Nicaragua: National Institution for the Promotion of Competition

Procompetencia has now completed its fifth year. During this time, Procompetencia has been established as a public law institution in Nicaragua. The organisation of the institution began from the most elementary level, from the need to find a building and purchase furniture and stationery, to the most complex aspects, such as the recruitment and selection of employees. All of the relevant civil servants were trained in competition policy and procedural rules, and as a part of this process, Procompetencia published procedural guides and complaint guidelines for the economic agents.

Procompetencia has also developed the promotion of competition by advising state bodies and entities; economic agents, including small businesses; colleges of economic and commercial professionals; and consumer organisations.

In the process of creating Procompetencia, United Nations Conference on Trade and Development’s Competition Policies for Latin America (COMPAL) programme gave us important assistance. This support, which was both technical and financial, was significant for the development of the institution. However, reality has not been so kind as to follow the practical advice that the COMPAL leader gave us. He encouraged us not to begin investigations of anti-competitive practices until we had the basic structural organisation and training for the instruction of a process. Unfortunately, we did not have the privilege of choosing when to start cases and in those days we received a claim from a consumer organisation. The claim was against seven private banks and the Association of Private Banks of Nicaragua for alleged violations of articles 17 and 18 (a) of Law 601 by fixing interest rates in the internal credit card market. Procompetencia lost the Credit Cards case and the Constitutional Chamber of the Supreme Court of Justice ruled that we had operated outside the scope of our authority, as this sector was within the exclusive competence of the banking regulator, even in competition matters.

Nowadays, Procompetencia has a trained team with technical knowledge and experience to deal with all the cases; nevertheless, circumstances and structural conditions make our work even more complex.

Nicaragua is a small economy, with a GDP of US$11,255 million and with a high level of economic concentration in certain markets such as rice, sugar and cement. These economic structures facilitate the development of parallel conduct among economic agents and encourage the abuse of the purchase and sale power of multinational firms.

It is well known that the implementation of competition policy in small economies is a controversial topic. To this end, the promotion of competition alone, without regard for poverty alleviation and the reduction of inequality, results in small economies with a high disparity in wealth.

In those conditions neutrality is not possible, otherwise implementation of the Act would result in an advantage to those economic agents in powerful positions and in the perpetuation of poverty and abysmal inequality.

The accomplishment of the aims of the Competition Act should contribute to due process and stimulate inclusive and sustainable development. The specific terms for the use of competition as a driver of inclusion and the alleviation of poverty remain a developing topic. Procompetencia attempts to contribute in this area through the development of competition indicators to the Nicaraguan economy in 2014 and 2015.

Indicators such as the World Bank’s Doing Business and Competitiveness reports overlook the correct measure of competition among the economic agents. The building of these indicators is one of the featuring goals of Procompetencia.