The first Competition Act (Law 4956/13) in Paraguay defends and promotes free market competition, expressly prohibiting anti-competitive acts. This Act was recently consolidated and strengthen with the enactment of Decree 1490 of April 14, 2014, opening an attractive and substantial national and international business world panorama.
Paraguay is the last country in South America to enact a rule regulating the state intervention on competition. With the enactment of this Act Paraguay modernized its legislation and brought into line with the principal legal systems of the world and its neighbors in the region.
The application of the Act refers to all acts, practices or agreements held by individuals or corporations, domestic or foreign, with legal residence in the country or abroad, whether public or private, or any entities developing economic activities or nonprofit, and produce effect on competition, in all or part of the country, except the limitations established by law, duly justified by reasons of general interest. It excludes the central government entities and decentralized bodies exercising State monopoly.
Until the enactment of this Law, notwithstanding that free competition has always been constitutional principle in Paraguay, competition principles where included in different laws, including the Law Merchant, the Trademarks Act, governed the Protocol MERCOSUR, the Civil Code, among others.
This law seeks to foster greater competition and open markets for companies to produce more efficiently, in order to benefit the consumer, who will use that as an advantage to demand better prices for products and services. Therefore, it is clear that the main objective of this law is the consumer, who by such state interventions to market directly benefits from competition. But competitors will benefit from these clear knowledgeable rules and create an equal market.
The act prohibits abuse of dominant position, as well as all the practices, behaviors, or focused individuals having as an objective or effect to restrict, limit, obstruct, distort or prevent actual or future competition in the relevant market. It includes a listing to exemplary prohibited conducts, which will be not considered "per se" illegal, but the enforcement authority shall determine in each specific case, through an analysis of reasonableness, analogous to the traditionally called "rule or reason" if as a result of such conduct has no place or a restriction or limitation of competition in the relevant market. Furthermore, concepts regarding economic concentration operations are introduced, establishing benchmarks. It also provides pre merger control through mergers and acquisitions that has some market power, establishing the circumstances that must be present to be considered such.
The National Competition Commission (CONACOM) is the public institution responsible for evaluating restrictions on free competition and to instruct and solve regulated procedures created by this Act. It functions as a decentralized body and is related to the Executive through the Ministry of Industry and Trade. Additionally the Research is also created as an executive agency under the CONACOM.
Any natural or legal person, public or private, is subject to the duty to cooperate with CONACOM and is required to provide all the data and information necessary for the application of the Competition Act. To verify the existence of agreements, decisions or concerted practices or consciously parallel, whether written or oral, formal or informal aimed to produce, prevent, restrict or distort competition in all or part of the national market, the burden of proof is on the National Competition Commission (CONACOM). Once existence of an infringement is proven, the burden of proof on the existence of profits in economic efficiency that outweigh their negative effects on the market will fall on the natural or legal person who alleged it.
Finally, this competition act should be considered as a legal tool to be used to be benefited by any operator, whether it is small or large; regardless of its position in the market.