Press Release C. 30-12 thEl Salvador, December 12 , 2012. CS reported 2012 resultsCommemorating the International Day of Competition, the Competition Superintendence (CS) reportedtoday its 2012 main results. Amongst the most significant, the CS detected and sanctioned the abuse ofdominance of a sugar distributor, issued important recommendations to improve the competition conditionsin the rice agro-industry, and carried out its first campaign to sensitize the general population oncompetition. Furthermore, the CS reviewed four acquisition authorization requests, amongst them, the onefiled by PUMA to purchase ESSO and the one filed by CLARO to buy DIGICEL. “In 2012, the CS The CS made a balance of its work during 2012, making public its main activities detected competition to protect and promote competition executed in the current year. problems in key markets such as in the The Competition Superintendent, Francisco Diaz Rodriguez, highlighted that rice and sugar agro- during the present year the CS carried out its first campaign to sensitize the industries and in the general population on competition, which has helped to increase the people´s telephony sector. In knowledge with respect to the authority´s work and regarding anticompetitive 2013, the Salvadoran practices forbidden by the Salvadoran Competition Law (CL). competition authority Nonetheless, there was an incident to regret: the fire occurred on October which will follow up pending partially destroyed the CS´ offices and that has meant an additional effort to cases, issued carry out the reconstruction activities without interrupting the authority´s recommendations, and enforcement and competition advocacy activities. initiated sector studies like the one on air The most significant protection and promotion activities executed during 2012 transport for are the following: passengers”, asserted the Competition Cases and fines Superintendent, Francisco Diaz The CS concluded three preliminary investigations related public procurement Rodriguez. processes of goods and services called by the Salvadoran Corporation of Tourism (CORSATUR, its acronym in Spanish), the Health Ministry (MINSAL, its acronymin Spanish), and the National Administration of Aqueducts and Sewers (ANDA, its acronym in Spanish).Moreover, the CS worked in ten administrative sanctioning procedures for the commitment of anticompetitivepractices. In one of said procedures the competition authority sanctioned the company DIZUCAR, S. A. de C. V.(hereinafter, DIZUCAR), with a fine amounting US$1,096,750.00 for abuse of dominance. The aforementionedsugar distributor created entry obstacles to new competitors and to the expansion of the existing ones, by limitingthe sale of bulk processed sugar and by establishing different prices, discriminating other wholesale sugardistributors, as well as potential packers, putting them in disadvantage.Two administrative sanctioning procedures for the alleged commitment of anticompetitive practices are currentlybeing processed: one against four international hotel chains for an alleged price fixing in catering services for
events; and the other one related alleged bid rigging in a public procurement process to hire services to rent towtrucks, called by ANDA.In the remaining seven cases, the CS dismissed the complaints due to formal flaws and because the conductsdenounced did not pertain to Competition Law.In addition, four sanctioning procedures were begun for lack of collaboration. Ones was initiated in the liquidpetroleum gas in which the company Total El Salvador, S. A. de C. V. was imposed a fine totaling US$69,314.60for not supplying the information requested in the established term. The other three procedures were openedagainst the Salvadoran Association of Airline Representatives (ASLA, its acronym in Spanish) and Delta Airlines,Inc., for supplying, when the term had concluded, information for the study on the competition conditions of airtransport for passengers; and against DIZUCAR, for supplying inexact information during the administrativesanctioning procedure in which said company was sanctioned afterwards for abuse of dominance.Totalizing, during 2012, the CS imposed 5 fines: 1 for the commitment of anticompetitive practices and 4 for lackof collaboration, amounting US$1,288,615.45, yet only US$89.867.70 have been paid. Mergers and acquisitionsThe CS received 15 merger/acquisition authorization requests: 10 were dismissed, and 1 filed by Wallmart andCalleja was desisted. The remaining four were fully reviewed, with the following results:1) AMNET and Telefonica Multiservicios (telephony sector): Authorized with ex-post remedies (to be complied with after the acquisition had been authorized);2) Seguros Suramericana and Asesuisa (insurance sector): Authorized with ex-post remedies;3) PUMA and ESSO (liquid fuel sector): Authorized with ex-ante remedies (to be complied with in order for the acquisition to be authorized by the CS); and4) CLARO y DIGICEL (telephony sector): Denied. The CS considered that this acquisition might create adverse effects to competition dynamics and to consumer welfare in land and mobile telephony markets. This has been the first merger/acquisition authorization request dined by the CS. Sector studies on competition conditionsPursuant to a petition from the Ministry of Agriculture and Livestock, the CS up dated the 2008/2009 study on thecompetition conditions of the rice agro-industry with information until July 2012. Likewise, two sector studies arecurrently in process: one on the competition conditions of the market of air transport for passengers and the otheron the competition conditions in the agro-industry of edible lards in the country. Amongst the studies oncompetition conditions to be carried out in 2013 figure the following: maritime ports services, supermarkets, and,corn and beans, this last one to the executed jointly with the Consumer Protection Authority. OpinionsThe CS issued 15 opinions: 5 with respect to drafts of laws and regulations and 5 regarding to publicprocurement processes. The Salvadoran competition authority issued opinions on the following legalinstruments: - Draft of legal framework favoring competition; - Technical regulation regarding credit card system; - Regulations with respect to credit card system; - Central American Technical Regulation - Fertilizers and Agricultural Use Amendments. Registry Requirements; and, - Open Skies Multilateral Agreement for Civil Aviation Member States.
