Guatemala | Navigating the New Antitrust Landscape: 5 Key Factors for Companies

The purpose of the Law is to promote and defend competition and, on the other hand, to prevent, investigate, combat, prosecute and sanction anti-competitive practices, with the purpose of guaranteeing the well-being of national consumers. In view of its imminent entry into force, it is important to bear in mind the following specific aspects that may impact the operations of companies, national and foreign, that have a presence in Guatemala.  

The Law is clear that any person or company that is dedicated to the production and/or commercialization of goods and/or provision of services seeking to obtain economic benefits (hereinafter, "Economic Agents") will be subject to this regulation. Notwithstanding the above, it is important to consider that, if the economic activity is regulated by specific regulations and is under the supervision and control of a particular authority, the specific law will have primacy, and the Antitrust Law will only apply in a supplementary manner. Therefore, the competition rules contained in specialized legislation, such as those on telecommunications, banking, and energy, are not repealed. 

The persons regulated by the Law, as well as the state entity that will ensure compliance with the rules of competition, must take into consideration the concepts defined therein, especially, for example, what will be understood by "free competition" and by "dominant position". The foregoing, given that the Law is based on these concepts when establishing the application criteria and the processes related to anticompetitive practices and economic concentrations. In summary, according to the Law, a market has Free Competition when there are no elements that prevent the entry or exit of competitors, or that limit the ability to compete in economic activities of the market. On the other hand, in accordance with the Law, a company has a Dominant Position when its presence in the market is such that it allows it to hinder competition in the market and to set conditions independently of the conditions set by the competition. 

In general, anticompetitive practices are those that negatively influence the market by affecting the rivalry that is common for economic growth. The Act makes an important distinction between Absolute (Anticompetitive) Practices and Relative (Anticompetitive) Practices. Absolute Practices, in short, consist of agreements between two or more Economic Agents related to prices; market division; production; or arrangements to coordinate bids in public tenders. On the other hand, Relative Practices are those carried out by one or more Economic Agents, whose effect is to displace other competitors from the market or even hinder the entry or permanence of other competitors. Having considered these types of anti-competitive practices, it is essential that companies evaluate their contracts, processes, and business practices and that they develop a plan to eliminate or modify those that may be considered anti-competitive before the entry into force of the Law in order to avoid the sanctions established in the Law. Likewise, as a result of this evaluation, processes must be implemented to ensure compliance with the respective regulations or, in other words, that the practices prohibited by law are not incurred. Finally, it is important to note that all anticompetitive conduct, both absolute and relative, regulated by the Law can be justified under the criterion of efficiency. Unlike other legislations that incorporate the concept of conduct per se —sanctioning conduct without evaluating whether it generates efficiency gains—this regulation does not contemplate such an approach. 

The SIC, in accordance with the Law, will be responsible for the defense and promotion of free competition, prevention, investigation and punishment of anticompetitive practices, with powers throughout the national territory. This state entity will carry out administrative investigations and will be responsible for imposing fines and penalties for infringements of antitrust rules (such as engaging in anti-competitive practices or carrying out economic concentrations without due authorization). The sanctions can be a fine and publication of the resolution imposing the sanctions and measures, which, in addition to being onerous, could cause a detriment to the business image. The fine for absolute anticompetitive practice is up to approximately US$2.8B, and for relative practice is up to approximately US$1.4B. Within the activities of the SIC, it is particularly important to emphasize the power to authorize, deny, or condition economic concentration operations (as expanded below). Additionally, it is important to factor in that the Law establishes that the SIC must work together with other public institutions, specifically those that are responsible for the supervision of economic agents that are subject to a specific regulation. In this context, it should be noted that monopoly offenses and other monopolistic practices have been repealed from the Criminal Code, although the offense of speculation remains in force. This repeal is significant, since previously it was intended to establish a double forum that contemplated both the increase of penalties and the creation of new crimes as well as the implementation of administrative channels to combat anticompetitive practices. 

One of the most relevant provisions for companies or corporations seeking to start or expand their operations in Guatemala is the one that establishes that economic agents are obliged to request authorization from the SIC to carry out economic concentrations in certain cases. The Law regulates economic concentrations as the integration of two or more competing economic agents, previously independent of each other, resulting in the transfer of control from one of the economic agents to another or others, or the creation of a new economic agent. It is important to consider that this authorization must be requested before the business, operation, acquisition, merger or sale is carried out. Bearing in mind the above, it is essential to identify the criteria and exceptions set in the Law to determine the cases in which prior authorization from the SIC is required, in order to avoid the risk of the operation being sanctioned as an undue economic concentration. Finally, an interesting aspect of the Law is the incorporation of positive administrative silence. If the Superintendence does not resolve the request for concentration within a maximum period of thirty (30) days, counted from the receipt of the same, it will be understood that there is no objection to the operation, allowing the economic agents involved to proceed with the concentration. 

The entry into force of the Antitrust Law will bring with it a series of challenges for companies in general. On January 1, 2025, the rules relating to the general provisions of the Law (i.e. purpose, definitions, and scope of application) will come into force; as well as the rules referring to the creation of the SIC; those referring to reforms (of other regulations) and repeals and those relating to the validity of the Law. On December 8, 2026, the rules relating to anticompetitive practices and economic concentrations, as well as the administrative process and sanctions, will come into force. 

The first months and years of the progressive entry into force of the Law will be of utmost relevance in determining the applicability of the processes established therein and the development of the criteria. Taking into consideration the above, it is advisable that companies in general get ready for this new regulation, evaluating their practices and developing plans to eliminate those that may be considered anticompetitive. 

The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.