Issues in Venezuela concerning the promotion and protection of free competition are governed by the Law for the Promotion and Protection of Free Competition published in 1992 and its Regulations. It rules over every person, public or private, that performs an economic activity.

The Law created a public entity widely known as ProCompetencia, which forms part of the Ministry of Commerce, and its main responsibilities are: to conduct the necessary investigations to verify the existence of anti-competitive practices; determine the existence of prohibited practices or conduct and take the corresponding measures to stop them and impose sanctions; impose precautionary measures to avoid the harmful effects produced by the prohibited practices; and grant authorisations in those exceptional cases expressly established in the law.

Anti-competitive practices and conduct
The Law establishes a general prohibition which restrains the conduct, practices, agreements, pacts, contracts or decisions that impede, restrict, distort or limit free competition.

However, the Law expressly prohibits certain specific practices, actions or agreements, including:

• preventing or obstructing the entry or permanence of companies or services in all or in part of the market;
• manipulation of the means of production, distribution, technological development or investment, to the detriment of free competition;
• agreements or pacts executed directly or by unions, associations, federations and other kinds of associations, that restrain or prevent free competition among their members;
• agreements, decisions, collective recommendations or an arranged practice to:
• fix prices and other conditions for commercialisation or services; or
• allocate the markets, territories, sectors of supply or sources of provisions between competitors, among others;
• abuse of a dominant position, such as:
• discriminatory imposition of prices and other conditions for commercialisation or services;
• the application in commercial or service relations of unequal conditions for equivalent activities that place some competitors at a disadvantage; or
• unjustified denial to satisfy a purchase demand or the rendering of services; and
• ProCompetencia can also investigate cases involving unfair competition that seek to eliminate a competitor, by performing actions such as deceitful publicity, false information, commercial bribery, violation of industrial secrets and product simulation.

Merger control
The law prohibits economic concentrations, especially those produced under the exercise of the same activity, when they generate restrictive effects over free competition or when they produce a dominant position in all or in part of the market.

This is an exception to the general rule established in law, which does not penalise the existence of a dominant position per se, but rather abuse of that position. In mergers, however, the simple existence of a dominant position as a result of an economic concentration is prohibited, in order to prevent the abuse of such position in the future.

Venezuelan law does not require compulsory notification to ProCompetencia about a merger. In this regard, the merger process can advance and also be concluded without informing ProCompetencia, even in the absence of such authorisation. ProCompetencia can, however, study the merger after the process has concluded and impose any measures it deems necessary.

There is an exception to the rule in the telecommunications sector where it is mandatory to request authorisation from the National Telecommunications Commission (CONATEL) in mergers between companies that operate in the sector. In these cases, CONATEL shall request ProCompetencia’s opinion and the merger will be approved if such opinion is positive.

Sanctions and their judicial review
Violations determined by ProCompetencia are punished with the imposition of a fine of up to 20 per cent of the value of the sales of the offender. For second offences, the fine is increased to 40 per cent.

The decisions issued by ProCompetencia are final and can be challenged only in court.

If the interested party requests the suspension of the fine, it must present adequate guarantees in court. However, the suspension of any order issued by ProCompetencia proceeds only when the court has sufficient evidence to justify it.

Recent developments
While acknowledging that ProCompetencia has issued certain decisions in 2010, we would prefer not to comment on them for the time being, since they have not been published, as in previous years, on Procompetencia’s website and they are not public for the moment.

Additionally, we would like to point out that although a draft bill has been prepared, it has not been approved by the National Assembly in this legislative period (2006-2011) and does not appear to be scheduled for discussion during the new legislative period (2011-2016).

Despacho de Abogados miembros de Macleod Dixon SC