The Constitution of the Dominican Republic embraces free enterprise and free competition as fundamental rights and guiding principles of the nation’s economic regulatory framework. Specific laws seek to promote competition in regulated markets such as telecommunications, public procurement and energy. In non-regulated markets, the applicable legislation is the General Law for Competition Defense 42-08 (the “Law”), which is expected to come into effect in coming months. The Law’s main objectives are to promote and protect effective competition to increase economic efficiency, thereby protecting consumers.

The Law is applicable to every national or foreign economic agent engaging in economic activities in the territory of the Dominican Republic. It also covers agreements or conduct occurring outside of the Dominican Republic that has restrictive effects on competition in Dominican territory.

The Law was enacted on January 25th, 2008. However, two conditions must be met before it will come into effect. First, the Board of Directors of the National Commission for Competition Defense (the “Commission”) must be appointed by the National Congress. Second, the Executive Director of the Commission must be appointed by the President of the Dominican Republic. The first condition has already been met and the second is expected to be completed shortly.

According to the Law, the Commission has powers to:

  1. resolve conflicts within the scope of the Law both between enterprises and between enterprises and their customers;
  2. issue regulatory resolutions to: a) set forth procedural rules applicable to proceedings before the Commission; b) set out certain dispositions that agents subject to the Law are obligated to comply with, and c) regulate the administrative-institutional functioning of the Commission.
  3. give public opinions of a non-binding nature when requested to by the regulators of regulated markets;
  4. propose to the President of the Dominican Republic the national policies for competition advocacy, particularly those measures and actions aimed at facilitating the entry of new competitors into Dominican markets (such as the modernization of public administration);
  5. foster a culture of competition in the Dominican Republic, including recommendations to simplify administrative proceedings before the government and municipal authorities (in order to prevent bureaucracy becoming a barrier to market entry); and
  6. recommend the adoption of corrective measures to avoid laws, regulations and other legal acts whose object or effect is to hamper or undermine freedom of enterprise or competition.

Some procedural attributions of the Commission are as follows:

  1. initiate administrative proceedings in respect of alleged breaches of the Law upon the request of a private party or on its own motion;
  2. impose sanctions (including fines and binding obligations) for breaches of the Law;
  3. conduct raids and inspection of facilities; and
  4. require private parties or government agencies to submit information and documents that may be deemed necessary for the investigation of suspected breaches of the Law (including registries of corporate documents, accounting records and statistical information).

The Commission has two distinct levels of authority; the Executive Director and the Board of Directors, which is composed of five members. The Executive Director is responsible for the investigative phase of cases. After assessing the merits of a complaint, the Executive Director may decide to initiate a prosecution or dismiss the complaint. The Executive Director may also commence an investigation at his or her own motion. The Board of Directors, on the other hand, is in charge of the decisional phase of cases and has the power to decide whether or not a sanction will be imposed on a party under investigation. The decision rendered by the Board of Directors is subject to appeal before the Superior Administrative Court, whose decision may in turn be challenged in the Supreme Court of Justice.

The anticompetitive practices proscribed in the Law may be classified in the following categories:

  1. Concerted practices, encompassing collusive agreements, information exchange, cartelization, manipulation of market conditions to create barriers to entry, and any kind of behavior intended to exclude or limit the access of competitors to the market.
  2. Abuse of dominant position, including predatory practices, imposition of price and other sale conditions by the supplier to resellers when there is no commercial reason justifying those measures, tying and refusal to supply.
  3. Unfair competition, comprising deceptive practices, unfair comparison of products, imitation, confusion, violation of business secrets, compliance violations, acts of vilification and incitement to breach of contractual obligations by third parties with other competitors.

The Law is expected to come into force shortly, upon the appointment of the Executive Director of the Commission. Its implementation is expected to have a great impact on business practices in the Dominican Republic, not only for local firms but also for foreign firms doing business in the country.