Design flaws in the Draft Organic Law on Antimonopoly and Economic Competition that should not reach Congress without correction.
A well-intentioned law with design errors that does not always fulfill the purposes for which it was conceived.
The Draft Organic Law on Antimonopoly and Economic Competition, which creates the National Antimonopoly and Economic Competition Authority (ANACE), and which replaces Law 42-08 on Defense of Competition, has real advances. But it has design flaws that should be reviewed in order to strengthen this regulatory instrument. Below we will refer to some of the most notable ones.
I. Merger and acquisition control
The draft law establishes that any business concentration, whether merger, acquisition or takeover, must be notified and obtain prior approval from ANACE before being executed, if the parties exceed the threshold of Article 48: RD$200 million in gross revenue, not in the value of the transaction.
A law can have the right name and the opposite effect. Regulatory history is full of such reforms.
To put it in perspective: There are commercial properties in the National District that exceed that value. Such a threshold does not distinguish between an operation with real market power and an ordinary transaction. That is not an anticompetitive filter. It is regulatory noise that will saturate from day one the very authority that should be pursuing cartels among competitors.
II. The regulator captured by its own budget
ANACE is financed, in part, by the sanctions it itself imposes (Article 7). It is not capture of the regulator by the industry. It is something more subtle and harder to correct: the regulator captured by its own budget, with the structural incentives that this generates towards over-prosecution of economic agents.
Competition authorities worldwide have avoided this scheme precisely because of the negative incentives it creates. The European Commission does not work this way. Neither does Chile's National Economic Prosecutor's Office, nor the U.S. FTC, to name just a few of the leading global entities in competition regulation.
III. Article 32, paragraph I
The draft law establishes that sector regulators must consult ANACE before issuing their rules related to competition. When they do so, the response is binding.
In this type of market regulation reforms, the risk is not always falling short. Sometimes, the risk is going too far.
We are talking about the sectors that drive the Dominican economy: electricity, telecommunications, banking, insurance, securities market. Each with its own specialized regulator —SIE, INDOTEL, SIB, SIS, SIMV— built over years on a technical and regulatory architecture that is not interchangeable with any other sector.
Although ANACE only intervenes in competition matters, in practice almost every relevant regulatory decision has a competition dimension: tariffs, entry requirements, access conditions. The perimeter of "competition matters" is broad enough that this theoretical limitation becomes, in fact, considerably narrower than it seems.
When a generalist authority can impose binding criteria on these matters, the question is no longer about institutional coordination. It is a question about who truly understands each sector and who has the final say over it.
There are more shortcomings, which we will discuss in a next section: For example, a poorly calibrated leniency program that may create incentives contrary to those it seeks to correct. The possibility of adopting precautionary measures with potential for strategic use by a party denouncing anticompetitive practices. And a ten-year statute of limitations whose implications, in terms of liability limitation and due diligence, have not been sufficiently discussed.
A good competition law is not measured by how much power it concentrates in the regulator, but by the precision with which it knows where to stop.