Costa Rica: from the enforcer
Yanina Montero Bogantes
Director of Technical Body
Tel: +506 2549-1458
Email: [email protected]
Hazel Orozco Chavarría
Tel: +506 2549-1458
Email: [email protected]
Questions and answers
How long is the head of agency’s term of office?
The Superior Body (Commissioner) is named for a six-year term. The Director of the Technical Body is appointed by the Superior Body for a five-year term.
When is he or she due for reappointment?
Commissioners may not be reappointed. The Director of the Technical Body may be reappointed.
Which posts within the organisation are political appointments?
The regular and alternate members of the Superior Body (commissioners) are appointed by the Council of Government.
What is the agency’s annual budget?
In the year 2021, COPROCOM's assigned budget was 699,459,114 Costa Rican colones (US$1,082,754.05).
How many staff are employed by the agency?
COPROCOM's Technical Body employs 16 professionals distributed in three units. There are three full-time commissioners.
To whom does the head of the agency report?
Commissioners have to present a report on the work and activities carried out during the previous year to the Legislative Assembly, pursuant to Law No. 9398 (the Law for Improving Accountability, of 28 September 2016).
Also, COPROCOM is subjected to oversight by the Costa Rican Comptroller General’s Office and to internal auditing by the Ministry of Economy, Industry and Commerce (MEIC), according to the competences established in current legislation.
Do any industry-specific regulators have competition powers?
Yes. Article 52 of General Telecommunications Act, No. 8642, states that the operation of networks and telecommunications services in the country will be subject to a sectorial competition regime ruled by that law.
The Superintendence of Telecommunications (SUTEL), which is responsible for enforcing competition law in the telecommunications sector, is also responsible for regulating this sector.
If so, how do these relate to your agency’s role?
SUTEL and COPROCOM have similar rules, both applying the Law 9736 on Strengthening of Costa Rican Competition Authorities.
May politicians overrule or disregard authority’s decisions? If they have ever exercised this right, describe the most recent example.
No. Politicians do not have any right to overrule or disregard the decisions of the authority.
Law 9736 establishes mechanisms to ensure the COPROCOM’s independence. Only the courts can review and annul COPROCOM decisions.
Does the law allow non-competition aims to be considered when your agency takes decisions?
Law 9736 reinforces the COPROCOM’s powers for eliminating and preventing entry barriers or distortions established in laws, regulations, agreements, circulars and administrative resolutions through the issuing of opinions and market studies.
The COPROCOM’s recommendations issued in a market study will not be binding, but public entities deviating from these recommendations must inform the respective competition authority of the reasons they will not be implementing the recommendations.
Which body hears appeals against the agency’s decisions? Is there any form of judicial review beyond that mentioned above? If so, which body conducts this? Has any competition decision by the agency been overturned?
Only judicial courts may overrule decisions adopted by the competition authorities, including those regarding merger control.
The Contentious-Administrative Court is competent to protect the legal rights of any person, and to guarantee or re-establish the legality of any behaviour that is subject to Administrative Law, as well as to decide on any aspect of the relationship governed by Administrative Law.
The country does not have a specialised court for competition law, so the cases are assigned to the different sections of the Contentious-Administrative Court in accordance with the parameters established by judicial power.
On second instance, an extraordinary recourse of cassation, cases go before the Supreme Court, appealing sentences or resolutions that have the force of res judicata and violate procedural and substantive rules of the legal system – and review may arise.
In addition, if parties to a proceeding before the COPROCOM consider their constitutional rights to have been infringed, they can appeal to the Constitutional Chamber of the Supreme Court of Justice. Parties can file constitutional petitions at any stage of the administrative procedure, if they consider any principle of due process to have been infringed by the authority. The Constitutional Court may order the competition authorities to suspend the administrative procedure until the Court reaches a final decision.
Of the 20 cases that have been taken to the Courts of Justice, 85 per cent have already been resolved, and most of the resolutions issued by the competition authorities have been confirmed in all their extremes.
Has the authority conducted a Phase II investigation in any of its merger filings? If yes, please provide the most recent instances.
Merger control was introduced in Costa Rica in 2012. Law 9736 established a two-phase procedure for control of concentrations that will permit the competition authority to expedite approval of transactions lacking the potential to harm competition.