With respect to public procurement processes, the CS issued the following opinions: - Public procurement process documents prepared by CAESS (electricity distributor) for long term contract (CLP, its acronym in Spanish) 001-2012 for the supply of 82.00MW and its associated energy; - Technical specifications in order to contract directly “Pharmaceuticals Supply”, Ministry of Health, 2012; - Possible renewal of the contract between Empresa Salvadoreña Portuaria de Acajutla S.A de C.V.; (ESPAC, its acronym in Spanish) and the Executive Port Autonomous Commission (CEPA, its acronym in Spanish); - Public procurement process to contract risk rating services called by the Housing Social Fund and its securities issues; and, - International public procurement process documents prepared by DELSUR, CLP-001-2012. Other Competition Advocacy and Communications ActivitiesCoordination and Co-operation Agreements. The CS signed three agreements in 2012 with the followinginstitutions: the first with the National Association for the Protection of the Consumers´ Rights of El Salvador(APCES, its acronym in Spanish) with the Ministry of Health; and, with the Secretariat of Legislative and LegalAffairs of the Presidency of the Republic. Through this last agreement the CS aims to previously analyze, fromthe competition perspective, the drafts of laws or regulations in process of approval or amendment.Training on Competition. With the support of the Judicial National Council, the CS trained approximately 35Civil and Commercial Judges, as well as legal assistants of the Administrative Contentious Tribunal of theSupreme Court of Justice, through special training courses in Competition Law given by the CS´ personnel.Participation in the SNPC. In 2012 the CS appointed one of its officials as liaison in the Consumer ProtectionNational System (SNPC, its acronym in Spanish) where the CS actively participates. The aforementionedsystem has become a mechanism to discuss, within technical committees, as the topic may be, public policyrecommendations result of the CS´ sector studies and competition cases. With respect to the milk and cheesesectors, the Health and Pharmaceuticals Committee of the SNPC presented the amendment drafts to theinstitutions responsible for the enforcement of the Law and its Regulations for the Development of the HygienicProduction of Milk and Dairy Products and the Directives for their Sale and of the Health Code.2012 Competition Week. Annually, the CS celebrates the Competition Week during which said institution makespublic its most relevant results.The events carried out during the above cited week included an event for the discussion for the topic“Enforcement of Competition Laws in Small Economies” with the participation of Lilliam Carsana, juris doctor;Roberto Rivera Campos, Economist; and, Sandra Barraza, Economista, as commenters. The challenges of theCS in the enforcement of the Competition Law under the Salvadoran market´s competition conditions wereaddressed. Furthermore, the book “Competition Superintendence Jurisprudence Synthesis: AnticompetitivePractices, Mergers and Acquisitions, and other Proceedings” was launched.A session was dedicated to public procurement head officers. The Competition and Public Provurement Toolkit,jointly prepared by the CS and the Public Administration Procurement Unit of the Ministry of Finance (UNAC, itsacronym in Spanish) was launched. This toolkit seeks to promote competition in public procurement procedures.Said publication is also part of CS Editions (Ediciones CS in Spanish), an institutional collection.During the aforementioned week, the CS and the National Association for the Protection of Consumers Rights ofEl Salvador (hereinafter, APCES, its acronym in El Salvador) signed a cooperation agreement. Afterwards, Mr.Erick Ulate, President of Consumers from Costa Rica, dictated a lecture on “The Importance of Competition forthe Consumer”, as a result for his experience in this field. At the end of the Week, the CS made public itscompetition studies of the rice and sugar agro-industries. Economic agents, sugar and rice producers and
distributors, law firms, amongst others, had an opportunity to comment or make suggestions to the informationdetailed in said session.Accountability and Transparency. For a second consecutive year in July 2012, the CS publicly renderedaccounts regarding its work from June 2011 until May 2012. The CS explained its most relevant cases andstudies, as well its main achievements. Regarding transparency, in compliance with the Access to PublicInformation Law (LAIP, its acronym in Spanish), the CS has executed all the actions pursuant to the guidelinesissued by the Transparency and Anticorruption Secretariat, in order to enforce said law. The competitionauthority appointed the Information Official responsible for the attention of information requests and permanentlyupdates its Transparency Site with the required information.Furthermore, seeking to make public its work to the population, the CS has communicated its institutionalactivities in its web site, massive e-mails, and through its participation in fairs, and massive communicationevents. The involvement of the competition authority in social networks like Twitter has increased more than600%, with more than two thousand fans and followers, respectively.Educational campaign on competition. The CS carried out its first campaign to sensitize the generalpopulation on competition in the country with the purpose to position itself as the institution responsible for thepromotion, protection, and guarantee of competition and to educate the Salvadoran population on anticompetitivepractices forbidden by the CL, as well as on the harm these conducts cause to the consumer and our economy.The aforementioned campaign lasted four months (from June until September 2012) in massive media such as:TV, radio, written and digital press, specialized magazines, bill boards, movie theaters, and social networks. Central American and International ActivityThe Central American Working Group on Competition Policy has prepared the documents for the adoption of aregional competition legal framework and the agency responsible for its enforcement. For said purposes, the CSis the executive unit of the Interamerican Development Bank´s financial cooperation. During 2012, the Groupcarried out various activities and is currently in the critical route for the adoption of a Regional Competition Policyand has contracted a consultancy to determine the basic elements to combat anticompetitive practices that affecttwo or more Central American jurisdictions.The CS participated in the OECD´s Competition Global Forum, in the Central American Competition Forum, andin the Latin American and Ibero American Competition Forums. One of the main topics of the last mentionedforum was “Competition and the Reduction of Poverty”. In addition, in the Latin American Forum El Salvador´sPeer Review was revised; its results will be made public next year. The CS also participated in the ICN CartelWorkshop which took place in Panama City.
