Executive summary
This report results from the Peer Review of the Dominican Republic’s competition law and policy. It presents the main findings of the current panorama of competition law and policy in the Dominican Republic and concludes with recommendations developed by the lead examiners and discussed at the Peer Review examination, carried out during the 2023 OECD-IDB Latin American and Caribbean Competition Forum.
After 12 years of legislative process, the Dominican Republic adopted its Competition Act in 2008, although it only became fully operational in 2017. Despite the efforts of Pro-Competencia, the Dominican competition authority, competition enforcement is still incipient in the country. While Pro-Competencia has only sanctioned two competition cases, sector regulators with competition enforcement powers have only adopted one enforcement decision related to competition law. No bid-rigging cases have been sanctioned.
There is a lack of overall competition culture in the Dominican Republic. Institutions empowered to enforce competition law (in particular, Pro-Competencia) face significant budgetary and human resources restraints. The Dominican Competition Act also has several limitations. For instance, there is no merger control regime applied to the entire economy, the maximum fines for anti-competitive practices are low and with low deterrent effects, and investigations are subject to a very short statute of limitation and expiration deadline. Furthermore, the competition law framework includes a general competition law regime (enforced by Pro-Competencia) and sector-specific competition law regimes (enforced by key sector regulators). There are still insufficient levels of co-operation between Pro-Competencia and sector regulators in the application of competition law, in addition to concerns on possible conflicting interests and lack of competition expertise within certain regulatory entities with the powers to enforce competition law.
The recommendations relate to the institutional and legal framework, competition law enforcement, as well as competition advocacy and institutional co-operation. They suggest possible ways forward for consideration by the Dominican Republic, with the aim of improving the country’s competition law and policy.
Institutional and legal framework
Adopt a common competition framework, including both substantive and procedural rules, that uniformly applies across all sectors. In addition, clarify which entities are responsible for the enforcement of competition law in the different sectors (i.e., Pro-Competencia or sector regulators).
Strengthen budgetary and human resources dedicated to competition enforcement in Dominican Republic, including Pro-Competencia’s budget (e.g., through governmental funding, administrative fees of a future merger control regime, and resources from international co-operation agreements, and avoid the use of sanctions for this purpose).
Enable Pro-Competencia to prioritise enforcement and advocacy actions based transparent criteria (e.g., economic and geographic impact, relevance to consumers, public procurements or strategic industries), including the power not to take enforcement actions or to close investigations based on its priorities and/or availability of resources.
Adopt a general ex-ante merger control regime in line with OECD standards and international best practices.
Increase enforcement actions against cartels and abuse of dominance cases:
Develop effective anti-cartel detection tools such as pro-active methods (e.g., economic filters and industry monitoring) and anonymous complaints.
Ensure that sanctions have sufficient deterrent effects. Maximum caps of fines should be based on flexible elements that allow to consider the specific circumstances of the cases and the markets affected in line with international standards.
Improve the procedural framework for enforcement actions:
Expand the length of the statute of limitation in line with international practices.
Increase the timeline limitation to conduct investigations and/or allow for more flexibility regarding the extension or suspension of investigation deadlines.
Protect the investigation phase, for instance by allowing Pro-Competencia to publish non-confidential versions of the decision to initiate the investigation and the complaints (instead of the full version) after the opening of the formal investigations.
Streamline the procedure for requesting authorisations for dawn raids, ensuring that they can be directly requested by Pro-Competencia’s Executive Directorate solely based on indications of anti-competitive infringements.
Introduce deterrent fines for failure to reply, late replies and the use of incomplete or misleading information regarding requests of information by Pro-Competencia.
Competition advocacy and institutional co-operation
Ensure that co-ordination mechanisms between Pro-Competencia and the sector regulators with competition enforcement powers are effectively implemented, including the use the consultation mechanism provided for in the Competition Act regarding the adoption of competition infringement decisions and draft sector regulation. Proper channels of information sharing, staff exchanges, and joint working groups should also be implemented. In addition, ensure the existence of formal co-operation agreements between Pro-Competencia and all sector regulators with competition enforcement powers.
Ensure that government entities, including sector regulators with competition enforcement powers, explain the reasons when choosing not to follow Pro-Competencia’s non-binding opinions and recommendations.
Empower another entity (for instance, Pro-Consumidor) with the enforcement of unfair competition practices. Alternatively, Pro-Competencia should limit its investigations related to unfair competition practices to those affecting the general public economic interest, freeing up resources to competition infringement investigations. In this case, co-operation with Pro-Consumidor, particularly in relation to unfair competition practices, should be strengthened.