Bulletin No. 21 - Free Competition

BULLETIN August, 2019
Edition Nº 21





free competition
PANAMA




Defending your freedom to compete








































500 years

of Panama
Antes Actualidad

















Our Contributors ...........2 Present...........3



New Administration in the Sanction for monopolistic practices related to
Authority for Consumer Refinería Panamá, S. de R. L.
Protection and Competition
Defense (ACODECO)

BULLETIN
FREE COMPETITION
PANAMA

New Administration in the Authority for Consumer Protection and
Competition Defense (ACODECO)

By: Joancy Chávez
Head of Competition Research









FOTO















His Excellency, Mr. President of the Republic of Panama, Laurentino The new General Administrator, in the exercise of his legal
Cortizo Cohen, by Executive Decree No. 38 of July 2, 2019, appointed powers, designated Mr. Marco Carrizo as the new National
Mr. Jorge Quintero Quirós as the new General Administrator of Director of Free Competition (DNLC) as of July 16th, 2019.
ACODECO. Mr. Quintero obtained a Bachelor of Law and Political Mr. Carrizo, is an Economist with more than 13 years of
Science, with experience in Consumer Protection, who held positions experience as Supervisor in the Price Information and Verification
as National Director of Consumer Protection and Executing Judge at Department (DIPREV) in ACODECO.
ACODECO in the period 2006 - 2009.



The new administration has as its main objectives, to achieve a better application and promotion of competition policy in Panama, the
following:


• Promote free economic competition in all markets where possible and desirable, to achieve greater efficiency and increase
consumer welfare.
• Establish cooperation and collaboration schemes with public bodies in order to minimize that, within the framework of their
functions, they make decisions that negatively affect free economic competition and free concurrence in the markets.
• Perform Competition Advocacy activities as a contributor in the arrest of anticompetitive behaviors before they happen.
• Issue an opinion regarding free economic competition about laws, regulations, and administrative acts, in order to raise
awareness about current or potential problems in a given market and, if appropriate, suggest methods to solve them, in coordination with
other public administration entities.
• Constant training for the continuous improvement of the main resource of the institution, its human resource.
• Educate the population about the benefits of free competition, in order to create a competition culture that benefits us all.
• Promote the modernization of the National Directorate of Free Competition by providing it with tools that increase its capacity to
detect restrictive practices of free competition.


To this end, a work plan has been designed that involves the entire team of the National Directorate of Free Competition, highly qualified
personnel and committed to their obligations, not only in the area of free economic competition, but also in the area of consumer
protection, since they fully understand its correlation and the importance of the best interactions in the economic system that we must
preserve.



2 OUR CONTRIBUTORS

BULLETIN
FREE COMPETITION
PANAMA

Sanction for monopolistic practices related to

Refinería Panamá, S. de R. L.

In 2009, ACODECO filed a complaint against Refinería Panamá, S. de RL (here in after REFPAN) in formal
court for the alleged commission of an illegal monopolistic practice within the market service for the disposal
of liquid fossil fuels (light and improved diesel, and 91 and 95 octane gasoline) at the cargo terminal of the
former Panama Refinery, Las Minas Bay in the province of Colon, infringing Law 45 of October 31st, 2007
(here in after Law 45).


By judgment No. 107-15 of December 15th, 2015, the Ninth Civil Circuit Court of the First Judicial Circuit of
Panama, decreed in the first instance the restrictive and illegal nature of the demanded practice, described in
article 16, numeral 9 of Law 45.


By ruling of April 3rd, 2019, the Third Superior Court of Justice of the First Judicial District of Panama confirms judgment No. 107-15 of
December 15th, 2015, issued in the first instance.

Once the decision of the courts of justice was executed and in accordance with the provisions of article 104, numeral 2 of Law 45, the
DNLC proceeded by Penalty Resolution No. DNLC-HCE-012-19 of June 27th, 2019, to impose a penalty fee for the sum of TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00), to the economic agent REFPAN, for incurring in illegal monopolistic practices.
Subsequently, REFPAN filed, in a timely manner, an appeal against the Penalty Resolution.

Currently, an appeal was granted on the imposition of the fine, the sanction booklet was sent to the Administrator's office to resolve in a
second instance.







Investigation followed to retailers by the alleged commission of relative

monopolistic practices in the sale of sodas and beers

This investigation began after it was published on social networks,
specifically Facebook, a statement from the Independent
Chinese-Panamanian Community of April 5th, 2019, through
which it was announced in general to retailers of sodas and beers,
to choose not to sell products of the company CERVECERÍA
NACIONAL S DE RL, as a strike measure, in response to an
alleged measure imposed by CERVECERÍA NACIONAL S DE RL,
of not only increasing the price to retailers, but also to fix a
maximum sale price to the consumer, that decreases the profit
margin, which they disagreed.

