In the year 2013, the Competition Law was sanctioned in Paraguay with the objective of protecting and promoting free competition in the markets and prohibiting and penalizing certain practices that are contrary to the same. The Law foresees the principles that govern free competition, the prohibited acts and practices, as well as, the corresponding penalties. Additionally, it foresees that for the application of its dispositions, the National Commission for Protection of Competition – CONACOM- shall be established, organism that shall, within the term of a year, define the rules and guidelines that serve as guidance to the individuals and corporations regarding the scope and criteria for the interpretation of the law, specifically those related to the criteria and definitions of Relevant Market, Dominant Position and Operations of Concentration. It shall also, within the same term previously mentioned, approve a regulation regarding the notification of Operations of Concentration and the procedures and use of the forms for the performance of the processes foreseen in the Law and its Regulation.
Whereas said Law is in charge of definitions, penalties and the establishment of the Authority, its Regulatory Decree No. 1490/14, promulgated on April 14th, 2014, is responsible for complementing the Law, outlining the grounds for the application of the sanctions foreseen in the Law, the constitution and functions of CONACOM and for regulating in general, the establishment of concentrations in Paraguay, which are thereon subject to prior authorization.
Specifically, the Decree rules which acts and practices fall within the scope of application of the Law, as well as the individual or corporations whose conducts need be adjusted to the principles of the same; it also further rules the anticompetitive practices foreseen in the Law, such as the agreements restrictive to competition and collusive tendering, in addition to the establishment of characteristics that need be reunited in order for a practice to be considered “predatory pricing” and for the calculation of the market share required for notification and registration of operations of concentrations, when said calculation is not definable if the specifications of the Law are only considered.
It should be noted that in accordance with the terms of the Decree, which coincides with what is foreseen in the Law, a conduct or practice that may be considered anticompetitive according to the specifications of the Law is not per se prohibited or penalized, on the contrary, CONACOM may, upon having analyzed if said practice generates an advantage in economic efficiency, thereby, benefiting the consumers, authorized it, so long as such advantages and benefits compensate the negatives effects caused by the practice concerned.
On the other hand, the Decree foresees the mechanism for the notification of operations of concentration, the procedure for the evaluation of such operations, its duration, establishing a second stage for the operations of concentrations that have not been approved during the first stage, during which the interested parties may submit additional information to CONACOM, in order for a more thorough study to be carried out and, when appropriate, for the Operation concerned to be authorized.
In addition, the Decree foresees the requirements for an Operation of Concentration to be considered null and void, regardless of the fines that may be imposed; it regulates the procedure for the application of fines, establishing the maximum amount to be applied, the basis for the imposition said fines and payment arrangements. The directors, managers and administrators, among others, of the corporation that has allegedly violated the principles set forth, may be subject to a fine, if it is proven that they have actively contributed or participated in the infringing practice.
The formal establishment of CONACOM, including the designation of its member by the Executive Power, should take place in September, 2015. On the other hand, it is foreseen that the entire legal body required for the correct implementation and application of the legal provisions, as well as, the operation of the administrative organisms established, including the corresponding regulations, procedures and forms, shall be completed at the beginning of the year 2015.
To access the Law, please click on the following link: LAW NO. 4956
To have access to the Decree, please click on the following link: DECREE NO. 1490