Benefits of the Competition Law

What are the benefits of passing the Competition Act?

Guatemala has not complied with the Competition Law for more than three years and is still lagging behind the rest of the Central American countries that already have the instrument, which was a requirement of the Association Agreement (Ada) with the European Union (EU). Currently, this law is in its second reading in the Congress of the Republic, but its formulation and approval process has taken more time than in any other country of the Central American region.

What is the Competition Law?

Basically it is a regulation that seeks to regulate against possible monopolies, concentration practices and cartels in the Guatemalan market. Its purpose is to protect small businesses, emerging companies and to eliminate entry barriers in any economic sector of the country.

The idea is that by promoting competition through these new businesses, a single company or a small group of companies will be prevented from controlling the prices and supply of certain products. This regulation would facilitate the integration of the Guatemalan market in all sectors, especially for entrepreneurs, cooperatives and micro-producers.

What benefits could it bring?

Experts, academics and professionals have stated that it is vitally important to create this legal framework to promote competition in the country and to have an institution to oversee it. Among them is Samuel Pérez Álvarez, a deputy from the Movimiento Semilla party.

Perez, head of the Consumer Defense Commission, believes that those who would benefit most from this law are the small industrialists and the Micro, Small and Medium Enterprises (MSMEs) sector of the country. In addition, he points out three specific advantages that the approval of the Competition Law would bring:

1. It breaks market concentration structures (monopolies, oligopolies, cartels). It would encourage the capacities of MSMEs and facilitate their access to the market.

2. Reduction of inequalities. It can generate a better distribution of resources, not from the fiscal route, but from the market and its efficiency in distributive terms.

3. It guarantees legal certainty. For European investors, knowing that in Guatemala there is a market that encourages them with a well-done Competition Law is an incentive because it guarantees that their investments will compete on equal terms.

Listen to the full interview of Samuel Pérez, a member of the Seed Movement, in this space:

Play the audio.