VENEZUELA: An Introduction to Competition/Antitrust

There was almost no activity under the Competition Law in Venezuela during 2016. No important decisions on pending cases were issued in 2016. This lack of activity suggests that competition advocacy and competition law in general are not priorities for the current administration.

The new Antimonopoly Law issued in 2014 by the President of Venezuela was based on an Enabling Law which permitted the President to issue laws in certain areas of the economy. Although the Antimonopoly Law took its name from the draft that had been under discussion in the National Assembly for several years, the new Law did not change much the regulations contained in the previous Competition Law.

The Antimonopoly Law, like the previous law it replaced, contains a prohibition of horizontal and vertical agreements to fix prices, control production, discrimination and tying. In addition, the new law allows the President to authorise certain agreements which are exempt from such prohibitions. So far the President has not issued any exemption; therefore, the exemptions issued under the previous law (such as the exemption for exclusive distribution and sale agreements and franchising) remain in force.

One of the most important changes that were discussed in the National Assembly for a new competition law was a mandatory notification system for mergers and acquisitions. However, the Antimonopoly Law did not impose mandatory notification for mergers and acquisitions, and therefore the voluntary notification system remains in place. Under the Law the President may issue a new regulation concerning merger control, but so far such regulation has not been issued. The only significant change with respect to the previous law is that the statute of limitations to investigate transactions is now five years instead of one year.

In such regard, under the Venezuelan merger control regime, although notification is not mandatory and the parties to a transaction may decide whether to notify or not, once the transaction is closed the authority may initiate by its own accord or at the request of an interested third party, an investigation into the transaction to determine its effects on the market in question. The authority had one year after closing to initiate such an investigation, but under the Antimonopoly Law it now has five years. No other changes were made to the merger control regime.

Unilateral practices that were regulated under the Competition Law, such as abuse of dominant position and exclusionary practices did not suffer any changes under the Antimonopoly Law.

The Antimonopoly Law created a new authority in charge of competition law in Venezuela called the “Superintendencia Antimonopolio”. However, notwithstanding the change of the name, the structure and personnel of the previous authority (“Superintendencia Procompetencia”) remain unchanged.

A new head of the authority was recently appointed, Mr. José Villalba.

However, with respect to the new competition authority there was a formal change concerning its independence from the government. Under the previous Competition law the Competition authority was an independent body. Under the Antimonopoly Law the head of the authority may be removed from its post by the President at any moment. As a result, the enforcement agenda of the Antimonopoly authority may legally be guided by the general policies of the Venezuelan government. Note however that this is a simple formal change, because since 2009 the Competition authority has operated under the authority of the Ministry of Commerce, consequently paying more attention to consumer protection issues than competition matters. The new authority is integrated into the general framework of the government’s policies.

Other than the few changes commented above, there are no changes in the new Antimonopoly Law in comparison to the previous competition regulations.