Competition Law and Policy in Costa Rica: a Peer Review 2014

Competition Law and Policy in Costa Rica A Peer Review 201{ COMPETITION LAW AND POLICY IN COSTA RICA A Peer Review -- 2014 -- ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 34 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economics, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. This work is published on the responsibility of the Secretary- General of the OECD and the Integration and Trade Sector Department of the IDB. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD, the governments of OECD member countries, the Inter- American Development Bank, its Board of Directors or the countries they represent. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The OECD has two official languages: English and French. The English version of this report is the only official one. © OECD/IDB 2014 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Centre (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) [email protected]. 3 FOREWORD The OECD has been active in promoting competition policy in countries across Latin America and the Caribbean (LAC) for many years. The partnership between the OECD and the Inter-American Development Bank (IDB) has advanced these efforts. The annual Latin American Competition Forum (LACF) is the cornerstone of this collaboration on competition matters. It is a unique forum which brings together senior officials from countries in the region, to promote and support the identification and dissemination of best practices in competition law and policy. Twelve meetings have been held to date. Peer reviews of national competition laws and policies are an important tool in helping to strengthen competition institutions and improve economic performance. Peer reviews are a core element of the OECD’s activities. They are founded upon the willingness of a country to submit its laws and policies to substantive review by other members of the international community. This process provides valuable insights to the country under study, and promotes transparency and mutual understanding for the benefit of all. There is an emerging international consensus on best practices in competition law enforcement and the importance of pro-competitive reform. Peer reviews are an important part of this process. They are also an important tool to strengthen competition institutions. Strong and effective competition institutions in turn can promote and protect competition throughout the economy, which increases productivity and overall economic performance. The OECD and the IDB therefore include peer reviews as a regular part of the joint Latin American Competition Forum. In 2007, the Forum assessed the impact of the first four peer reviews conducted at the LACF (Brazil, Chile, Peru and Argentina) and the peer review of Mexico, which was conducted at the OECD’s Competition Committee. The Forum reviewed El Salvador in 2008, Colombia in 2009, Panama in 2010 and Honduras in 2011. A follow-up of the nine peer reviews was conducted in 2012 as part of the 10th Anniversary of the LACF, and Costa Rica, in 2014, has now become the 10th country to have its competition regime peer reviewed. The OECD and the IDB, through its Integration and Trade Sector (INT), are delighted that this successful partnership contributes to the promotion of competition policy in Latin America and the Caribbean. This work is consistent with the policies and goals of both organisations: supporting pro-competitive policy and regulatory reforms which will promote economic growth in LAC markets. COMPETITION LAW AND POLICY IN COSTA RICA © OECD / IDB 2014 4 Both organisations would like to thank the Government of Costa Rica for volunteering to be peer reviewed at the twelfth LACF meeting held in Uruguay on 16-17 September 2014. We would like to thank Paolo Benedetti, the author of the report, and the lead examiners (Vinicius Marques de Carvalho, Brazil; Vanessa Facuse, Chile and Alejandra Palacios Prieto, Mexico), Luciana Macedo and her team at Uruguay’s Commission for the Promotion and Defence of Competition for hosting the LACF and the many competition officials whose written and oral submissions to the Forum contributed to its success. We and the author would also like to specifically thank Victoria Velazquez from COPROCOM for her valuable input, availability to answer queries, and support in facilitating interviews; Sebastian Corcuera, for his investigation and drafting assistance; and Ania Thiemann of OECD, for overseeing the peer review and planning the discussion at the LACF, together with Erica Agostinho for assisting in both of these activities. We also thank Luz Aurora Ortiz, Alberto Farca, Poullette Faraón-Chaúl and Ximena Argüelles, for translating the report. John Davies Antoni Estevadeordal Head of the Sector Manager of the Competition Division Integration and Trade Sector OECD Inter-American Development Bank COMPETITION LAW AND POLICY IN COSTA RICA © OECD / IDB 2014 5 TABLE OF CONTENTS Executive Summary ...................................................................................... 7 1. Context and Foundations ....................................................................... 13 1.1 Context .......................................................................................... 13 1.2 Foundations of Competition Policy ............................................... 19 2. Content and scope of the competition law ............................................ 22 2.1 Objectives and scope of the Competition Law .............................. 22 2.2 Conduct.......................................................................................... 24 3. Institutional Issues: enforcement of competition policy ...................... 42 3.1 Competition policy institutions ..................................................... 42 3.2 Administrative procedures ............................................................. 46 3.3 Judicial Review ............................................................................. 48 3.4 Special competition regimes .......................................................... 48 4. Competition Advocacy ............................................................................ 53 5. Conclusions and recommendations ....................................................... 57 5.1 Current Strengths and Weaknesses ................................................ 57 5.2 Recommendations ......................................................................... 61 Notes ............................................................................................................. 68 Bibliography ................................................................................................ 75 COMPETITION LAW AND POLICY IN COSTA RICA © OECD / IDB 2014 6 Tables Table 1. Coprocom’s investigated and sanctioned cartels (1995-2014) ....... 28 Table 2. Coprocom’s investigated and sanctioned relative monopolistic practices (1995-2014) ............................................... 34 Table 3. Economic Regulatory Authorities’ budget for 2012 ....................... 44 Table 4. Comparable Competition Agencies’ budget in Latin America ....... 44 Boxes Box 1. Significant cartel cases ...................................................................... 29 Box 2. Definition of relevant market and market power in Law 7472 ......... 31 Box 3. Significant unilateral conduct cases .................................................. 35 COMPETITION LAW AND POLICY IN COSTA RICA © OECD / IDB 2014 7 EXECUTIVE SUMMARY Costa Rica adopted its comprehensive competition law, the Law 7472 for the Promotion of Competition and

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