- 1.What is the relevant antitrust legislation?
The Promotion of Competition and Effective Consumer Defense Statute (Law No. 7472) and its Regulations.
- 2.Which authorities enforce antitrust legislation?
The Costa Rican Competition Promotion Commission (COPROCOM).
- 3.Are decisions of the antitrust authorities subject to administrative or judicial review?
Yes, COPROCOM’s decisions may be challenged in a Judicial Court within a month after the decision is notified.
- 4.What practices can be deemed as anti-competitive under the legislation?
In general, the statute forbids public and private monopolies, as well as monopolistic practices that may impede or limit competition, market access, or force an exit from a given market. For such matter, the Statute differentiates among absolute and relative monopolistic practices, providing an array of specific practices that would be considered anti-competitive.
According to the statute, absolute monopolistic practices include any action, contract, agreement, arrangement, or concurrence of competing economic agents, for any of the following purposes:
• fix, increase, concur, or manipulate the purchase or sale price of goods and services in a given market, or trade information for the same effect;
• force the obligation of producing, professing, distributing, or selling a limited amount of goods, or providing a limited volume, number or frequency of services;
• divide, distribute, assign, or impose market portions or segments, for goods or services, through customers, suppliers, and or time periods; or
• set, fix, or coordinate the offers or lack of offers for public bids, public auctions, and similar.
Relative monopolistic practices comprehend any action, contract, agreement, arrangement, or combinations which result or effect may be the improper displacement of other market agents, the substantial impediment of their market access, or the establishment of exclusive advantages for one of more persons in any of the following cases:
• fixing, imposing or establishing the exclusive distribution of goods or services based on the individual, location or time periods, including the division, distribution or assignment of clients or suppliers among non-competing economic agents.;
• imposing prices or any other conditions to be observed by suppliers or distributors when selling or distributing goods or services;
• conditioning a sale or transaction to the purchase, acquisition, sale or supply of an additional good or service or upon reciprocity;
• conditioning a given sale or transaction to not using, acquiring, selling or providing other goods or services normally offered to third parties;
• the concurrence between various economic agents or their invitation to set pressure against a given customer or supplier, with the purpose of discouraging a certain conduct, taking reprisals, or force an action;
• the production or commercialisation of goods and services for a lower price than its normal value; and
• in general, any deliberative act that causes the market exit of competitors or impedes their market access.
- 5.Do antitrust violations incur administrative, civil or criminal liability?
Antitrust violations incur administrative and civil liability, which may range from administrative measures and orders to the imposition of fines. No criminal liability is provided under the statute.
- 6.What are the penalties for antitrust and criminal violations?
In addition to potential administrative measures and orders, antitrust violations could result in the imposition of a fine by COPROCOM. Such fine may range between 410 times the minimum wage and up to 680 times such amount, depending on whether the conduct qualifies as an absolute monopolistic practice or a relative monopolistic practice. In case of particular severity of the incurred conduct, COPROCOM may impose a fine equivalent to 10 per cent of the company’s annual sales, as measured from the previous fiscal year, or 10 per cent of its assets, whichever results higher. Moreover, if the “offender” does not pay the fine on time, COPROCOM can take the case to the Judicial Courts.
In order to impose the fines, COPROCOM will take into consideration the following aspects:
• the illegality of the infraction;
• the threat or damage caused;
• the evidence of intent or wilfulness by the offender;
• the offender’s market share;
• the size of the affected market;
• the duration of the incurred conduct;
• if it is the offender’s first violation or not; and
• the payment capacity of the offender.
- 7.How are investigations initiated and what are the procedural steps?
An administrative proceeding before COPROCOM can be opened by either a complaint from an economic agent or from COPROCOM itself. The proceeding must be started within six months of the infraction/fault or of the knowledge of the infraction and COPROCOM must follow the provisions of the Public Administration Statute, which establishes the following steps:
• COPROCOM will name an Administrative Instance that will be in charge of the proceeding. This Administrative Instance will be in charge of any previous matters that may come out in the course of the proceeding and will demand and carry out the necessary evidence proceedings, by request of the parties or by its own initiative. Eye and technical expert inspections can be carried out if necessary.
• An appearance notice for an oral and private hearing must be issued 15 days before the date of the hearing.
• An oral and private hearing before the Administrative Instance in charge of the proceeding will be held. In this hearing, all of the collected evidence is received and admitted (or not), and the arguments of the parties are heard by the Administrative Instance in charge of the proceeding, who is also specifically in charge of the direction of the hearing. Evidence can be filed previously or at the moment of the hearing. Furthermore, in this hearing,? the parties are both entitled and obliged to the following:
• to file evidence;
• to obtain the admission of the filed evidence if it is pertinent and relevant;
• to request to the Administrative Instance a confessional (deposition) of the other party or any testimony in general;
• to question/depose witnesses and experts, proposed by any of the parties.
