Cooperation Agreements and Exchange of Information: Prior to the enaction of Law N°
9736, COPROCOM did not have the authority to conduct joint investigations or share
information with competition authorities from other countries. However, since its adoption,
several international cooperation agreements have been signed with competition agencies
such as CONACOM (Paraguay), SIC (Colombia), and COFECE (Mexico). Among the Central
American countries, Costa Rica has agreements with all its peers (with the exception of
Guatemala). In addition, Costa Rica signed the agreement to create the Central American
network of national competition authorities with the Republic of Nicaragua, El Salvador,
Panama and Honduras in 2012. Confidential Information may also be shared. However, the
Cooperation Agreements must provide for the appropriate mechanisms to safeguard such
information in accordance with applicable law. Confidential information may only be used for
the purposes for which it was requested under the terms of the Cooperation Agreement and
those officials who breach such dispositions are subject to applicable sanctions.
4 Advocacy function: one of the most important tasks of COPROCOM is to disseminate the scope of the legislation
and contribute to the development of a competition culture in the country, through the awareness of the benefits that
it can generate to the various actors and,
especially, to consumers
5 National Consumers’ Commission.
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3. Anticompetitive Conducts and Concentrations (article 279 of the EUCAAA)
Articles 278 and Article 279 Section1, of the EUCAAA call for the adoption of laws to efficiently
regulate the following anticompetitive conducts: i) agreements between entities or cartels; ii)
any type of abuse by any company with a dominant position or market power; and iii)
concentrations that could hinder competition. Costa Rica’s competition law covers all these 3
aspects.
Agreements/Cartels: Cartels or Agreements are known as “Absolute Monopolistic
Practices”. Costa Rican Law (article 11 of Law N° 7472) prohibits conducts known in
international doctrine as “hardcore cartels” (i.e., price fixing; output restriction, submission of
collusive tenders and division or sharing of markets). In addition, article 11 includes 2
additional practices: agreements to boycott competitors and exchange of information to
achieve the formation of the cartel. Costa Rican law, however, neglects regulating other types
of conducts different to the conducts specifically regulated by article 11, and therefore, in
theory, such agreements would not be punishable by law, even if these generate
anticompetitive effects. In Costa Rica, there are no criminal sanctions for those responsible.
Nevertheless, the modification introduced by Law N° 9736 does include personal economic
responsibility in addition to the fines that are imposed to the companies or economic agents
involved in the agreement.
It also increased the quantum of the fines to up to 10% of the
company’s gross income of the last fiscal year; as well as the prohibition to participate in public
tenders.
It is not necessary to prove that the agreement had actual effects in the market, but rather, it is
only necessary to verify that the agreement took place, i.e., Competition Authorities use the
per-se rule for “hardcore cartels”; which has been confirmed by case-law. The intention, effects
in the market and size of the company are analyzed, but only to establish the applicable fines.
However, the modifications introduced by Law N° 9736, include a “de minimis rule” and hence,
economic agents that represent less than 5% of the relevant market are exempt from these
regulations, creating thus an exception to the per-se rule. Furthermore, Law N° 9736 also
includes a leniency program which has not yet been put in practice.
In 27 years, there have been 16 procedures conducted by COPROCOM related to Absolute
Monopolistic Practices. 6 Most of these decisions have remained firm or have been confirmed
by judicial authorities. However, in some cases courts have partially or totally annulled
COPROCOM’s decisions due to either insufficient reasoning when establishing the fines7 or
rejected the existence of the illegal conduct based on a different assessment of the evidence.
Out of those 16 cases, 11 cases have been revised by the judicial authority, 6 were confirmed
and 3 were partially revoked due to the aforementioned reasons. Just 1 case was totally
revoked. 8 This case took place in 2009 and the authority established fines to 7 out of the 8
pension funds that existed at that time due to price fixing of the commissions that were charged
for the administration of the pension funds. The judicial authorities revoked COPROCOM’s
decision indicating that the evidence was not adequately analyzed. It is important to point out
that the insurance market is supervised and regulated in Costa Rica by the General
6 Thompson Chacon, Alan, Prácticas Monopolísticas Absolutas en la Ley y Jurisprudencia de Costa Rica, Logos JulioDiciembre, Vol 1 No. 2, p 58. 7 Fines were from 25 to 569 Base Salaries. In 2001, when the highest fine was imposed, this translated to ₡256,163,800
that based on the highest exchange rate of 2021 converted to USD$ 784,527.13, approximately (based on an
exchange rate of ₡1 equal $326. 52). 8 Thompson, Op. cit.
