Pipo

Peru: Developments in Competition Policy
1. Introduction: Key features of the Peruvian competition policy regime

Peru’s economic development accelerated in the 1990s with the implementation of market liberalization and regulation processes, with the aggressive promotion of private investment and the implementation of competition policy. Before this decade, the Peruvian economy was a small andhighly protected economy with few producers, limited technological development, subsidized processes and low value-added production. Peru implemented a competition policy regime through Legislative Decree Nº 701 – Law to eliminate monopolistic, restrictive and control practices that impede competition. This legislation establishes ex-post control for dominant position abuses and collusivepractices. The aim is to eradicate monopolistic practices, controls and restraints on competition in the production and marketing of goods and in the provision of services, so that businesses can flourish while strengthening consumer welfare. The law applies to all persons and entities under public or private law undertaking economic activities. It also applies to all persons who represent corporations,organizations and institutions, when they take part in prohibited behavior. In June 2008, a new competition law, Legislative Decree Nº 1034, was approved. This new law clarifies anticompetitive conduct, strengthens the authorities’ investigative powers and assures its independence. Legislative Decree Nº 1034 includes two types of prohibitions relating to anticompetitive agreements and unilateralabuse of market power: Acts or behaviors involving economic activities that constitute abuse of a dominant position that limit, restrain, or distort competition in a manner that injures the common economic interest (consumer welfare); and, Agreements or other practices that restrain or can restrain competition.

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The law does not have any provision for mergers that may produce anticompetitiveeffects and generally Peruvian law does not provide for pre-merger notification, except in the Electrical Sector (Law Nº 26876, Antimonopoly and Antioligopoly of the Electrical Sector Law). Nevertheless, governmental authorities do follow-up on mergers especially in sensitive economic sectors. In the beginning, the Peruvian competition law established mild sanctions which did not affectcompetitors’ behavior. After a law modification in June 2008, the sanctions were raised to US$1 million but never exceeding 12% of a firm’s sales or gross income for the previous year. Since its establishment in 1992, Indecopi (National Institute for the Defense of Competition and the Protection of Intellectual Property) has enforced the competition law; and is empowered to investigate, examine and applyadministrative sanctions to economic agents. Another agency responsible for the application of competition laws is the Peruvian Telecommunications Regulatory Agency – OSIPTEL, which covers the telecommunications industry only. In general terms, this agency is in charge of applying antitrust and unfair competition law, competition advocacy, removing entry barriers that restrict competition,regulatory proposals that increase and to promote competition conditions and evaluating license transfers and concessions (often in the context of the merger of operators).1
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Even though there is not an explicit merger control policy applied to the telecommunications markets, the current legal framework establishes that any transfer of licenses and concessions among telecommunication

OSIPTEL actsthrough claims mechanisms, regulatory procedures and investment promotion measures. OSIPTEL is conscious of the importance of its role in the Peruvian economy, with the objective of generating conditions that favour competition and eliminating barriers that restrict it. OSIPTEL constantly monitors market conditions and practices in order to sanction anticompetitive conduct, in particular, the...