Guatemalan lawmakers debate new competition laws

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By LatAm Reports Editor

The political moment that the country is going through with the arrival of new authorities in the Executive and Legislature opens the possibility of promoting the discussion of a competition law to regulate different practices and, at the same time, be a mechanism that promotes economic growth.

Different actors are beginning to debate and activate the need to reach consensus and create a relationship with the competition law initiative, with a view to advancing and approving it in the medium term.

In Congress, the official bloc has also confirmed the intention to discuss the proposal with an objective approach, so that it does not cause distortion in the market, but on the contrary, facilitates competition.

In the environment there is a general agreement that the political moment and the conditions between the Executive and Legislative bodies are appropriate to create a new legal framework, or “fine-tune” initiative 5074, which was presented on May 17, 2016, and whose discussion advanced in the plenary session, but was not approved.

Having competition regulations would allow Guatemala to have useful legislation for the national economy, in various variables, as well as compliance with the various trade agreements signed with partners, which demand these conditions in the markets.

The Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations (Cacif), the Institute for Economic Competitiveness (ICE) and the National Business Council (CNE) have made their positions public.

President Bernardo Arévalo has reiterated that one of the priorities is to advance legislation, and the president of Congress, Nery Ramos, reported a few days ago that a technical table was formed to carry out the analysis and generate discussion.

Dialogue space

When consulting Ignacio Lejárraga, president of Cacif, about this approach, he stated: “We agree with the approval of a competition law. “It can have advantages for Guatemala and Guatemalans, one of them being having it as a mechanism to attract investments, by giving certainty to investors that the country has the necessary conditions to invest.”

“We consider that, regardless of the version from which we start, the important thing is to return to the recommendations that previous legislatures have made on the law and a space for dialogue can be opened where all Guatemalans who can contribute to it, from our particular perspectives , let’s find a law that achieves its objective,” he added.

The president of Cacif also listed some elements on which agreements must be reached.

For Lejárraga, it must be “a technical initiative, in which there are mechanisms that allow competition, but that do not affect free entrepreneurship. A good example is the Credit Card Law, which provides a technical framework that does not discourage credit card issuers.”

And, finally, he acknowledged that it is a good time to learn about this initiative, due to the implications it may have from an investment perspective.

Although Congress has tried to reactivate the more than 200 initiatives that remained from previous legislatures, prioritizing those that can make a difference for Guatemala and Guatemalans is necessary.

Challenges to adopt

For Javier Núñez, president of the ICE Advisory Council and international competition expert, he also provided a position on the economic and productive relationship, aimed at a future discussion of the regulations in Guatemala.

Fundamentally, he said that, in the business environment, best international practices are adopted and that competition is an issue that is increasingly monitored, more required, to carry out international business, as well as attract investments, which is a topic of exchange to generate benefits. for the consumers. In this regard, he stressed that in Guatemala the issue of competition has been discussed for many years, there are many precedents and we are not starting from scratch, which is good.

He considered that, without a doubt, as in any country, the challenge is to reach agreements between the different political actors, in an agreement that is achievable and quickly, since it is one of Arévalo’s promises.
“We must focus the different actors and reach agreements for the benefit of all Guatemalans,” he recommended.

Discussion process

Núñez also provided an approval perspective of what has to be done for the approval of a law.
In his opinion, it is a long process, and the first thing is to agree on the legal framework and, from that, create the body in charge of applying the law. Which implies having facilities, furniture, equipment, hiring personnel and appointing authorities, training the professionals who will apply the law, as power, and always reviewing the actions.

The director of ICE was consulted about three key mechanisms of competition regulations adjusted to current times, and he mentioned defining the objective and, from this, the faculties and powers that a competition law may have begin to be determined. , without forgetting that the objective is to improve the country’s economy, from the point of view of efficiency, he added.

In the implementation of competition law there are two aspects that are fundamental, he mentioned.

One is that the agency has to apply the law in a very clear, correct and very robust manner, which is foundational. But, in addition, it must be accompanied by the tools and economic analysis that are applied to this matter, so that the decisions adopted by the authority first comply with robustness from the legal perspective and from the analytical point of view, all this in a system that provides the opportunity to the investigated economic agents to present their defense arguments.

