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Panama

Last Verified on Friday 3rd March 2017

    Applicable legislation and the competent authorities

    • Panama

      The relevant legislation regarding competition is: Law No. 45 of 31 October 2007 (Consumer Protection and Competition Defence Law), Executive Decree No. 8-A of 22 January 2009, which regulates Title I (Monopoly) and other dispositions of Law No. 45 of 31 October 2007 and Resolution No. A-31-09 of 16 July 2009, through which the Consumer Protection and Competition Defense Authority (from here on, ACODECO or the authority) approves the Guide for the Control of Economic Concentrations.

      Last verified on Friday 3rd March 2017

    • Panama

      Instead of ACODECO, The National Authority for Public Services is responsible for applying the provisions regarding economic concentrations in the electricity, radio and television sectors.

      In the banking, insurance and securities sectors approval is required from the sector regulator (the Superintendency of Banks, the Superintendency of Insurance and the Superintendency of Capital Markets, respectively), according to its sectoral laws. The foregoing is in addition to ACODECO's intervention in competition matters.

      Last verified on Friday 3rd March 2017

    • Panama

      According to the Competition Law, notification is not compulsory, so there are no strict deadlines for notification; however, prior voluntary notification must be filed before the concentration takes effect (that is, before any changes in control).

      Closing before clearance implies that the economic concentration must have taken effect before holding the explicit approval of ACODECO, so it could be challenged by ACODECO or third parties within the three years that follow the date in which it took effect. If this occurs, ACODECO may order the provisional suspension of any act that it deems in violation of the Consumer Protection and Competition Defence Law. Furthermore, if ACODECO determines that the concentration itself is in violation of the law, it may condition the concentration or order partial or total unwinding, termination of control, or annulment of acts.

      Last verified on Friday 3rd March 2017

    • Panama

      According to the Competition Law, prior notification of a potential economic concentration is voluntary. If parties decide to voluntarily notify in advance, they must do so before the merger has taken effect; that is, before there has been a change in control.

      There is no prohibition of closing before clearance, but the transaction may be challenged by ACODECO or third parties within three years if it is not cleared before it takes place.

      If the transaction was approved by ACODECO it cannot be challenged.

      Last verified on Friday 3rd March 2017

    • Panama

      ACODECO is responsible for the enforcement of the relevant legislation at the administrative level. Therefore, ACODECO has the authority to analyse and resolve prior verification of economic concentrations filings. The Third Chamber of the Supreme Court of Justice is in charge of resolving challenges against ACODECO decisions in the administrative process of the prior verification of economic concentrations. 

      The special courts of justice are also in charge of matters related to competition and are responsible for the evaluation and resolution of the lawsuits through which economic concentrations are challenged. Specifically the special courts of justice include: (i) the two civil courts that resolve on first instance the lawsuits against economic concentrations; (ii) the Superior Court, which resolves the appeals and (iii) the Civil Chamber of the Supreme Court of Justice, which is in charge of resolving cassation, extraordinary recourse.

      Last verified on Friday 3rd March 2017

  • Time frames

    • Panama

      Our investigations conclude that since the Competition Agency was established only one transaction has been blocked (2002), while around 40 per cent of the transactions were conditioned, this is, cleared including remedies, and more than half of the transactions were cleared without remedies. 

      Last verified on Friday 3rd March 2017

  • Notifiable transactions: thresholds

    • Panama

      Prior notification of a potential economic concentration is voluntary. If parties decide to voluntarily notify in advance, they must do so before the merger has taken effect; that is, before there has been a change in control.

      Parties typically file prior notifications of an economic concentration when there are circumstances surrounding the transaction (ie, market share) that increase the risk of an investigation by ACODECO.

      The Panamanian legislation does not establish thresholds. Any and all transactions that have as a consequence or potential consequence the lessening, restriction, harm or impediment of free competition and free access of the economic agents are subject to review.

      However, in accordance with the Guide for the Control of Economic Concentrations approved by ACODECO, transactions in which the resulting dominance rate does not increase above 25 per cent are seen to have such a low impact that they are generally not investigated.

      Last verified on Friday 3rd March 2017

    • Panama

      Change in control is always part of the test. In accordance with the Guide for the Control of Economic Concentrations, approved by ACODECO, control exists when: rights, contracts or other means, either independently or jointly, and taking into consideration the legal and factual circumstances, grant the possibility of executing decisive influence over the activities of a company and, in particular when:

      • property rights or rights to use all or some of the assets of a company are acquired.
      • rights or contracts that enable the decisive influence over the composition, deliberations or the decisions of the departments of a company are acquired. 

