of conditions that November 27, 2017 issued a favorable concept on the
had to be fulfilled for a period of time was established, so merger presented.
that the transaction could be perfected. In the fourth clause
of said agreement, paragraph a, it was established that:
"a) THE AUTHORITY is empowered, this is recognized
and accepted by THE GROUP, to perform, without prior
notice and without any type of authorization,
or judicial order, inspections, examinations
and audits in all THE GROUP facilities, for a
period of 24 months, counted as of this
extrajudicial settlement is formally approved
by the Cabinet Council”. 1
In the audit conducted, no information was
identified that would indicate limitations to the
principles of free competition.
1 El Consejo de Gabinete aprobó la transacción extrajudicial el 10 de diciembre de 2015. de-venta-assicurazioni-generali-spa-sucursal-panama
BOLETÍN de Libre Competencia PANAMÁ Technical Teleconference on The International Consumer Protection and Law
ACODECO exhibits at ICPEN Turkey
Settlements to RECAC
Enforcement Network (ICPEN) invited ACODECO as an
exhibitor to the "Best Practices Workshop and
Conference". This event was held from November 13 to 16,
2017 in the city of Antalya, Turkey.
The National Directorate of Free Competition participated
on November 9 of a technical teleconference with Mr. Aarón Alexander, collaborator of the National
homologous authorities belonging to the Central American
Network of National Authorities Responsible for the Issue Directorate of Free Competition, presented the experience
of Competition (RECAC, acronym in Spanish), exposing of Panama in terms of collaborative economy, making
the issue of Settlements in the Competition Law of known the results of ACODECO through a report prepared
Panama, which consists in the investigated economic in August 2016 under the title, "Collaborative Economy in
agent or defendant requests the Authority an agreement Businesses of Transport Networks Supported in Mobile
and offers guarantees and commitments, such as allowing Applications". In addition, the benefits and challenges of
unannounced and judicial order audits of competence, the collaborative economy were announced, as well as the
contribution in favor of the national treasury, viability Law that legalizes the service of these platforms in
consultation, cessation or modification of the conduct and Panama, Executive Decree No. 331 of October 31, 2017,
penalty clause in case of non-compliance. The which regulates the Luxury Transportation Service through
teleconference was held in order to promote the issue in information and communication technologies.
the region and share experiences of this fundamental tool
for the restitution of competition conditions in the market
and also avoids the wearing down of an excessively long
Forensic Practice in the Competition Law competition agencies of the different countries regarding
the development of the forensic practice as well as the PANAMÁ
economic and legal techniques and tools used. In addition, BOLETÍN de Libre Competencia
a workshop of practical cases where the different
techniques and regulations used by the competition
agencies were applied was developed in groups.
Law of Competition and Economic
Development: A single formula for all?
The National Institute for the Defense of Competition and
Protection of Intellectual Property (INDECOPI) of Peru,
through the INDECOPI-COMPAL School developed the
Third Specialized Training Program in Defense of
Competition called Forensic Practice in the Law of the From November 20 to 23, the Superintendency of
Competition from November 13 to 17, 2017, where the Competition of El Salvador, offered the workshop seminar
graduates Grace De Gracia and Gaspar Vásquez of "Competition Law and Economic Law", with the objective of
ACODECO participated. determining the role of the Competition Authorities in
situations outside the traditional economic and legal
The objective of this course was to identify the most framework, such as, the informal economy and economic
important topics within the forensic practice or exhibitor dependence, to strengthen the institutional role of
proceedings in international competition law, as well as to developing economies.
understand and analyze the main economic and legal
research techniques used in forensic practice, as well as This seminar disseminated academic research and
techniques for detecting and testing anti-competitive experiences of competition agencies in linking the
behavior of a unilateral type and abuses of dominant characteristics of developing countries with Competition
position and comparing the tools and techniques used in Law, and in turn, allowed participants to contribute to the
different agencies. design of Competition Policies that contribute to the
processes of competition growth and development.
Among the subjects that were dictated in the course, the
following can be mentioned: Among some of the topics discussed were:
• Characteristics of developing economies and their
• Basic conceptual aspects of the defense of competition. implications for competition.
• Legal and economic research techniques. • The impact of informality on the dynamics of
• Quantitative and qualitative indicators in defense of competition in developing countries.
competition. • Barriers to entry and Latin American Competition
• Relevant market in defense of competition. Law: Why does development matter?
• Dominant position and unilateral anticompetitive • Competition Policy for regulated industries in
practice. developing countries.
• Concept of cartelization and operation of economic • Adaptation of Competition Law to the Brazilian context
concentration. and its contribution to the discussions of the BRICS.