During the preliminary phase of the investigation, no specific
On April 10th, 2019, the DNLC officially started a preliminary businesses were identified that were incurring the alleged practice.
investigation for possible illegal monopolistic practices carried out Since the investigation did not include evidence of retailers that
by retail stores to the detriment of CERVECERÍA NACIONAL S. were actually incurring the anti-competitive conduct, it was
DE R.L, for an alleged boycott of retail stores against the brewery. recommended the non-opening of an investigation and file the
administrative record.



PRESENT 3

BULLETIN
FREE COMPETITION
PANAMA
Judicial Processes for Monopolistic Practices

In that sense, the DNLC, currently maintains various judicial
processes for monopolistic practices in markets both absolute and
relative, such as: airlines, fuels, telecommunications, sugar,
customs brokerage, laundries, judicial processes are also
maintained on public procurement acts (tenders made by the
Ministry of Education).


It is important to note that these judicial processes, most of them,
are in the Superior Courts and the Supreme Court of Justice for the
extraordinary resources brought by the legal representatives of the
defendant companies.


It is up to the entity through the DNLC, to represent the State´s
interest in protecting and ensuring the process of free economic
Law 45 of 2007, in article 124, numeral 1, establishes, among competition and free concurrence to preserve the best interest of
other things, the jurisdiction of the circuit courts of the civil branch the consumer, so that once the corresponding judicial channels are
of the First Judicial District of Panama, (eighth and ninth courts), to exhausted, and favorable declaratory judgements are obtained,
hear about matters in monopolistic practice, disputes that arise as then the corresponding administrative sanctions may be imposed
a result of individual or collective claims and / or that arise due to according to the law.
the application or interpretation of this law.





Merger between Sociedad de Alimentos de Primera, S.A.,

and Helados La Italiana, S.A


The DNLC, by previous request, verified the operation of merger whereby DMPTY,
INC., purchases the 100% of shares of Helados La Italiana, S. A.

Regarding the product market, DMPTY, INC., (Through the Sociedad de Alimentos
de Primera, S. A.), and Helados La Italiana, S.A. make and sell ice cream to retailers
through refrigerated trucks and the latter through “wheelbarrows” in urban areas.


According to those interested, the ice cream satisfies a whim, the consumer enjoys something sweet and / or refreshing; 86% of
respondents buy classic packaged ice cream. Ice cream is consumed alone, accompanied and except the popsicle if consumed
immediately, generates refrigeration costs. Companies that produce and sell juices, nectars and beverages, dairy products companies
that do not produce ice cream, would be able to adapt facilities and equipment to generate competitive pressure. The market product
dimension is the production and/or distribution of ice cream.

Regarding geographic market, the production plants of the ice cream production companies are in Panama City and the distribution and
sales centers are in the capital and inside the Republic. The promotion and advertising of ice creams of Sociedad de Alimentos de
Primera, S.A. and Helados La Italiana, S.A. is national. The transportation pattern of the companies goes from Panama City to the interior
of the country. The competition of imported products for 2018 comes mainly from USA and Costa Rica.

The market was defined as production and/or distribution of ice cream in general in the Republic of Panama. The market is concentrated,
there are no obstacles at the entrance and rivality exists. The buyer accepted modification of the non-competition clause at 3 years,
according to the criteria adopted by this Authority. The operation obtained a favorable concept.

4 PRESENT

BULLETIN
FREE COMPETITION
PANAMA


Merger Cable Onda – Telefónica Móviles


Through a memorial presented on May 15th, 2019, Telefónica Once all the information and / or documentation provided by the
Móviles Panamá, S.A., and Cable Onda, S.A., telecommunication interested parties was evaluated, it was estimated that the
service concessionaires in Panama, notify and submit upon elements that allow a prior verification analysis proposed by the
previous verification, to obtain the favorable concept of economic agents Telefónica Móviles Panamá, S.A., and Cable
ACODECO, the analysis and processing of the merger by which Onda, S.A., were contributed to the administrative file, therefore a
Cable Onda, S.A. acquires 100% of the shares of Telefónica resolution was issued stating that the required information has
Móviles Panamá, S.A. been delivered by the interested parties and is set as the deadline
to issue concept on September 2nd, 2019.

The operation was approved by Resolution No. DNLC-MC-016-19
from August 22, 2019.




