2009 CS Achievements Report

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In 2009, the Competition Superintendence (CS) sanctioned 8 economic agents with fines
amounting more than 50 thousand dollars, authorized 1 merger, carried out 3 sector studies
on competition conditions, and issued over 30 public policy recommendations to improve
and promote competition conditions in the country, increase economic efficiency as well as
consumer welfare.

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2009 CS Achievements Report

  1. 1. Press Release C. 56-09 El Salvador, December 17th, 2009. Annual Work Report 2009 CS Achievements Report In 2009, the Competition Superintendence (CS) sanctioned 8 economic agents with fines amounting more than 50 thousand dollars, authorized 1 merger, carried out 3 sector studies on competition conditions, and issued over 30 public policy recommendations to improve and promote competition conditions in the country, increase economic efficiency as well as consumer welfare. The CS achieved important results in 2009, through the investigation and “The year 2009 has been a sanction of anticompetitive practices, the analysis of mergers and acquisitions in period of significant activity different economic sectors, the constant study of the competition conditions on for the CS. The investigation various sectors, and the promotion of competition in the public opinion. The of anticompetitive practices aforementioned achievements of the CS during 2009 are set forth below. and the promotion of a competitive environment in • Cases and Fines the country have been crucial achievements. The In 2009, the CS imposed fines totaling US$50,668.10. Four travel agencies CS intensified the fight were sanctioned with fines amounting US$21,325.50 for bid rigging in public against agreements amongst tenders for the purchase of airline tickets in the public sector. competitors in public tenders. The commitment to Furthermore, the CS concluded 7 administrative sanctioning proceedings work in favor of competition against 4 economic agents who did not supply information in the investigation of for the benefit of consumers anticompetitive practices in the telecommunications market. Said fines total and economic efficiency will US$29,342.604. be pursued again in 2010”, indicated the Competition In addition, the CS received and analyzed 2 complaints which were ruled out, Superintendent, Jose due to the fact that said complaints did not comply with hypothesis established Enrique Argumedo. in the Competition Law. With respect to case investigations, the CS monitored activities such as: the exclusive TV transmission of the National Mayor Soccer League games; the transmission of the Spanish Soccer League games; the relation between airlines and travel agencies; and the import of pharmaceuticals used for the treatment of Influenza A H1N1. • Activity in the Judiciary System The CS issued 30 requirements to the Salvadoran General Attorney, requesting to collect the fines imposed to different sanctioned economic agents. During 2009, the CS filed 42 reports and writs with the tribunals of the Justice Supreme Court. Thirty six of them were filed with the Administrative Contentious Tribunal and 6 with the Constitutional Tribunal. By means of four of said reports, the CS presented technical, legal, and economic arguments to justify the legality of the decisions of the Board of Directors (BD) of the CS. Nine reports confirmed the existence of the appealed resolutions. Edificio Madreselva, 1er Nivel, Calzada El Almendro y 1ª Ave. El Espino, Urb. Madreselva, Antiguo Cuscatlán, El Salvador. E-mail: contacto@sc.gob.sv - www.sc.gob.sv
  2. 2. Four reports contained the final allegations prior to sentencing. The remaining 25 writs contained other requests and considerations. • Mergers and Acquisitions In 2009, the CS reviewed 13 merger/acquisition authorization requests. Only one of said requests was authorized (the operation amongst “Inversiones Financieras Citi”, “Banco Citi”, and “Citi Info Centroamérica”). Six of the aforementioned requests were declared unsuitable due to the fact that these operations did not need prior authorization from the CS (including the TACA/AVIANCA operation).pursuant to the Competition Law. Two requests were declared inadmissible because they did not comply with the formalities to file this type of requests. Finally, one request was overruled due to lack of information and three are still been reviewed (amongst these is the one related to the purchase of Shell El Salvador). • Sector Studies on Competition Conditions The CS carried out 3 sector studies on competition conditions in 2009.The sectors studied were rice, fertilizers, and fluid and powder milk. In addition, the studies on the cheese and iron sectors are in process. In 2010, the study on the competition conditions of the credit and debit cards sectors will be reassumed. During 2009, the prices of products such as: fertilizers, rice, fluid and powder milk, beans, and the basic food basket were monitored. • Recommendations y Opinions Public Policy Recommendations: Thirty four public policy recommendations were issued, which were addressed to 8 governmental institutions. From the aforementioned recommendations, 20 resulted from sector studies on competition conditions. Five of them resulted from monitoring activities or prior investigations. Nine recommendations resulted from the investigation of anticompetitive practices. In some cases, the same recommendations were addressed to more than one institution, due to the fact that they are related for their enforcement. A chart with the recommendations issued by the CS in 2009 is set forth below: Recommendation Recommendation resulted Sector or Market Number of addressed to: from: recommendations Ministry of Agriculture and Sector study on competition Rice, fertilizers, fluid 18 Livestock conditions and powder milk Ministry of Finance Sector study on competition Rice 2 conditions Ministry of Economy Sector study on competition Rice and fertilizers 8 conditions Ministry of Public Health Sector study on competition Fluid and powder milk 3 and Social Assistance conditions Salvadoran Soccer Monitoring activity or prior Open television 4 Federation investigation Civil Aviation Authority Monitoring activity or prior Travel agencies 1 investigation Edificio Madreselva, 1er Nivel, Calzada El Almendro y 1ª Ave. El Espino, Urb. Madreselva, Antiguo Cuscatlán, El Salvador. E-mail: contacto@sc.gob.sv - www.sc.gob.sv