• The Clemency program in Brazil. • Non-economic considerations in the application of
• Agreements of cessation of conduct (TCC) in cases of Competition Law: Public interest in South Africa's
• Interview techniques in cases of collusion and leniency.
• Tools used to discover cases of posters. At the end of each day, among other aspects, work tables
• Illustration through applied practical cases. were held with the objective of collecting inputs for the
definition and application of a competition law adapted for
Among the participants and speakers of the course, it was developing countries.
possible to share the diverse experiences lived in the
BOLETÍN de Libre Competencia PANAMÁ On November 30 and December 1, 2017, ACODECO For the working session of the second plenary session, the
International Workshop on
hypothetical case of the first session was addressed in
relation to hotel reservations through technological
platforms, adding additional information, this generated a
participated in the workshop on Unilateral Conduct of the
scenarios for to carry out the analysis of the same. An
International Competition Network (ICN) organized by the greater debate, especially due to the expansion of
Authority Responsible for Competition and the Italian interactive session was given exploring the different
Market (AGMC acronym in Italian). possibilities of market power in the context of the platform
with the information provided, focusing on the role that
market participation could or could not play.
The third plenary addressed the issue related to the
evaluation of price parity agreements, in response to work
schemes and compliance experiences. For the working
session of this topic, a hypothetical case related to retail
sales platforms was addressed, where an interactive
session was developed in relation to vertical restraints,
evaluating the possible effects of price agreements in the
hypothetical case raised.
The event was developed through plenary sessions and Participations like this allow ACODECO to have elements
multiple work session in previously formed groups in to better analyze the relevant aspects in relation to digital
attention to the specialties, mainly lawyers and age markets, especially in aspects of free competition, the
economists. In the first plenary the exhibition turned into acquired knowledge, as well as the positive synergies that
how to enforce the competition law in the digital era , with are generated with these events, they are translated into
all the challenges that have to be overcome, especially being able to perform analyzes according to current events
because of the complex nature of the territorial scope at a that reflect the digital markets, especially because of their
given moment, as well as the handling of large volumes of dynamic in the current context.
information, which become a challenge for the competition
In the work sessions on this topic, a hypothetical case
related to the hotel reservation was addressed through
technological platforms, in which representatives from
different agencies could interact and exchange ideas, as
well as access the experience that it has been possible to
achieve in similar cases or that have some type of
relationship on the part of agencies with greater
development of digital markets.
The second plenary session dealt with evaluating the
market power of technological platforms, where traditional
concepts to evaluate market participation are not
necessarily the most effective, a platform can at one time
have a large market share, but A change in any of the
conditions of the same, can generate important structural
changes in the short term, especially because consumers
can access the different platforms at very low cost,
something that does not occur in traditional markets, where
geographical location by example, it plays an important
role when it comes to making the consumption decision,
and it is not so easy to change providers at any given time,
XVI Global Forum on Competition related to the competition, interactions between judges and
competition. BOLETÍN PANAMÁ
Overcome adversity and achieve success: Focus on small de Libre Competencia
agencies and those in developing economies.
Each competition agency must overcome obstacles to
enforce its competition law. For small and developing
jurisdictions, these obstacles are often more acute,
numerous and reinforced by the specific challenges of
these jurisdictions. In June 2017, the OECD distributed a
survey among members of the Global Forum, to discover
what are the most difficult challenges facing competition
agencies and how they managed to overcome them.
The three most salient challenges (promotion, compliance
ACODECO participated in the XVI Annual Global Forum on and how can competition authorities overcome hostility or
Competition of the Organization for Economic Cooperation indifference?) The session was discussed during three
and Development (OECD) held in Paris, France on parallel sessions, in which representatives from different
December 7 and 8, 2017. The sessions discussed on the agencies presented case studies for their challenges and
forum where: success stories. The ACODECO delegation participated in
Is Competition and Democracy Symbiotic? the topic: Advocacy efforts within the government and
During the session, a panel of experts from different areas creating a competition culture in the public.
discussed whether competition can be included among the Competition in the Public Markets
success factors of democratic government, particularly The objective of the session was to open discussion topics
when considering countries in transition to democratic on the role of: the election and competition in public
government systems. Are there links between democracy, markets, and the application of competition law in those
the degree to which a country is democratic and the markets.
prevalence of competition through the economy? As the
application of competition evolves, does this change the Public markets, such as health, education and the
nature to which democracy may or may not support? How provision of various public services, constitute a large part
can the application of competition be a vector for of the economy, and the quality and efficiency of the
democracy? Is it possible that the liberalization of the services they provide are fundamental to a country's ability
market and competition can prosper in the absence of to achieve inclusive growth. However, these markets
democracy? attract relatively little attention from competition authorities
in many countries.