      Last verified on Friday 3rd March 2017

    • Panama

      The analysis of effects of the economic concentration is carried out case by case in order to determinate effects or potential effects of lessening, restricting, harming or impeding free competition and free access of the economic agents, as economic concentrations have as an object or effect to:

      • Fix, manipulate, agree, convene or impose prices, or exchange information with the same object or effect or limit the production, partition of the markets or the clients or collusion of offers in public bids.
      •  Displace or unreasonably prevent other agents from their participation in the market or establish unreasonably exclusive advantages in favour of one or various economic agents. 
      • A market division or that one of the parties stops competing or decides not to compete in favor of the other.

      The test is reasonably sophisticated, and includes, for instance, the analysis of the market in question, the substitutability of the product in terms of its supply and its demand, barriers to entry and the degree of concentration in terms of the number of firms in the market and the amount of competition amongst them, as dictated by the Herfindahl–Hirschman Index and the Dominance Rate.  

      Last verified on Friday 3rd March 2017

    • Panama

      Transactions between foreign companies must be notified when they have the effect or potential effect of lessening, restricting, harming or impeding free competition and free access of the economic agents.

      Merger control will be applied to all concentrations with effects in Panama, regardless of the origin of the firms involved.

      Last verified on Friday 3rd March 2017

  • Notification procedure, timing and penalties for non-compliance

    • Panama

      Law No. 45 of 2007 establishes that the request of prior notification should be filed by the interested economic agent, which implies that either party (i.e.: the buyer or the seller) could file for voluntary prior notification. 

      Last verified on Friday 3rd March 2017

    • Panama

      There is no standard form. Pursuant to the antitrust regulations and for purposes of verification of the economic concentration, the following documentation must be submitted to the Authority for Consumer Protection and Free Trade Defence (ACODECO):

      1. The general data of the economic agents that are providing notice of the concentration (to the authority) and of those who are participating directly in such concentration.
      2. The general data of the legal representative or agent and documentation that supports their authority to act on behalf of the company.
      3. The public deed of incorporation and by-laws of the economic agents involved.
      4. The financial statements of the economic agents for the current year or the last fiscal period, certified by an authorised public accountant.
      5. Good standing certificate issued by the Public Registry (or its equivalent agency for foreign economic agents) regarding the existence, validity, legal representation and capital structure of the participating economic agents.
      6. Description of the new capital structure of the economic agents and the participation of each partner (shareholder), before and after the concentration, and of the person that has and will have control, issued by the legal representative or secretary of the company.
      7. Description of the concentration, its objectives and type of operation, as well as a copy of the draft of the legal act (agreement) referred to.
      8. Copy of the relevant documents of analysis and valuation of the business or investment project, which is taken into account for the purposes of deciding on the implementation of the economic concentration transaction which is being submitted for prior verification (pre clearance).
      9. A detailed and precise explanation regarding the timeline and stages in which the economic concentration will unfold.
      10. Certification regarding the provisions in which the economic agents involved obligate themselves not to compete, and an explanation of the basis for its existence.
      11. Description of the main goods or services that are manufactured or offered by each of the economic agents involved, list of goods or services being substituted and description of the main economic agents that manufacture, distribute or deal with such goods within the national territory, together with a definition of the pertinent market and the data related to the participation in such market.
      12. When applicable, the percentage allocation representing the cost of transportation on the manufacture price for each service affected, from the manufacturing/production plant to the different zones of coverage should be established.
      13. Establish the limitations from a legal, economic and other perspective, that must be taken into account for the purpose of entering into the market of the products affected (entry barriers).
      14. Inform, when known, the companies that have entered and exited the market during the past three years.
      15. Mention the economic agents involved in the transaction that have a direct or indirect participation in the capital, administration or any other activity of the other economic agents that manufacture or deal in goods and services affected by the transaction, in markets related to the activities of economic agents that participate in the concentration at issue.
      16. Mention the main providers and clients of the economic agents involved in the concentration at issue.

      The documentation provided in any language other than Spanish must be accompanied by a translation from an official authorised translator. The documents and certificates required that are issued abroad must comply with all the legal requirements for enforceability in Panama.

      Depending on the circumstances of the case, filing preparation takes approximately three months and usually includes an economic analysis of the transaction.