Summary table of the CS´ 2012 main activities 2012 ADMINISTRATIVE SANCTIONING PROCEDURES Concluded: 3 Public procurement processes of goods and services called by the SalvadoranPreliminary Corporation of Tourism, the Health Ministry, and the National Administrationinvestigations of Aqueducts and Sewers. In process: 2 Wheat flour and liquid petroleum gas markets.Administrative Concluded:1 Case of abuse of dominance committed by DIZUCAR.sanctioningprocedures for In process: 2 Alleged price fixing amongst four international hotel chains and alleged bidcommitment of rigging in a public procurement process called by ANDA.anticompetitivepractices Inadmissible: Dismissed complaints due to formal flaws and because the conducts 7 denounced did not pertain to Competition Law.Sanctioning 4 sanctions - TOTAL El Salvador: for not supplying the information requested in theprocedures for established term in a preliminary investigation..lack of - Salvadoran Association of Airline Representatives (ASLA, its acronym incollaboration Spanish) and DELTA Airlines, Inc., for supplying, when the term had concluded, information for the study on the competition conditions of air transport for passengers. - DIZUCAR, S. A. de C. V., for supplying inexact information during the administrative sanctioning procedure in which said company was sanctioned afterwards for abuse of dominance.Fines imposed 5 fines Totalizing 5 fines were imposed: 1 for the commitment of anticompetitive practices and 4 for lack of collaboration, amounting US$ 1,288,615.45, yet only US$89.867.70 have been paid. MERGERS AND ACQUISITIONSAuthorized with 3 AMNET to purchase TELEFONICA MULTISERVICIOS;remedies SEGUROS SURAMERICANA to acquire ASESUISA; and PUMA to buy ESSO.Denied 1 CLARO to purchase DIGICEL.Dismissed 10 - Operadora del Sur (WALMART) and EUROPA; - Consultoría, Servicios and Capacitación and Consultoría, and Desarrollo Empresarial; - CARFLO, PASARI, ARI VAN H, and TRANSMASCO; - DAVIVIENDA – HSBC; - UNOPETROL- INVERSIONES PETROLERAS; - SYSBANC and CITI VALORES; - MILLICOM, NEWCOM and others; - KRAFT FOODS and CADBURY ADAMS; - INTERCARGO and SANDPIPER; and, - RAF, INVERSIONES and ASESORIA, and PROMEX.Desisted 1 - CALLEJA to purchase EUROPA.
SECTOR STUDIES ON COMPETITION CONDITIONSConcluded 1 Update of the 2008/2009 study on the competition conditions of the rice agro- industry with information until July 2012.In process 2 - Air transport for passengers and - Edible lards.To be carried 3 - Corn and beans (executed jointly with the Consumer Protectionout in 2013 Authority); - Maritime port services; and, - Supermarkets. OPINIONSOpinions to 5 - Draft of legal framework favoring competition;drafts of laws - Technical regulation regarding credit card system;and regulations - Regulations with respect to credit card system; - Central American Technical Regulation - Fertilizers and Agricultural Use Amendments. Registry Requirements; and, - Open Skies Multilateral Agreement for Civil Aviation Member States.Opinions to 5 - Public procurement process documents prepared by CAESS (electricitypublic distributor) for long term contract (CLP, its acronym in Spanish) 001-procurement 2012 for the supply of 82.00MW and its associated energy;processes - Technical specifications in order to contract directly “Pharmaceuticals Supply”, Ministry of Health, 2012; - Possible renewal of the contract between Empresa Salvadoreña Portuaria de Acajutla S.A de C.V.; (ESPAC, its acronym in Spanish) and the Executive Port Autonomous Commission (CEPA, its acronym in Spanish); - Public procurement process to contract risk rating services called by the Housing Social Fund and its securities issues; and, - International public procurement process documents prepared by DELSUR, CLP-001-2012.