Trade and Commercial Law Assessment - Honduras - Economic ...

TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004
HONDURAS
IX. COMPETITION LAW AND POLICY
A. INTRODUCTION
Recognizing the benefits of a competition law and policy, the Government of Honduras has
engaged in significant efforts to adopt a competition law. 150 Substantial initial efforts began in
2001, with renewed interest and activity in 2003. Since the end of 2003, momentum has
increased significantly. The well-publicized anticompetitive practices in the cement sector during
the past year, combined with pressures created by CAFTA preparations and related internal and
external concern about the lack of a competition law, have all driven forward the process of
adopting a competition law. In September 2004, a draft competition law was “officiated” and
submitted to the Economics Committee of the Legislative Assembly. It is anticipated that this
draft law will be voted on before the end of 2004.
B. LEGAL FRAMEWORK
No competition law exists in Honduras; however, certain laws have competition-related
provisions, many of which are comprehensive. Article 339 of the Honduran constitution
prohibits monopolies and oligopolies. Articles 4 and 5 of the Commercial Code address unfair
competition, described as competition undertaken by merchants wherein a merchant unduly
attracts the clientele of a competitor. The Consumer Protection Law (and the accompanying
implementing regulation of July 25, 1989) has numerous competition-related provisions. Article
5 provides the basis for a competition law, stating that all goods and services offered in the
national territory must comply with conditions of just retribution with respect to quality,
quantity, and efficiency in the prices paid by the consumer. In Article 29B of the Consumer
Protection Law, the executive branch is empowered not only to adopt any measures necessary
for preventing or combating unfair competition but also to stop any activities that unfairly restrict
or limit the delivery of products or services or affect price. Specific examples within this law
include Article 7, which states that a producer cannot condition the sale of one product on the
acquisition of another product. In the implementing regulation of the consumer protection law,
Article 41 authorizes the executive branch to issue any other measures necessary for controlling
150 Competition law provides a regulatory framework for maintaining and improving efficiency in markets,
promoting competitive pricing practices, and restraining price rises in markets where competition is affected by
anticompetitive business practices (including horizontal and vertical restraints [e.g., collusive price-fixing,
input/output allocation, bid rigging], abuse of dominant position [e.g., exclusion, discrimination, predation], and
certain mergers and acquisitions). Competition law alone does not create competition, but when effectively
applied can counteract the dangers of private anticompetitive behavior. For example, cartels may deliberately
create artificial shortages, resulting in some consumers’ being able to obtain the product but others’ paying an
inflated, or monopoly, price. Dominant firms may abuse their market power by, for example, tying two products
without a legitimate business purpose. Firms with market power that erect protectionist barriers may block entry
to new participants.
In addition to private conduct, competition law can be used to counteract inefficient government regulation and
promote efficiency within the public sector. Competition authorities can use the competition law to perform a
comprehensive review of existing and proposed laws and regulations, providing suggestions and advice on
government policies and measures that promote anticompetitive practices or inefficiencies. Activities often
include the review of possible sources of public restraints on competition in trade policies (tariff and non-tariff
barriers, antidumping duties and discriminatory export practices), investment policies (exclusionary lists,
ownership restrictions, licensing requirements), and sectoral regulation (power, transportation,
telecommunications, natural monopolies).
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