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

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS The pressure to adopt a competition law, together with the alleged existence of anticompetitive practices, suggests the need for a competition law, though broad-based public support for such a law is not self-evident. Many members of the public, for example, appear vehemently opposed to market reform (in particular, to privatization). Successes in market reform 164 , are frequently discounted, and so-called “failures” 165 are highlighted. Moreover, a limited number of discussions with members of the public suggested a weak understanding of competition law policy. If the adoption of a competition law and promotion of competition policy are to move forward in Honduras, considerable educational efforts will need to be undertaken, as elaborated further in the conclusions and recommendations section of this chapter. 4. Recommendations Competition law, together with several microeconomic, industrial, and commercial policies, such as privatization, international trade, and foreign investment, is the main instrument for nurturing market reform. The application and interface between competition law and these related policies can have a significant bearing on industrial structure and the competitive market performance of enterprises in the private and public sectors and on economic development. Competition law and international trade liberalization, for example, complement each other in promoting trade, market access, economic efficiency, and consumer welfare. Promoting the objectives of a liberal trade policy supports the objectives of competition law and vice versa. For example, trade liberalization and competition law together can prevent powerful business interests with monopoly power from creating barriers to trade. Similarly, competition law and privatization interact to ensure that a public monopoly is not merely transferred to a private monopoly. When a sector has been liberalized through introduction of new competitors into the market, competition law and its enforcement can fill the primary role of maintaining competition and avoiding distortions caused by anticompetitive practices. Honduras has engaged in a variety of these market reforms without introducing and enforcing a competition law; consequently, Honduras has not been able to realize the full benefits of these reforms. Actual and alleged anticompetitive practices cause considerable consumer injury, suggesting that this strategy of market reform without a competition law merits reconsideration. A number of active proponents throughout Honduran society, combined with a number of informed government representatives and private legal practitioners, suggest that the capacity for successful adoption and enforcement of a competition law exists and needs to be supported by education of the members of the Legislative Assembly. Specific recommendations are as follows: ♦ With a view toward regional convergence and harmonization, consider carefully the competition laws of Mexico and Panama; consult with the drafting committees in El Salvador, Guatemala, and Nicaragua. 164 For example in liberalizing local transportation, private companies entered the market, and the government eliminated price controls, leading to a considerable decrease in the price of local transport. 165 For example, after the issuance of concessions for operation of the international airports, prices increased because the new operators were actually collecting airport fees as opposed to accepting smaller bribes to waive the fees. IX-8
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS ♦ Consider comments made by private sector representatives, including those by Tegucigalpa’s Chamber of Industry and Commerce (Cámara de Comercio e Industria de Tegucigalpa or CCIT) and the Honduras Council for Private Enterprises (Consejo Hondureño de la Empresa Privada or COHEP). ♦ Consider comments on the current draft made by international experts, including those by the World Bank and U.S. antitrust authorities. ♦ Revise and circulate a new draft based on these comments and on the ongoing experiences of regional efforts. ♦ Consider promoting passage and implementation of a competition law through a twofold strategy: – Develop a series of seminars to promote private sector support, focusing on recent experiences, for example, in the telecommunications sector, regional initiatives, etc. – Develop a series of seminars to educate the Legislative Assembly about competition law. o As a first step, prepare an advocacy brochure for the deputies who will vote on the bill, explaining in clear, basic language the principal purposes of a competition law in the Honduran context, drawing on examples from previous studies. o Hold a 2-day training seminar for the Legislative Assembly, bringing in foreign experts from the region (including at least one expert from Mexico.) Following passage of the competition law— ♦ Develop a policy strategy to make the law operational, including institutional arrangements (e.g., staffing and training). ♦ Develop regional training programs for staff and with universities and bar associations. ♦ Continue advocacy initiatives, including reviews of government policies and regulation affecting competition, and prepare studies on key sectors. ♦ Develop an enforcement strategy that focuses on investigating anticompetitive conduct in sectors that are important to consumers and that address Honduran market failures. ♦ Promote a competition culture through public communication, including preparing communication and media materials; enhance the media capacity in publication of competition-related issues through dialogues and workshops with journalists; and engage in dialogues and workshops with related law enforcement officers, other government regulators, and business and academic communities. IX-9
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