- 1.What is the relevant antitrust legislation?
The Competition Law, and its Regulations. The Competition Law was approved by Legislative Decree No. 528, dated 22 December 2004. It was published in the Official Gazette 240, Volume 365 of 23 December 2004; and is in force since 1 January 2006. The abovementioned law was amended through Legislative Decree No. 436, dated 18 October 2007, which was published in the Official Gazette 204, Volume 377 of 1 November 2007.
The Regulations of the Competition Law were approved by Executive Decree No. 126, dated 5 December 2006, and were published in the Official Gazette 227, Volume 373 of 5 December 2006.
- 2.Which authorities enforce antitrust legislation?
The Superintendence of Competition, which is a publici juris institution with legal status and with its own patrimony. It is a technical institution with administrative and budgetary autonomy for exercising its attributions and performing its duties. It is related to the Executive Branch through the Ministry of Economics.
The abovementioned entity looks after the compliance of the Competition Law, and its regulations, by means of a technical, legal, and economical analysis system, complemented by support studies and other related activities.
The maximum authority within the Superintendence of Competition is the Directive Council, which is comprised by the Superintendent of Competition and two directors, appointed all of them by the president of the Republic.
The resolutions of the Directive Council shall be reached by a majority of members.
- 3.Are decisions of the antitrust authorities subject to administrative or judicial review?
Yes. The act that definitely resolves an antitrust procedure can be challenged by means of a review recourse, which shall be submitted in writing before the Directive Council of the Superintendence of Competition within five
working days, starting from the day that follows, to the date when the final resolution was notified. The review recourse shall be resolved in no more than ten working days after its admission.
The abovementioned administrative review is optional for the purposes of the contentious administrative action, as a judicial mean for challenging the act that definitely resolves the antitrust procedure, and shall be submitted in writing before the Contentious Administrative Chamber of the Supreme Court of Justice within 60 working days, starting from the day that follows to the date when the final resolution was notified.
If the administrative review recourse is submitted, the contentious action cannot be filed until the review is finally resolved.
- 4.What practices can be deemed as anti-competitive under the legislation?
Anti-competitive practices are classified by the Competition Law as:
• Anti-competitive practices amongst competitors:
The Competition Law doesn’t establish exhaustively which practices amongst competitors shall be considered as such. Nevertheless, as examples, the following practices amongst competitors are prohibited by said statute:
- establish agreements to fix prices, or other conditions for purchases or sales under any form whatsoever;
- fix or limit production quantities;
- fix or limit prices at auctions or in any other form of private or public tender, national or international, with the exception of joint bids submitted by economic agents that are clearly identified as such in the documents submitted by the bidders; and
- market sharing, whether by territory, volume of sales or purchases, by type of sold products, by customers or sellers or by any other means.
• Anti-competitive practices amongst non-competitors:
These kinds of practices are no restricted in the Competition Law, but as examples given by said law, the following practices are considered as forbidden practices amongst non competitors, as long as the economic agent holds a dominant position in the relevant market:
- conditioned sales, whenever a supplier sales a product under the condition that the buyer must purchase other products from the supplier or companies related to the supplier;
- the sales or transactions subject to the condition of not using, nor acquiring, nor selling, nor providing goods or services available and normally offered to third parties or by third parties; and
- the agreement among several economic agents or invitation to them to exercise said practice.
• Abuse of dominant position:
Any action that constitutes an abuse of dominant position by economic agents in a given market is forbidden. Examples of said actions are given by the Competition Law as follows:
- the creation of obstacles to impede the entry of competitors or the expansion of existing competitors;
- when the action has the purpose of limiting, impeding or displacing in a significant manner the competition in a market;
- the systematic reduction of prices, below the cost price, with the purpose of eliminating one or several competitors or impeding the entry or expansion of the same; and
- the sales or rendering of services in a given part of the territory of the country at a price that differs from the price charged in another part of the country, with the intention or effect of reducing, eliminating or displacing competition from that area of the country
- 5.Do antitrust violations incur administrative, civil or criminal liability?
- 6.What are the penalties for antitrust and criminal violations?
Non compliance with the Competition Law shall be sanctioned with fines which amount shall be determined in accordance to the severity of the infringement, the damage caused, the effect on third parties, the duration of the antitrust practice, the size of the market and recidivism, and the fine shall not exceed 5,000 minimum monthly urban wages in the industrial sector (US$1,015,500).