In his opinion, work must be done quickly to comply with the matter, and that it be something that can bring good results for the Guatemalan economy, but taking care that, due to the rush, production is not harmed.

Discussion

Regarding how a deep discussion of a competition law is being seen in Guatemala, José Andrés Ardón, executive director of ICE, emphasized that, from the outset, it is known that this is one of the priorities of the Executive to the Legislative Body, and it was evidenced with the formation of a commission to begin discussing this matter.

From ICE, he explained: “They have been working for many years to train and communicate the importance of being prepared for this type, which is, of course, very important for the country, and we believe that it is good to start the discussion soon.”

He stressed that it is very important that a technical discussion can be held, in which the deputies are involved, those who may be affected by said regulations and who can have feedback.

“It is a policy that has to be approved in the short term, which is important, and it takes a few months to make a good law, and you have to take the time,” he emphasized.

When asked, of the two most recent initiatives that have been presented, he stated that the one they have seen, the one that is more technical and that has more elements to present at the best practices and recommendations events, is initiative 5074.

In any case, it is of the idea that, if it is necessary to finish it “polishing”, in a discussion process, it is important that some amendments be presented, but that, in general, that is the one that best meets the technical criteria. that have been analyzed in ICE.

Ardón also offered a reading on the spirit of the organized private sector to begin discussing a regulation, and highlighted that eight years have passed since the last time it was done, as well as the importance of the approval of the bill. “I believe that the private sector, companies, business chambers and others are prepared, willing and eager to approve this initiative.”

“They are open to what we can hear, to having that discussion, always taking care of elements, such as the presumption of innocence, due process, the appeal of discussions, the authority that is eminently technical, and there is a lot of concern that it could be used as a political tool,” said Ardón.

He reiterated that, as long as technical elements and principles are met, it can be a tool that promotes competitiveness in Guatemala. But if it is misused, it is approved in a context of persecution, for example against the private sector, it may include elements that are not positive for consumers, as well as for the country.

Agreements

Dulce Veras, executive director of the CNE, declared that there is a need to promote a competition law that has been in place for many years, and exemplified that it has not been possible to comply with the Association Agreement with the European Union, and last year it was signed a trade agreement with South Korea, so regulations must be in place to comply with those obligations.

The other thing, he said, is that the market needs to be regulated to open up to new sectors. To begin with, talk about investment and economic development, and an authority that has the ability to regulate certain competitive practices.

Then, he stated that it is now that the opportunity opens, with the arrival of a new government, to promote competition law, which has the capacity to regulate and make a more efficient market.

Incidents

Like the ICE, the CNE has the interest of discussing the fundamental elements, under the international standards of having a competition law.

Veras recalled that there have been initiatives that have redeemable aspects; However, no specific proposal is promoted, but instead entering into a technical discussion “of what should be included in competition regulations.”

“This is a task that the Executive and the Legislative must have, accompanied by the part of enforcing the minimums that a good competition law must comply with, with the capacity to regulate the market and convert a much more efficient economy,” he emphasized. .

“There are conditions”

The director of CNE commented that there is a window of opportunity to promote certain structural reforms that lead to change, and the competition law initiative is a minimum step that must be taken to have a framework and system that is long-term. , in an innovative, efficient, competitive and productive market, which in the long term would lead to structural changes.

“We see that the Government comes out with the need to promote this law. It is on the legislative agenda and the public agenda; So, it’s an opportunity to do it. The discussion is clearer that there should be a law, but the dilemma is what law we want and what it should contain, and that is the debate we want to have,” he said.

Legislative agenda

Independent deputy Samuel Pérez Álvarez stated that President Arévalo has mentioned it and attempts have been made to put it up for discussion since the previous legislature.

He confirmed that it would be a new competition law proposal, but that it would be based on initiative 5074.
In the structure of the bill, several issues would have to be seen, such as governance, the autonomy of the competition authority, which is fundamental, “because it cannot be a corporatist entity or with a conflict of interest, but “which has to be an autonomous and objective entity, so as not to generate distortions in the market and the economy, among others.”

It would also be necessary to carry out information studies and obtain data on the market structure for decision-making, on what could be considered competition crimes, due to the fact of having a dominant position or an abusive position due to that dominant position, but first You have to identify what that dominant position is, among other issues.

This article has been translated from the original which first appeared in Prensa Libre