• to clarify, extend, or modify the initial petition or defence;
• to propose alternatives and its evidence; and
• to provide conclusions on the facts and the law in relation with the admitted evidence and the results of the hearing.
• A second hearing may take place only if the first one was not sufficient to prepare the file for the final decision, because there are unsolved, pending issues. A third hearing is expressly prohibited by law.
• The final act/decision will be issued within 15 days of the date of the hearing, unless new facts or evidence are introduced. The final act is not issued by the Administrative Instance itself, it is actually issued by COPROCOM directly. If new facts or evidence are introduced, COPROCOM will also be responsible for deciding if a new hearing is necessary. The final decision may either impose a sanction, in accordance with the law, or determine there are no grounds for any sanctions and thus dismiss and close the case.? COPROCOM has up to four months to make a decision; after this time, it must issue either a sanction or a dismissal.
• The parties can request a reconsideration of the decision. Once the Administrative Process is completed, parties can take the case to Judicial Courts within the next month.
- 8.What are the possible mitigating factors of anti-competitive practices?
Although mitigating factors are not established per se, in order for a given practice that could qualify as a relative monopolistic practice to be considered anti-competitive, it must be demonstrated that the alleged offender has substantial power over the relevant market and that such practice is carried in relation to goods or services as least related to such relevant market. In this respect, the Statute establishes specific criteria to determine a relevant market in a given case and whether the economic agent has a substantial power over such market. For the scenario of absolute monopolistic practices, there are no mitigating factors since such conducts are absolutely prohibited.
- 9.Is there a leniency programme? What are the basic features?
- 10.Is there a provision for merger control in the antitrust legislation? What kinds of transactions are caught?
Although there are no specific pre- or post-merger notice obligations in the antitrust legislation - except for regulated sectors- the “Regulations to the Promotion of Competition and Effective Consumer Defense Statute”, as amended, include the option of a prior and voluntary communication of a merger to COPROCOM. This option applies for transactions in which the total amount of revenue reported in the previous fiscal year exceeds 30,000 minimum salaries, or in which the total amount of productive assets of the companies involved exceeds 50,000 minimum salaries, or when one of the original companies (or the new company that results from the merger) covered more than 40 per cent of the market affected by the merger. Under such scenario, COPROCOM reviews if the proposed merger plan could result in antitrust violations, which could later render the transaction illegal.
In addition to the mentioned voluntary procedure, COPROCOM can always review mergers carried out between competitors, by means of the mentioned administrative procedures. If a violation is found, COPROCOM may order the suspension, correction, or annulment of the merger, or impose fines in cases where mergers have been carried out specifically to diminish, hinder or impede competition with regards to similar goods or services.
- 11.What are the thresholds (turnover, etc) for filing, and is it voluntary or mandatory?
The statute has no notification or threshold requirement. Voluntary notice can be given and it applies only for transactions in which the total amount of revenue reported in the previous fiscal year exceeds 30,000 minimum salaries, or in which the total amount of productive assets of the companies involved exceeds 50,000 minimum salaries, or when one of the original companies (or the new company that results from the merger) covered more than 40 per cent of the market affected by the merger.
- 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?
Notification is not mandatory. Consequently, there are no sanctions under this scenario.
- 13.What is the substantive test for clearance and overall timetable for the analysis?
The test or threshold for vertical restraints and mergers and acquisitions is “substantial market power over the relevant market”.
- 14.To what extent do merger control rules apply to regulated sectors?
In case a transaction implies a potential market concentration and involves an entity supervised by one the Costa Rican Superintendences (Financial Entities Superintendence, Securities Superintendence, Pensions Superintendence or Insurance Superintendence), the transaction would need to be approved by the corresponding Superintendence, after proper review of a non-binding opinion to be issued by the Competition Promotion Commission on the intended transaction (section 27 bis of the “Promotion of Competition and Effective Consumer Defense Statute”).
- 15.What remedies may the antitrust authority impose?
In presence of a prior and voluntary communication of a merger to COPROCOM and if this entity finds that the intended merger may imply antitrust violations, it may propose corrective remedies to solve and avoid such potential violations. Among others, remedies may include the assignment, licensing, or transfer of assets or rights; limitations on the intended services to offer or the goods to sell; the obligation to supply certain products so specific clients in a non-discriminatory way; or the incorporation of certain clauses to contracts with providers or clients.