Notwithstanding the aforementioned, when the antitrust practice is particularly grave, the Superintendence of Competition may impose, instead of the fine stated in the previous paragraph, a fine up to 6 per cent of the total annual sales, or up to 6 per cent of the value of its assets during the previous fiscal year, or a fine equivalent to a minimum of twice and up to a maximum of 10 times the estimated profits resulting from the antitrust practice, whichever is higher.
In addition to the economic penalty, the Superintendence of Competition, in the final resolution, shall order the antitrust practice to cease in a determined time period, and shall establish the necessary conditions or obligations, whether these are structural or behavioural.
- 7.How are investigations initiated and what are the procedural steps?
The procedure before the Superintendent shall initiate ex-officio or at the request of a third party by denounce. Before initiating the procedure, the Superintendent may carry out previous actions through officials empowered to investigate, inquire and inspect about any antitrust practice, with the purpose of preliminarily determining potential violations to the Law. The results of this preliminary investigation cannot be used as evidence in a procedure and in no case whatsoever.
In certain cases, the Superintendent may order precautionary remedies, when an imminent risk to the market exists and that may limit competition, the access of an economic agent to the market, or displacement of an economic agent, or that the detected conduct may result in damages to third parties or in damages to public or collective interests.
A third party can initiate the procedure through a written denounce, by stating all the facts in which consists the anticompetitive practice denounced.
The investigative stage of the procedure shall be ordered through a justified resolution which will indicate the following:
• the name of the official ordering the investigation and the place and date of the resolution;
• appointment of the procedure’s instructor to whom the case is delegated, and of the secretary whom shall also be in charge of notifications;
• a summarised description of the facts that justify the investigation and the type of infraction, and the sanction that could be imposed; and
• an indication of the right of search, to plead and invoke the laws and other legal grounds that justify the actions undertaken by the alleged offender, to provide evidence, make use of a hearing and all other guarantees which are part of the due process.
In performing his duties, the Superintendent may request relevant reports or documents to carry out the investigation, summon any person related to the case under investigation, and carry out the necessary investigations for the proper enforcement of the law.
The alleged offender shall be notified about the resolution ordering the investigation. Upon notification, the alleged offender shall be given with a copy of the minutes recorded and of any prior action, if any. In the case of an investigation initiated due to denounce, a copy of the complaint shall also be submitted.
The alleged offender shall have a term of 30 days starting from the day when the notification was received, to provide any allegation, document and data deemed necessary, and shall propose evidence and the facts to be proven.
Precluding the allegation period, the process shall be opened for evidence during a period of twenty working days. Evidence shall be assessed based on the rules of due judgment.
Once the file is integrated, the Superintendent shall conclude the investigations and send it to the Directive Council, that shall issue a final resolution in a period no longer than 12 months, starting from the date when the investigation started or when the denounce was filed; this term may be expanded by means of a justified resolution issued by the Directive Council, up to a term that shall not exceed of 12 months, only once, and only when the circumstances so merit.
- 8.What are the possible mitigating factors of anti-competitive practices?
There are no mitigating factors of anti-competitive practices established in the Competition Law and its Regulations.
- 9.Is there a leniency programme? What are the basic features?
During the investigation phase of the procedure for anticompetitive practices different than those among competitors referred to in question 4, the alleged offender may provide sufficient guarantees that will suspend or modify the alleged anticompetitive practice and recognise such fact before the Superintendent, whom shall verify, amongst others, the compliance of the following requirements:
• be the first amongst the economic agents involved in the conduct, and provide sufficient elements in its possession, and that according to the Superintendence’s judgment, allow to confirm the existence of the practice and the participation of the rest of economic agents;
• fully and continually cooperate with the Superintendence in the conclusion of the investigation;
• execute all the necessary actions to determine its participation in the practice which infringes the Law.
The Board of Directors, when issuing the respective final resolution shall not apply to the petitioner the criteria established in the second paragraph of answer to question number 6.
The above benefit may only be granted once for each economic agent.
- 10.Is there a provision for merger control in the antitrust legislation? What kinds of transactions are caught?
Yes. For the purposes of the Competition Law, mergers and acquisitions which require previous authorisation from the Superintendence of Competition are considered to exist when:
• economic agents that have been independent from each other enter into acts, contracts or agreements with the purpose of totally of partially merging, acquiring, consolidating, integrating, or combining their businesses; including judicial adjudications, actions of voluntary or forced liquidation, and inheritance or legacies, which result in the merger of companies, divisions or companies participations, and assets in general; and
• when one or more economic agents who control at least one other economic agent acquire through any means whatsoever, the direct or indirect, total or partial control of more economic agents.