Judicial Perspectives on the Competition Law.
Competition cases are often characterized by complex It has been shown that competition in these markets helps
litigation and different sets of economic tests. improve quality and efficiency. As a result, competition
While recognizing the differences between jurisdictions, agencies may have opportunities to advocate for a broader
the session addressed the main common challenges faced role of competition in these markets, providing advice on
by judges in applying the competition law, and finding ways the design and regulation of markets that do exist.
to meet those challenges. Since the hearing was
comprised of judges and representatives of competition
agencies from around the world, the session provided a
venue for an exchange of views on the interaction between
competition agencies and courts, exploring topics such as,
standard of proof and the evidence in judicial procedures
BOLETÍN de Libre Competencia PANAMÁ The workshop allowed ACODECO to learn about the Finally, a role play was developed, presenting the
ACODECO participated in the Workshop on Research Techniques of Mergers of the ICN
different research tools used by international competition
an exchange of questions and answers that seek to
agencies. concentrated parties and the competition agency, through
deepen the existence of competitors and understand the
During the first day, different presentations were made, relevant market.
especially a hypothetical Merger on Energy Drinks.
Emphasis was placed on the importance of organized During the second day was carried out an analytical
planning at the time of carrying out investigations of framework, where was defined the product market and the
mergers, where there is a rain of ideas on the topic to be geographic market of the parties concentrated. It is also
investigated, as well as other key aspects to define the analyzed possible corrective measures or remedies that
market, if there are anti-competitive effects and barriers to help keep the competition with the other economic agents,
entry. Also analyzed the mechanisms and appropriate then of economic concentration.
formulas to request documents, data and other
requirements useful for the analysis, so as to understand Taking all these aspects, the working groups proceeded to
the market in which converge the economic agents that are analyze in full the merger taking into account the theory of
concentrated and its competitors. damage, the competitive aspects, approving or not the
concentration or merger, based on the evidence obtained.
Statistics from January to December 2017
of the Unit of Analysis of cost increase PANAMÁ
consumers can find the online validation application form, BOLETÍN de Libre Competencia
ACODECO from January to December 2017 has received under the icon PROYECTOS INMOBILIARIOS (Real
two hundred twenty eight (228) validation requests for
increases in construction materials costs of which, two Once the online form appears on the screen, the
hundred and nineteen (219) have been requests for consumer is asked to fill in a full name, personal identity
verifications by consumers and nine (9) requests for prior card, address, telephone number, email and reasons for
validations by economic agents. the claim. In addition, he is asked to attach the following
It should be noted that, for this year 2017, 60% of documents: copy of the consumer's personal identity card,
copy of the initial purchase agreement and addenda, copy
consumers have personally approached the offices of of the increment note.
ACODECO to request validation of the increase in
construction materials and 40% of consumers used our Direct benefits to the consumer:
service via the web, saving time and costs of transport.
• The consumer does not need to go to our offices
Consumers have received notifications of increases in the because the entire process of verification and response to
prices of construction materials from the promoters for a the request is done in the web. Representing consumers
total amount of B /. 945,533.32 of which ACODECO has saving time and money.
validated an amount of B /. 388,281.29 that is to say that • Personalized attention by a team of lawyers and
36% of the cost increases were validated, resulting in economists.
savings for consumers of B /. 557,252.03. • A technical analysis in accordance with the
On the ACODECO website, www.acodeco.gob.pa, regulations currently established for this type of price
IN NUMBERS 11
Investigations by Collusion in Public Tenders
An investigation into absolute monopolistic practices derived from a
public bid, initiated ex officio by ACODECO or by complaint of public Law 45 of October 31, 2007,
officials responsible for public bid, when there are indications that Article 13, numeral 4, Law of Consumer
involve coordination or agreement of bids and abstentions exist and Protection and Defense of Competition
situations arise as: (ACODECO)
• Inelastic demand, facilitates coordinated price increases
• Small number of companies; - companies + probable 4. Establish, arrange or coordinate
collusion positions or abstention in public bids, for
• Barriers to the entrance; limits the participation of new best value, for framework agreement and
competitors reverse auction, auction of public goods,
• Business associations; facilitate information exchange as well as any other form of contracting
• Identical products or services; homogeneity facilitates with the State.
• Repetitive offers; allows public tenders distribution
• Few or no substitutes; limits the number of competitors
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