In 2020, COPROCOM settled 20 notifications prior to economic merger cases in markets such as: drugs; technological products; transportation; secured loans and financial leasing; textiles; the production, sale and marketing of spices, condiments, seasoners or similar, and generic or specific packaged mixture preparation services for the industrial sector; electromechanical, electrical; and mechanical engineering professional services; among others.
Of all the analysed merger notifications, only one of them was approved with commitments; two cases were closed, as they failed to satisfy the requisites set forth in the Act; and the remainder were authorised.
Do you operate an immunity and leniency programme? Whom should potential applicants contact? What discounts are available to companies that cooperate with cartel investigations?
The new legislation adopted in November 2019, introduces a leniency program that grants exceptions or reductions of fines to the agents that collaborate with the authorities in the investigation of absolute monopolistic practices.
COPROCOM reduces the fine of an economic agent or individual, full or partial, as follows:
- 100 per cent – first agent;
- 50 per cent – second agent;
- 30 per cent – third agent;
- 20 per cent – fourth agent
Is there a criminal enforcement track? If so, who is responsible for it? Does the authority conduct criminal investigations and prosecutions for cartel activity? If not, is there another authority in the country that does?
COPROCOM does not conduct criminal investigations for cartel activity.
In Costa Rica, monopolistic practices (hardcore cartel) is an administrative offence.
Are there any plans to reform the competition law?
No, there are no plans to reform competition law because the last reform legislation was adopted in November 2019.
When did the last review of the law occur?
Costa Rica was subject to a Peer Review in 2014, by Competition Committee of the Organisation for Economic Co-Operation and Development (OECD). In June 2016, Costa Rica had the first accession review of thr Competition Committee of the OECD. In June 2019, the Competition Committee of OECD held the second formal accession review.
Do you have a separate economics team? If so, please give details.
No, we do not have separate economics team. Economists are distributed in three areas: mergers, instructions of procedures and investigations, promotion and advocacy.
Has the authority conducted a dawn raid?
While it is legally possible for COPROCOM to conduct dawn raids. COPROCOM has not conducted a dawn raid yet.
COPROCOM is working on guidelines and getting the resources, such a laboratory equipped with the hardware and software and the human resources.
Has the authority imposed penalties on officers or directors of companies for offences committed by the company? If yes, please provide the most recent instances.
The competition law provides for effective sanctions to deter firms and individuals from participating in hardcore cartels (absolute monopolistic practices) – including bid rigging – and incentivise cartel members to defect from the cartel and cooperate with the competition agency.
Article 119 of Law 9736 establishes that:
- individuals who participate directly in monopolistic practices or illegal concentrations in representation of or on behalf and to the order of legal or de facto entities shall be fined with a fine equal to an amount from one base wage to 680 base wages; and
- public officials who contribute to, facilitate, foster or participate in any way in, monopolistic practices shall be fined with a fine equal to an amount from one base wage to 680 base wages.
What are the pre-merger notification thresholds, if any, for the buyer and seller involved in a merger?
A transaction has to be notified where:
- it involves the participation of at least two economic agents that engage in or have engaged in activities with an effect in Costa Rica at any time during the two fiscal years prior to the transaction;
- the sum of gross sales or the sum of productive assets in Costa Rica of the economic agents involved in the transaction has reached, during the previous fiscal year, amounts equal to or greater than the threshold set by COPROCOM, within the range of 30,000 to 60,000 base wages; and
- individually, at least two of the economic agents involved in the transaction have generated gross sales or have productive assets in Costa Rica during the previous fiscal year for amounts equal to or greater than the threshold set by COPROCOM, within the range of 1,500 to 9,000 base wages.
Are there any restrictions on investments that involve less than a majority stake in the business?
No. There are no restrictions.
Costa Rica: from the enforcer's competition economists
Questions and answers
How many economists do you employ?
COPROCOM's Technical Body has four economists. One commissioner is an economist.
Do you have a separate economics unit?
No, we do not have a separate economics unit.
Do you have a chief economist?
No, we do not have a chief economist..
To whom does the chief economist report?
Does the chief economist have the power to hire his or her own staff?
How many of your economists have a PhD in industrial economics?
Does the agency include a specialist economist on every case team? If not, why not?
Is the economics unit a ‘second pair of eyes’ during cases – is it one of the agency’s checks and balances? If not, why not?
How much economics work is outsourced? What type of work is outsourced?