Press Release
C. 25-13 th
El Salvador, October 10 , 2013.
CS will investigate CEL´s suppliers for possible horizontal agreements The Competition Superintendence (CS) has begun a formal investigation against six suppliers of the Rio Lempa´s Hydroelectric Executive Commission (CEL, its Salvadoran acronym) for the possible commission of anticompetitive practices in public procurement procedures. 1.
“Bid rigging limits the capacity of public institutions to obtain goods and services at competitive prices, causing an inefficient distribution of public resources, damaging the population in general”, expressed Francisco Diaz Rodriguez, Competition Superintendent.
Pursuant to a complaint from CEL, the Competition Superintendence began a formal investigation against six of its suppliers for the alleged anticompetitive practice described in Provision 25 letter a) of the Salvadoran Competition Law (CL), which prohibits establishing agreements for price fixing or other purchase or sales conditions under any form whatsoever. The investigated economic agents are the company C-E Inversiones, S. A. de C. V., and five individuals, all CEL´s suppliers through public procurement procedures where these agents participated from July until December 2010. According to CEL, enough elements exist that sustain the alleged relationship and communication amongst the investigated suppliers. Amongst others things, CEL affirms that a variation pattern exists amid the bids presented by the denounced suppliers and that, furthermore, one same person is in charge of withdrawing the checks issued to anyone who might be the winner.
The competition conditions in public procurement procedures can be distorted from the beginning - amongst other reasons – with the manipulation of the bids filed by the economic agents who prepare fraudulent bids, in order to eliminate rivalry and determine with anticipation the winner of the procedure. Said practices limit the capacity of public institutions to obtain goods and services at competitive prices, causing an inefficient distribution of public resources which damages the population in general. Bid rigging, together with the other conducts described in Provision 25 of the CL, has been classified by the Organization for Economic Co-operation and Development (OECD) as the “most severe and pernicious infringements of Competition Law, since the colluded agents harm the consumers by increasing the prices, limiting the supply, and causing dominance, waste, and inefficiency in the country´s whose markets would be operating under competition conditions if cartels did not exist”. If as a result of this investigation, the CS proves the existence of elements of an anticompetitive practice the Competition Superintendence will, amongst other actions, a) order the anticompetitive practice to be ceased and b) impose other remedies to the infringers; and, C) impose the respective fines, which will not exceed five thousand minimum monthly urban wages in the industrial sector. If determined that the committed practice is particularly grave, the Superintendence may impose a fine up to 6% of the total annual sales obtained by the infringer, or up to 6% of the value of its assets during the previous fiscal
year, or a fine equivalent to a minimum of twice and up to a maximum of ten times the estimated profits resulting from the anticompetitive practices, whichever is higher, pursuant to Provision 38 paragraphs 1 and 2 of the CL. Moreover, it is deemed necessary to point out that according to Provision 38 paragraph 6 of the CL, if during this procedure, the Competition Superintendence requests the investigated economic agents any type of collaboration and they deliberately or negligently fail to supply it, or if collaborating, provide incomplete or inaccurate information, the CS may also impose a fine amounting up to 10 minimum urban monthly wages in the industrial sector for every day of delay. The investigated agents have 30 calendar days to file their defense arguments; period starting the day after the resolution ordering the initiation of this investigation was notified to them.