      Last verified on Friday 3rd March 2017

    • Panama

      According to Competition Law, notification is not compulsory, so there are no strict deadlines for notification; however, prior voluntary notification must be filed before the concentration takes effect (that is, before any changes in control).

      Last verified on Friday 3rd March 2017

    • Panama

      There is no pre-notification requirement or custom whereby a draft notification is submitted first to the authority for comments and questions to be addressed before formal notification is made.

      However, an informal meeting with ACODECO is customary to inform about the transaction that will be subject to verification.

      Last verified on Friday 3rd March 2017

    • Panama

      Notification and clearance are not required before closing, so there are no penalties involved in doing so. However, closing before clearance implies that the economic concentration must have taken effect before holding the explicit approval of ACODECO, so it could be challenged by ACODECO or third parties within the three years that follow the date in which it took effect. If this occurs, ACODECO may order the provisional suspension of any act that it deems in violation of the Consumer Protection and Competition Defence Law. Furthermore, if ACODECO determines that the concentration itself is in violation of the law, it may condition the concentration or order partial or total unwinding, termination of control, or annulment of acts.

      There is no specific guidance from the authority as to how the parties should conduct business between signing and closing. However, the parties must conduct their business as independent economic agents until clearance. 

      Last verified on Friday 3rd March 2017

    • Panama

      The process of prior notification of an economic concentration is composed of the following phases:

      • The interested economic agent will file the notification in writing.
      • ACODECO might require additional facts or other information, within the twenty calendar days following the receipt of the notification.
      • From the date in which the notification is received or, if additional information is required, from the date this additional information is received, ACODECO will have a time period of up to sixty calendar days to issue its resolution. If this time period expires before a resolution has been issued, the concentration can be assumed to be approved.
      • The resolution issued by ACODECO must be duly based on the law. ACODECO could reject a prior notification request when it is deemed inadequate, or condition it to compliance with given set of requirements.
      • Within the five days that follow the notification of the issuance of the resolution, the interested party may appeal before the Administrator of ACODECO against the decision of the Competition Direction of ACODECO regarding the economic concentration for which the party filed the prior notification. The appeal must be resolved within the two months that follow. 

      Last verified on Friday 3rd March 2017

    • Panama

      According to competition law, a transaction is not forbidden if the economic agent has systematically incurred losses and lost market share in a way that threatens its presence in the market and if it proves to have unsuccessfully searched for buyers that are not considered competitors. 

      Last verified on Friday 3rd March 2017

    • Panama

      This is not customary, but the authority can be consulted. However, only a formal approval from ACODECO impedes the transaction from being challenged by ACODECO or third parties. 

      Last verified on Friday 3rd March 2017

    • Panama

      Notification and clearance are not required before closing, so there are no penalties involved in doing so. However, closing before clearance implies that the economic concentration must have taken effect before holding the explicit approval of ACODECO, so it could be challenged by ACODECO or third parties within the three years that follow the date in which it took effect. If this occurs, ACODECO may order the provisional suspension of any act that it deems in violation of the Consumer Protection and Competition Defence Law. Furthermore, if ACODECO determines that the concentration itself is in violation of the law, it may condition the concentration or order partial or total unwinding, termination of control, or annulment of acts.

      Last verified on Friday 3rd March 2017

  • The review process, confidentiality and the role or influence of third parties

    • Panama

      The authority has broad investigative powers including, but not limited to, gathering information, conducting interviews and requesting documents from the economic agent and/or third parties such as competitors, customers, suppliers or government entities.

      The market test is performed in a case-by-case basis according to the characteristics and circumstances particular to the market in which the economic concentration will take place, at the time in which this economic concentration is being analysed.

      However, in accordance with the Guide for the Control of Economic Concentrations approved by ACODECO, transactions in which the resulting dominance rate is above 25 per cent will usually be object of an investigation in the event that the parties had decided not to file for voluntary clearance. When the 25 per cent dominance rate is not reached, these transactions will not be analysed further by ACODECO nor will the economic concentration be impugned.  

      Last verified on Friday 3rd March 2017

    • Panama

      ACODECO has signed information exchange agreements with the competition authorities of Peru, Nicaragua, Costa Rica, El Salvador, Dominican Republic, Honduras and the Republic of China (Taiwan). Confidential information is protected in such agreements. Therefore, the authority should not provide such confidential information without a waiver from the party that provided it.

      Last verified on Friday 3rd March 2017

    • Panama

      ACODECO’s investigation is based mainly on the information presented by the parties and information available in other governmental entities. However, ACODECO may request information from competitors, suppliers or customers.