The DNLC proceeded with the preliminary review of documents
and evidence presented by the interested parties, a review in
which some points were identified that had to be extended, clarified
or provided by the interested partied, in order to have knowledge of
important data that complement and contribute to a better analysis
of the information initially provided, so that information was
requested through resolution No. DNLC-HCE-008-19 of June
3rd, 2019.












Merger by Absorción –TAMEK, S.A.,
and INVERSIONES PARNA, S.A.





On July 19th, 2019, ACODECO received a statement from the legal representative of the
company TAMEK, S.A., whereby it informs ACODECO of the conclusion of a merger
agreement for absorption signed between TAMEK companies, S.A., dedicated to the activity
of hypermarket and INVERSIONES PARNA, SA, dedicated to the trade of retail textile
stores, noting that as a result of the operation, the surviving company is TAMEK, S.A.


In this sense, the DNLC, started an investigation on its own initiative in order to require more
information to determine if in effect it is an merger and if such operation could have the effect
of diminishing, restricting, damaging or unreasonably preventing free economic competition
and free concurrence.










PRESENT 5

BULLETIN
FREE COMPETITION
PANAMA
Launch of the Guide for conducting Market Research
ACODECO submitted to the public consultation the proposal for a Market Research Guide, that was an
institutional initiative supported by the Secretariat of the Competition Committee of the Organization for
Economic Co-operation and Development (OECD), under the auspices of the British Government
Prosperity Fund. The secretariat explored the use of market studies in the competition agencies of Chile,
Colombia, Costa Rica, Mexico, Peru and Panama, in order to evaluate its operation and offer
recommendations that could improve its use as a tool to promote the best operation of the markets.


The guide seeks to help interested parties (companies, trade associations, consumers, consumer
organizations and public entities (including ministries, independent regulators and other public
organisms) to understand what market studies are, what they intend to achieve, how they are performed
and what their results may be. It also aims to explain to interested parties how they can collaborate in
market research. It is a flexible instrument that will be update in case there are changes to the
procedures in order to ensure that stakeholders are informed in a timely manner. The guide, among other aspects, describes the specific
characteristics of market research and explains how they differ from other tools available for ACODECO. It explains how the markets to
be studied are selected and prioritized and also describes the different stages of the procedure.

An important aspect to distinguish from the launch stage of the study is that, in the press release published on the website, interested
parties are invited to contribute to the study through the provision of information and insights that can help to the analysis and, contact
points are established for any questions related to the study.

The guide contains the procedure to study deeply and entirely how a market works and has been adopted through Resolution No. A-024-
19 of May 7th, 2019, available on the website of the institution www. acodeco.gob.pa and soon it will be used by ACODECO to thoroughly
study markets that show signs of not functioning correctly.


TODAS LAS ENTIDADES DEL ESTADO, EMPRESA PRIVADA,
ORGANIZACIONE S D E CONSUMIDORE S O CÁMARA S
EMPRESARIALES PUEDEN RECOMENDAR O SUGERIR A LA
ACODECO LA ELABORACIÓN DE “ESTUDIOS DE MERCADO”


Una función de ACODECO es la de realizar estudios sobre el comportamiento del mercado para
detectar distorsiones en el sistema de economía de mercado, y propiciar la eliminación de tales
prácticas, mediante su divulgación o la recomendación de medidas legislativas o administrativas
encaminadas a su corrección.













ACODECO takes over Real Estate Fair


The DNLC, participated in the 2019 Convivienda Fair, one of the most important real estate
exhibitions in Panama.

The fair was staffed by the DNLC Cost Increase Analysis Unit over three days from August 17th to
18th. As part of their functions, they attended inquiries from consumers, real estate agents and
developers.

Also, supplies with relevant information about the possible elements to be considered prior to the
purchase of a new home were distributed, such as: clause to increase construction materials, labor
or financing, change in the footage of the real estate unit or change in the effective rate with the
financial entity.


6 PRESENT

Panama Free Competition Bulletin reaches its edition No. 21

BULLETIN














free competition




PANAMA








The National Directorate of Free Competition of the ACODECO releases every three months from
September 2015 to date through the National Free Competition Bulletin of Panama, the achievements,
recent goals, investigations, presented demands, competition law, seminars between many other

management activities.


The objective of this newsletter has been to promote and publicize both national and international actions
in defense of competition in Panama, as highlighted in its slogan, "Defending your Freedom to Compete".



On the other hand, an important aspect to highlight is that the editing and writing team of the articles
published in this bulletin are lawyers and economists who are actively working day by day within the
Directorate.



We thank you in advance to be part of our readers.