General Aspects of Antitrust in Panama

  1. What are antitrust laws?

Essentially, antitrust is the set of rules aimed at preventing or correcting the artificial distortions that are adopted in the natural processes of price formation. Guillermo Cabanellas understands it as “the abusive and hateful traffic by which an individual or a company sells (…) merchandise that, delivered to free trade, would reduce its price, increase its quality due to healthy competition and benefit a greater number of people.”

  1. Does Panama have an antitrust regime?

Yes, Panama has an antitrust regime. It is based on Article 295 of the Political Constitution, which prohibits “any combination, contract or any action that tends to restrict or disable free trade and competition and that has monopoly effects to the detriment of the public.” This rule also empowers any person to challenge any monopolistic practice before the competent courts. These constitutional provisions have been developed by Law 45 of 2007 and its regulation on the defense of competition, Executive Decree 8-A of 2009.

  1. How are economic concentrations defined and treated by the relevant regulations?

Economic concentration is understood as “the merger, the acquisition of control or any act by virtue of which companies are grouped (…) that is carried out between suppliers or potential suppliers, between clients or potential clients, and other economic agents that are competitors or potential competitors between themselves”. The rule prohibits any economic concentration that affects “free economic competition” and “free competition with respect to equal, similar or substantially related goods or services.” This protection is manifested through the review of the reasonableness of the act that constituted the concentration.

  1. Must every possible economic concentration be previously approved by a government institution?

No, at a general level, Panama does not have a mandatory prior approval system for economic concentrations. However, interested parties may request prior verification before the Authority for Consumer Protection and Defense of Competition (hereinafter, the “ACODECO”). In the event that ACODECO approves the merger, it cannot be challenged later. This is very relevant since, as we said, pursuant to Article 295 of the Political Constitution, any person can request before the courts of justice the declaration of illegality. However, at a special level, some sectors are subject to a mandatory prior approval regime, such as the banking, securities and insurance sectors.

  1. Are there any sanctions for not notifying ACODECO previously about an economic concentration?

Due to the fact that the general regime for economic concentrations in Panama is based on voluntary prior verification, the sanctions that may be imposed on economic agents for a concentration can only be imposed through a judicial process, which can be initiated at the request of any person, with the participation of ACODECO. The court can order the agents to pay compensation for damages to the affected parties, and even the dismemberment of the concentration.

  1. How does the prior verification process in ACODECO work?

The prior verification process before ACODECO works as follows:

  • The interested party submits the request to ACODECO, with the pertinent evidence.
  • Within twenty calendar days following the request, ACODECO may request additional documentation.
  • Once the additional documents have been submitted, ACODECO must issue its decision within sixty calendar days.
  1. How does the judicial process for the challenge of economic concentrations work?

The judicial process for challenging economic concentrations works as follows:

  • Any person, ACODECO, organized consumer associations or collective management entities can sue the merger.
  • Once the claim is admitted, the defendant will have ten business days to answer it.
  • The court sets the date and time for a preliminary hearing, followed by a regular hearing, where the parties may argue and present evidence.
  • After the ordinary hearing, the court issues a sentence, where it can order, for example, the dismemberment of the concentration.
  • This sentence only admits as an appeal mechanism, the extraordinary appeal before the Supreme Court of Justice. This is because the competent authority for these trials is the Third Superior Court of Justice of Panama, the judicial seat with the nature of an appeals judge.
  1. Are there transactions that may be excluded from the antitrust regime?

Yes, by exception, there are transactions that may be excluded from the scope of application of the antitrust regime. Specifically, Article 6 of Law 45 of 2007 mentions that agreements, alliances, associations, etc. are not illegal if they occur between competitors that seek to increase, save or improve “the production and/or distribution of goods or services or promote technical or economic progress and that generates benefits for consumers or the market”, if it is for:

  • The exchange of technical information.
  • The establishment and/or joint use of infrastructure, equipment, resources, etc.
  • The establishment and/or joint use of collection, storage, transportation, etc. facilities.
  • That the product is exported.

Jorge Molina CIArb

Senior Partner

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