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Who bemoans competition laws in Latin America?

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According to the mainstream explanation of the origin of the Sherman Act, in 1890 the US Congress was persuaded by farmers and other small businesses about the dangers posed by big trusts (especially railroad monopolies) and enacted the first national antitrust law to curtail their market power. However, Stigler (1985) argued that there was modest proof of such account. The origin of the Sherman Act is still an issue of subject of recent revision and debate.

While the US case requires to revise what happened more than 100 years ago, other regions in the World have witnessed the passing (or opposition to the enactment) of antimonopoly laws more recently. In Latin America, for example, most of the 22 national competition laws were enacted between the second half of the 20th century and beginning of the 21st century. Hence, Latin America offers a more recent story (and perhaps a clearer one) about the interest groups that resist competition law’s enactment and enforcement.

Drawing from local press accounts and from a small sample of expert interviews, that I recently conducted to write a paper with A. Palacios-Lleras (UCL), there have been multiple sources of opposition to the enactment or enforcement of competition laws in Latin America. To make a long story short, the opposition is comprised of the usual suspects: large business associations, some sectors that benefit from sector-specific regulation (e.g. agroindustry) and  “national champions”. The opposition consisted on active lobbying in Congress to impede the passing of the laws, limit their scope (e.g. creating sectoral exceptions), or reduce the fines. Allow my to illustrate the latter with a few examples.

The opposition to enact competition laws in Latin America has been overt and vocal in some cases. However, in recent times opposers have not been able to prevent the passage of the regulation (for example, in Paraguay and Bolivia). The exception to the latter may be  Guatemala, where the opposition has successfully blocked several attempts to pass a national competition law, in spite of the fact that their 1985 Constitution mandates the development of laws that prohibit monopolistic practices.

Moreover, sometimes the opposition did not cease after the passing of the competition law. Instead, the resistance migrated towards a new strategy: advocating against the law’s enforcement. This may be the case of Dominican Republic, where in spite of the fact that the competition law was enacted in 2008, the process of setting up of the competition authority began very recently. Additionally, in the case of El Salvador, as Francisco Beneke posted recently, the competition authority has not been able to persuade congress to amend the statutes that currently leave specific agroindustrial sectors out of the scope of the antitrust law. Furthermore, in few cases the opposition to competition law has also been more sophisticated. This was the case of the judicial challenge that the biggest Colombian business association presented against merger control rules and that the Constitutional Court decided in 2010 (confirming the constitutionality of the law).

In conclusion, the story of the interests groups that have opposed (or currently oppose) competition laws appears clear and similar across the Latin American region. What remains to be studied is the other side of the coin: the story about the interests behind the passing of these laws seems more complex and context-specific. But there are some clues about international players that have either persuaded or overtly pressed Latin American countries to enact competition regimes. In this regard, the US, EU and multilateral organizations (such as WB, IMF & UN) are clearly in the spotlight, specially in recent times.

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Kudos. For the Superintendence of Competition of El Salvador that actively engages with citizens through very innovative ways. Besides having a strong online presence in social media, the authority created in 2014 a mobile app that allows citizens to access and revise competition cases.

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