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Superintendency of Insurances (SUGESE) These cases also involved the participation of trade
and business associations or organizations and show that these can play an important role in
facilitating the agreement and if these organization were to directly sell products or services
then they would be considered as “economic agents” and thus, also punishable by law. SUTEL
has not registered any proceedings regarding cartels. Even if the number of cases could seem
low, these might increase due to the novelties and increase of budget introduced by Law N°
9736 and its Regulations.
Abuse of Market Power: In Costa Rica, these types of conducts are known as “vertical
anticompetitive conducts” or “relative monopolistic conducts”. Article 12 of Law N° 7472
describes 15 different types of conducts that are prohibited if indeed, the economic agent
performing such conduct has “substantial market power in the relevant market”. De “de
minimis” rule of 5% as explained above, also applies. In 2019, Law N° 9736 added 2 conducts
out of the current 15 conducts: cross-subsidization and margin squeezing. With regards to the
sectorial competition framework of telecommunications, the General Telecommunications
Law only regulates 10 conducts excluding margin squeezing. SUTEL has solved just 1 case
which was overruled by the judicial authorities. COPROCOM has investigated several cases,
that were dismissed due to insufficient evidence and from these, it has been able to impose
fines in 13 cases. However, not all fines have been applied, for instance in the case against
Credomatic de Costa Rica, S.A. one of Costa Rica’s largest financial entity. The case was based
on exclusivities and the fine on 2013 was of USD$23,809,4040.7. 9
Concentrations: Concentrations must be approved by the competition authorities prior
to having their intended effect. In case of the telecommunications market all transactions must
be notified. The remainder of the economic agents acting in any other market, must only
request approval if the thresholds established by Law are met (related to the revenue of the
involved parties both individually and jointly, as well as if both economic agents perform
actions that have incidence or impact in Costa Rica). In the case of the telecommunications
market, the concentration carried out without the prior authorization is considered a material
breach consisting of 0,5% to 1% of the parties’ gross income and SUTEL is also authorized to
order the definitive closure of the establishment if deemed necessary or order the removal of
equipment and instruments used in the operations of the telecommunications services Failure
to await approval in the markets supervised by COPROCOM is considered a light infraction
which entails an economic fine from 0,1% to 3% of the parties “business volume” or revenue
from the previous fiscal year. However, COPROCOM could order the dissolution of the
concentration, and if this is not possible, the authority could order conditions aimed to
reestablish competition levels in the affected market. COPROCOM has rejected only one
transaction in the case of a concentration between Walmart and a Costa Rican supermarket
chain (“Periféricos”). COPROCOM,
when concerned by possible anticompetitive effects,
approves concentrations subject to the fulfilment of certain conditions that must be complied
by the economic agents in order to compensate such negative effects. However, in this case,
COPROCOM considered that conditions would not have even been sufficient to counteract
the negative effects that would produce this transaction. The case is currently being revised by
the judicial authority. In 2020 alone, COPROCOM handled 20 requests for concentration in
markets such as: technology products, transportation, loans and leasing, textiles, production
and marketing of spices, condiments, seasonings or similar products, and services of
9 Organization for Economic Co-operation and Development, Costa Rica: Evaluation of Competition Law and Policy,
2020, pp. 62 and 63. Available at: https://www.comex.go.cr/media/8236/evaluacio-n-del-derecho-y-la-poli-tica-decompetencia-cr-esp-20-07-23.pdf
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preparations of generic or specific mix packages for the industrial sector, professional services
in electromechanical, electrical and mechanical engineering, among others.