      In general terms, ACODECO gives weight to the information provided by the parties. It should be noted that ACODECO may investigate the transaction when the approval is granted on the basis of false or incomplete information from the parties.

      Last verified on Friday 3rd March 2017

    • Panama

      Anyone may request ACODECO to investigate the transaction or may provide elements for the investigation. However, ACODECO should not allow third parties to access the investigation file for confidentiality reasons. 

      Last verified on Friday 3rd March 2017

    • Panama

      Within the five days that follow the notification of the issuance of the resolution, the interested party may appeal before the Administrator of ACODECO against the decision of the Competition Direction of ACODECO regarding the economic concentration for which the party filed the prior notification. The appeal must be resolved within the two months that follow. After Administrator of ACODECO has issued the resolution regarding this appeal, the Third Chamber of the Supreme Court of Justice is in charge of resolving any further challenges against the ACODECO decision.

      The special Courts of Justice in charge of matters related to competition are responsible for the evaluation and resolution of the lawsuits through which economic concentrations are challenged.

      There are no precedents in which third parties have appealed clearance decisions.

      Last verified on Friday 3rd March 2017

    • Panama

      It is customary to hold an informal meeting with ACODECO in order to inform the authority about the transaction that will be subject to verification. This is recommended, as a courtesy, to be able to briefly explain the transaction and to gather ACODECO’s initial feedback regarding the transaction.

      Last verified on Friday 3rd March 2017

  • Substantive analysis and remedies

    • Panama

      The analysis of the potential results of an economic concentration is carried out on a case by case basis in order to determine the potential effects of lessening, restricting, harming or impeding free competition and free access of the economic agents, as economic concentrations have as an object or effect to:

      • Fix, manipulate, agree, convene or impose prices, or exchange information with the same object or effect or limit the production, partition of the markets or the clients or collusion of offers in public bids.
      •  Displace or unreasonably prevent other agents from their participation in the market or establish unreasonably exclusive advantages in favour of one or various economic agents. 
      • A market division or that one of the parties stops competing or decides not to compete in favour of the other.

      The test is reasonably sophisticated, and includes, for instance, the analysis of the market in question, the substitutability of the product in terms of its supply and its demand, barriers to entry and the degree of concentration in terms of the number of firms in the market and the amount competition among them, as dictated by the Herfindahl–Hirschman Index and the dominance rate.  

      Last verified on Friday 3rd March 2017

    • Panama

      In accordance with the Guide for the Control of Economic Concentrations approved by ACODECO, transactions in which the resulting dominance rate is above 25 per cent will usually be object of an investigation in the event that the parties had decided not to file for voluntary clearance. When the 25 per cent dominance rate is not reached, these transactions will not be analysed further by ACODECO nor will the economic concentration be impugned.  

      Last verified on Friday 3rd March 2017

    • Panama

      Transactions that have a restrictive effect on the competition can be approved by ACODECO if the latter considers that said effects are compensated by the efficiencies that will result from the merger, including:

      • Improvements in the production or commercialisation systems.
      • Technical or economic progress.
      • Improvement in the industry’s competitiveness.
      • Contributions to the consumers’ interests.

      Last verified on Friday 3rd March 2017

    • Panama

      Before issuing the decision, ACODECO may consult with the parties about the possible conditions to be imposed for the approval of the transaction. There is no negotiation of remedies. 

      Last verified on Friday 3rd March 2017

    • Panama

      Within the five days that follow the notification of the issuance of the resolution, the interested party may appeal before the Administrator of ACODECO against the decision of the Competition Direction of ACODECO. There are no recent cases. 

      Last verified on Friday 3rd March 2017

  • Judicial review

    • Panama

      After ACODECO's Administrator has issued the resolution regarding this appeal, the Third Chamber of the Supreme Court of Justice is in charge of resolving any further challenges against the ACODECO decision. This challenge must be filed within the following two months.  

      Last verified on Friday 3rd March 2017

  • Case law

    • Panama

      By means Resolution of 8 March 2016, ACODECO approved the transaction between Gold Mills De Panama and Harinas Panama, in connection with the wheat flour market. This transaction was approved conditioned to future audits and the obligation to provide a guarantee of compliance for the sum of US$2million. 

      Last verified on Friday 3rd March 2017

    • Panama

      In general, the authorities seem to be particularly concerned about sectors or markets that have a visible impact on a large number of consumers (for example, the food industry).                                                  

      Last verified on Friday 3rd March 2017

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