For the legal effects, control shall be understood as the capability of an economic agent to exert an influence over another by exercising property rights, or the right of use, of all or part of the economic agent’s assets or by means of agreements that grant a substantial influence in the composition, voting or decision making of the Boards and management bodies or the legal representatives of the economic agent.
A written request for the authorisation of a merger or acquisition under the above terms must be filed before any of the following possible events take place:
• the legal act is executed according to the applicable legislation or, should it be the case, the condition precedent is fulfilled to which said act is subject;
• control is acquired de facto or de jure, or exercised directly or indirectly, over another economic agent; or if assets, participation in trusts, capital stock contributions or shares of another economic agent are acquired;
• a merger agreement is executed amongst the involved economic agents, or in the case of a succession of acts, before executing that which, when completed, would exceed the legal thresholds; and
• in the cases the merger or acquisition proceeds from an authority action, the latter will require, before dictating the action, the favorable pronouncement of the Superintendence, which should be mentioned in the document to be issued.
In case of mergers or acquisitions derived from legal actions performed abroad, the respective authorisation must be requested before the legal or material effects take place in the national territory.
- 11.What are the thresholds (turnover, etc) for filing, and is it voluntary or mandatory?
Mergers or acquisitions which combined total assets exceed 50,000 minimum urban annual wages in the industrial sector (approximately US$121,860,000) or which total income exceeds 60,000 minimum urban annual wages in the industrial sector (approximately US$146,232,000) must request its prior authorisation to the Superintendence of Competition.
- 12.What are the deadlines for filing and is there any mandatory waiting period? Are there sanctions for non-compliance? Which party should pay for them?
Regarding deadlines, please refer to the first four sub-sections of the answer to question 10. Sanctions for non-compliance are the ones referred to in first and second paragraphs of answer to question 6. The parties that should pay for the sanctions are the economic agents involved in the merger or acquisition.
- 13.What is the substantive test for clearance and overall timetable for the analysis?
The substantive test shall include:
• Economical efficiency:
- the relevant market where eventually the effects of the merger or acquisition will take place;
- the relevant market where, eventually, the merger or acquisition’s effects will be produced with respect to competitors and consumers of the goods or services, as well as in the other related markets and economic agents;
- the control of the economic agents involved;
- the dominant position that would result if said merger or acquisition is authorised; and
- the value of gains in economic efficiency in the relevant market that could derive from the merger or acquisition, which must also be demonstrated by the economic agents involved.
• Any other relevant issue:
- that economic agents involved in legal acts concerning assets or participations in foreign companies do not acquire control of Salvadoran companies, nor do they accumulate in the national territory shares, participations in companies and trusts or any asset in general, in addition to those which they directly or indirectly had before the transaction;
- an insolvent economic agent is involved in the merger or acquisition, as long as it proves that it has searched unsuccessfully for non competitor buyers;
- the temporary entailments established to develop certain project or specific aim, such as consortiums, strategic alliances, amongst others; and
- simple corporative re-structuring operations, where an economic agent owns and possesses, directly or indirectly, at least during the last three years, 98 per cent of assets or corporate participations of the economic agents involved in the transaction.
In order to issue a resolution concerning a merger or acquisition, the Superintendence has a time period that shall not exceed 90 days from the day after filing the request.
In the event that the Superintendence of Competition requires additional information or if it considers that the information submitted is not sufficient, it should request it within a period of fifteen days after filing the request. In this case, the term established in the previous paragraph shall begin the day after filing the additional information requested.
The lack of a resolution by the Competition Superintendence within the term established shall be understood as an authorisation to merge.
- 14.To what extent do merger control rules apply to regulated sectors?
When mergers and acquisitions are carried out by economic agents subject to oversight by any regulator, such as the Superintendence of the Financial System, the Superintendence of Pension Funds, the Superintendence of Securities, the General Superintendence of Energy and Communications, etc, the Superintendence of Competition shall issue an opinion regarding its authorisation on legal basis. This opinion shall be binding for the regulator entity.
- 15.What remedies may the antitrust authority impose?
In addition to the economic penalty, the Superintendence of Competition can order the act to cease in a determined time period, and shall establish the necessary conditions or obligations, whether these are structural or behavioural.
- 16.What are the main laws and regulations related to trade remedies?
