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New Free Competition Act


On August 30, 2016, Act 20,945 was published in the Official Gazette that perfected the free competition system set out in Decree Law 211.  Save some exceptions, this law entered into effect on the date of its publication.


We can highlight the following in this new law:

1. New deeds, acts or arrangements contrary to free competition

New deeds, acts or arrangements were included that are contrary to free competition, namely collusion by “hard-core cartels” and other practices conferring market power. Interlocking was also included, meaning a person who simultaneously holds executive positions or directorships in two or more companies that compete against each other.

2. New reporting obligation

An obligation was added to file a report with the National Economic Attorney General’s Office (hereinafter also the FNE) whenever a company or member of a business group directly or indirectly acquires an interest of more than 10% in the capital of a competitor.  Any violation will be penalized.

3. New penalties that the Court of Defense of Free Competition (hereinafter TDLC) may impose.

The TDLC may impose significant fines totaling either 30% of sales during the period that the violation lasted or twice the profit earned.  If this cannot be calculated, the TDLC may impose fines equal to 60,000 annual tax units. Special penalties can be imposed for collusion.

4. Damage indemnity action

No damage indemnity action may be taken directly before civil courts, but rather must be filed first with the TDLC. A petition can be made in the action for compensation for all damages caused during the period that the infringement lasted. The TDLC must ground its judgment on facts, which must be set out in its decision and will serve as grounds for any claim.

5. Collusion: compensated informant

The first informant may receive benefits when the informant has been involved in the collusion and has provided information to the FNE.  The second informant may receive a reduced penalty provided the informant has participated in the collusion and provided additional information.

6. Business transaction concentration

A title is added on “Concentration Transactions,” hereinafter CT.  These rules will enter into effect six months after the FNE issues a decision establishing the thresholds that trigger a mandatory notice to the FNE.  The FNE will also have 90 days to issue that decision after publication of this law. After an investigation of the CT, the FNE may approve the transaction, approve it under certain conditions, or forbid it.

7. Criminal Sanctions

The crime of collusion is typified and penalties of 3 years and one day to 10 years of imprisonment may be imposed as well as a disqualification to hold certain positions. The first year of imprisonment must be effectively served.  A compensated informant system is established for this crime.  Also, penalties of 61 days to 3 years of prison may be imposed when there is concealment or misinformation to the FNE.


Please contact Manuel Jimenez at should you require further information on this subject.