  3. 3. General Superintendence Case analysis of an alleged Telecommunications 4 of Electricity and anticompetitive practice Telecommunications Vice Ministry of Case analysis of an alleged Public transportation of 5 Transportation anticompetitive practice passengers Opinions on Legal Framework: 6 A. To the draft of the Credit Cards System addressed to the Legislative Assembly; B. To 3 technical regulations on pasta, premixed cement, and fluorescent lamps issued by the National Science and Technology Council; C. To a draft of a postal remitances project of El Salvador´s Mail System; and, D. As a follow-up of the preliminary conclusions of the “Regional Study of Air Transportation of Passengers”. The BD of the CS issued an opinion with recommendations to the Civil Aviation Authority on the Civil Aviation Organic Law and applicable regulations, by means of the resolution RC-AE-04/2009, dated April 21st, 2009. Opinions on public tender processes: 3 A. Long term contracts through proceedings called by the “Compañía de Alumbrado Eléctrico de San Salvador S.A. de C.V.”; B. Public tender documents issued by Executive Port Commission: “Contracting Companies to Provide Labor Force and other Resources to the Executive Port Commission, in order for Port of Acajutla to Render Services during the Period Starting on January 1st, 2010 until December 31st, 2010”; and C. Policy to be applied to public tender processes of the Salvadoran Social Security Institute. • National and International Cooperation and Coordination Agreements 3 national: Customs, Consumer Protection Authority, and renewal with the Civil Aviation Authority; 3 international: Fiscalía Nacional Económica of Chile, Instituto Nacional de Promoción de la Competencia of Nicaragua, and the renewal of the agreement with the Tribunal de Defensa de la Libre Competencia of Chile; 2 Academic Sector: Agreement renewal with the Escuela Superior de Economía y Negocios and with the Universidad Centroamericana “José Simeón Cañas”. Furthermore, the Internship Program was broadened to include students of any career studying at universities with which the CS has subscribed an agreement and to give the possibility of executing their social work at the CS. • Central American and International Activity Competition Policy Working Group in the Central American Integration Edificio Madreselva, 1er Nivel, Calzada El Almendro y 1ª Ave. El Espino, Urb. Madreselva, Antiguo Cuscatlán, El Salvador. E-mail: contacto@sc.gob.sv - www.sc.gob.sv
  4. 4. Five meetings and nine video conferences took place. Three Central American Bulletins were published. The study of the competition conditions of the pharmaceutical sector was initiated with the non refundable cooperation of the Interamerican Development Bank for the Regional Public Goods Project. In addition, the Regional Training Program was carried out by the Federal Trade Commission of the United Stated of America. Active Participation in Forums: Tenth Session of the Intergovernmental Experts Group in Competition Law and Policy, Central American Competition Forum, Competition Global Forum (OECD), Latin American Competition Forum, Ibero American Competition Forum, and the ICN Seminar on the Agencies Effectiveness. Participation in Trade Negotiations and Training: 3 Negotiation Rounds: Negotiation Round of the Canada - CA4 Free Trade Agreement; VI Negotiation Round of the Central American – European Union Association Agreement; and, Reduced Negotiation Round of the Central American – European Union Association Agreement. 4 Central American Coordination Rounds: 2 Central American Coordination Meetings with respect to the Central American – European Union Association Agreement and 2 Central American Coordination Meetings with respect to the Canada - CA4 Free Trade Agreement. National Training carried out by International Consultants: 23 activities with the Justice Supreme Court the Salvadoran General Attorney´s Office, Customs, National Registries Center, National Judicial Council, General Superintendence of Electricity and Telecommunications, universities, and thinking tanks. Participation in International Training: 9 international organizations forums and seminars. The international activity carried out by the CS includes the renewal of the program “Strengthening Institutions and Capacities in the Areas of Competition Policy and Consumer Protection” (COMPAL II), for competition advocacy activities to complement those executed in the first stage of said program. Additionally, the Interamerican Development Bank provided non refundable financial resources for pre investment projects called “Regional Public Goods Project”, presenting the proposal “Development of the Regional Competition Policy”. The Central American countries, including Panama, are the project´s beneficiaries and the CS has been designated to execute said project. • Special Events The CS launched the following manuals: “Let´s Learn about Competition” and “Detecting and Preventing Bid Rigging in El Salvador”, as well as a new web site www.sc.gob.sv, and the board discussion “Challenges and Defiances of the CS”. • More Competition Advocacy Activities The CS has carried out 74 informative presentations. A space in Facebook has been created for the CS, which currently has 1,300 registered users. The CS has produced the following institutional publications: “White Book” or “Libro Blanco”, which contains procedural amendments to the Competition Law; the manuals “Let´s Learn about Competition” and “Detecting and Preventing Bid Rigging in El Salvador”; 2006-2009 Recompilation of Public Policy Recommendations; Recompilation of Articles and Essays written by the CS. Besides, the CS has made the necessary contacts to gain presence in a newspaper with nationwide readers, in a specialized magazine, and in a virtual media to publish essays and articles on Competition Law topics, free of charge. Edificio Madreselva, 1er Nivel, Calzada El Almendro y 1ª Ave. El Espino, Urb. Madreselva, Antiguo Cuscatlán, El Salvador. E-mail: contacto@sc.gob.sv - www.sc.gob.sv

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