Applicable legislation related to trade remedies are the agreements issued by the World Trade Organization (WTO) such as the General Agreement on Tariffs and Trade 1994 (GATT 1994), Agreement on Implementation of Article VI of the General Agreement on Tariffs And Trade 1994 (Antidumping Agreement), Agreement on Subsidies and Countervailing Measures; Agreement on Safeguards, approved by Legislative Decree No. 292, dated 9 March 2005, and published in the Official Gazette 78, Volume 327 of 28 April 1995. Also are applicable the Central American Regulations about Unfair Trade Practices –Reglamento Centroamericano sobre Prácticas Desleales de Comercio–, and the Central American Regulation about Safeguard Measures –Reglamento Centroamericano sobre Medidas de Salvaguardia–, both regulations published in the Official Gazette No. 89, Volume 375 of 18 May 2007; and the Free Trade Agreements (FTA´s) ratified by El Salvador with other countries, for example DR-CAFTA, FTA Taiwan, FTA Colombia, FTA Mexico, FTA Chile, FTA Panama and FTA Dominican Republic, which include regulations that are referred to trade remedies, applicable only for the parties to such FTAs.
- 17.Which are the investigating authorities? Who takes the final decision on the application of trade remedies?
The Ministry of Economics is the authority in charge of the investigations about unfair trade practices and safeguards, and also the authority that decides and imposes trade remedies. Said ministry is an entity that belongs to the Executive Branch, and amongst other purposes, it promotes the economic development and establishes trade policies.
- 18.How long does a trade investigation last?
In the case of investigations of unfair trade practices (dumping or subsidies) the period of investigation, except for special circumstances, shall be concluded in a period of 12 months. An additional period of six months can be authorised upon exceptional circumstances.
In the case of investigations on safeguards, the term will depend on the forum before which the investigation has been initiated (eg, WTO, FTAs or Central American Regulations), but in any case the investigation shall not exceed a 12-month period, except for the investigations on textile safeguards under DR-CAFTA, which term of investigation shall not exceed a 90-day period after its initiation.
- 19.What is the recent record of the authorities regarding the imposition trade remedies?
Up to this date, El Salvador has not imposed anti-dumping, countervailing or safeguard measures. Every and all previous investigations have been closed without imposing trade remedies.
- 20.Are information and documents provided during a trade remedies investigation treated confidentially?
The information or documentation provided by the parties shall be treated confidentially if such information or documents are confidential by its nature (eg, because disclosing said information or documents would mean a significant competitive advantage to a competitor, or because its disclosure would have a significant adverse effect upon a person providing the information or upon a person from whom that person acquired the information), or was provided on confidentiality basis by the parties to an investigation; nevertheless, the
authorities shall request to the parties involved to furnish non-confidential summaries thereof, for the purposes of being shared by the investigative authority with third parties involved in the investigation. Said summaries shall include enough details to allow a reasonable understanding of the substance of the information submitted under confidentiality basis. In exceptional circumstances, the parties may indicate that the confidential information is not susceptible of
non-confidential summaries, in which case, a statement of said exceptional
reasons shall be provided.
- 21.Are verification visits permitted and are they carried out in practice?
Yes, the authorities may perform visits to the companies that are being investigated, in order to verify the veracity of the information provided or to obtain further details. Said visits shall be preceded by a notification to the companies and need the previous authorisation of said companies; the visits can be performed as long as the governments that have jurisdiction on said companies do not object the visits.
- 22.Are provisional measures permitted under the anti-dumping laws and regulations?
Yes. Provisional measures are allowed, provided that an investigation has been initiated, a preliminary and affirmative determination has been made of dumping practices and consequent damages to a domestic industry might be caused, and that the authority deemed such measures as necessary for preventing damages that might be caused during the investigation if said measures are not issued.
The provisional measures may take the form of a provisional duty or a security such as cash deposits or bonds, which shall be equal to the amount of the anti dumping duty provisionally estimated, being not greater than the provisionally estimated margin of dumping, and such measures shall be limited to the shorter period as possible, not exceeding a four-month period, and a
six-month or nine-month periods in exceptional cases.
- 23.Is anti-dumping circumvention regulated? How?
No, the anti-dumping circumvention is not regulated in Salvadoran legislation.
- 24.Is China considered a market economy for the purposes of anti-dumping investigations? If so, is it possible to argue otherwise?
No. Due to its type of economy China is not considered as market economy for anti-dumping investigations. Article 2.2 of the WTO Antidumping Agreement, as well as the Protocol of Adhesion of the Popular Republic of China, shall apply to investigations for originating goods of China.
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