Aside from the voluntary procedure, if COPROCOM investigates a given merger and finds a violation, it may order the suspension, correction, or annulment of the merger, or impose fines in cases where mergers have been carried out specifically to diminish, hinder or impede competition with regards to similar goods or services. Fines can range up to 410 times the minimum wage, but as mentioned before, COPROCOM can also establish fines of 10 per cent of the annual sales or of 10 per cent of the assets of the offender, whichever results highest. Moreover, if the “offender” does not pay the fine on time, COPROCOM can take the case to the Judicial Courts.
- 16.What are the main laws and regulations related to trade remedies?
Trade Remedies are regulated in Costa Rica by means of international laws and regulations, such as the General Agreement on Tariffs and Trade (GATT), which was locally adopted by means of Statute Number 7475 of 20 December 1994. Moreover, on a regional basis, Costa Rica has adopted the “Central American Regulation on Trade Remedies” and the “Central American Regulation on Safeguard Measures”, which further develop the principles and regulations established under the GATT Agreements. Finally, Costa Rica has also entered into various trade agreements that contain specific dispositions for bilateral commerce.
- 17.Which are the investigating authorities? Who takes the final decision on the application of trade remedies?
The Ministry of Economy, Industry and Commerce (MEIC) is the competent authority to investigate and take a final decision on cases involving trade remedies. MEIC’s duties on these matters are complemented with the technical support of its Commerce Defense Division.
- 18.How long does a trade investigation last?
Pursuant to the timelines established under the “Central American Regulation on Trade Remedies”, a trade investigation may last up to 12 months, but may be extended to 18 months under exceptional circumstances as determined by the local authority (MEIC). For the specific case of safeguard measures, the “Central American Regulation on Safeguard Measures” provides that an investigation may last up to six months, but may be extended to 12 months under exceptional circumstances as determined by the local authority (MEIC).
- 19.What is the recent record of the authorities regarding the imposition trade remedies?
According to MEIC’s Commerce Defense Division, a very low percentage of cases conclude in the imposition of trade remedies in Costa Rica. Furthermore, in recent years such Office’s records show only two cases that have resulted in the imposition of anti-dumping rights.
- 20.Are information and documents provided during a trade remedies investigation treated confidentially?
Yes. Following GATT rules, both the “Central American Regulation on Trade Remedies” and the “Central American Regulation on Safeguard Measures” rule that the information and documents provided during an investigation shall be incorporated into separate files, one for public information and one for confidential information. In order for given information to be treated as confidential, the interested party shall duly justify such request to the investigating authority. Only the providing party and the investigating authority will have access to the file containing confidential information. Thus, such information cannot be released or revealed during the procedure.
- 21.Are verification visits permitted and are they carried out in practice?
Yes. Following GATT rules, both the “Central American Regulation on Trade Remedies” and the “Central American Regulation on Safeguard Measures” allow the investigating authorities (MEIC) to carry out verification visits during their investigations. According to MEIC’s Commerce Defense Division, the verification visits are indeed a cornerstone of any investigation process and therefore are normally carried out in practice.
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- 22.Are provisional measures permitted under the anti-dumping laws and regulations?
Yes. The “Central American Regulation on Trade Remedies” provides that the investigating authorities may recommend to the enforcing minister (For Costa Rica, the minister of Economy, Industry and Commerce) the imposition of provisional measures for cases involving dumping or subsidies, all in accordance with the rules under the GATT Agreements.
The provisional measures may be imposed when the following elements are present:
• at least 60 days have elapsed since the beginning of the formal investigation;
• preliminary findings shows the existence of dumping or subsidies that may cause or threat to cause significant damage to national production;
• the investigating authorities consider that the provisional measures are needed to impede such damage.
In general, provisional measures may not last more than four months, but such period may be extended to six months in cases involving dumping. Furthermore, the investigating authorities may impose the measures for six to nine months in exceptional dumping cases, as ruled under the “Central American Regulation on Trade Remedies”.
- 23.Is anti-dumping circumvention regulated? How?
No. Since the regulation of dumping in Costa Rica follows the GATT rules, there is no current provision regulating the practice of anti-dumping circumvention.
- 24.Is China considered a market economy for the purposes of anti-dumping investigations? If so, is it possible to argue otherwise?
Yes, China has been recognised as a market economy by Costa Rica. Both countries are currently negotiating a free trade agreement, and this recognition was a prerequisite to begin such negotiation. Because of the above, it is not possible to argue otherwise.
It is important to highlight that the recognition of China as a market economy does not impede the potential application of trade remedies by Costa Rica, as established in the WTO agreements and domestic law. Therefore, the practical consequence of this recognition is the reversal of the burden of proof in any anti-dumping procedure until the year 2015 (transitory period established upon China’s incorporation to the WTO).
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