Regulatory Improvement Based On The Identification, Review, And Elimination Of Market Entry Barriers

• Published date: 07 December 2020
• Subject Matter: nti-trust/Competition Law, Antitrust, EU Competition
• Law Firm: CorralRosales
• Author: Ms Ana Samudio

The Superintendency of Market Power Control (SCPM) published the "Methodology for the identification, review, and elimination of regulatory barriers" on November 5, 2020. It will serve as a guide to remove regulatory barriers to promote the participation of various operators in the market.

The Constitution establishes the principle of the prevalence of public interest over private interest as a guide for state and social activity and recognizes the right of people to develop economic activities, individually or collectively, in accordance with the principles of solidarity, social and environmental responsibility and the power of State intervention in economic activities to promote forms of production that ensure the welfare of the population and discourage those that violate their rights or those of nature.

State intervention through the regulation of economic activities is legitimate as long as it achieves a balance of these guarantees and powers, in the sense that the regulatory restrictions imposed on the entry and permanence of economic operators in the different markets are useful, reasonable, proportionate, and sufficient to guarantee public interest but not constituting an entry barrier for the development of efficient markets.

The methodology developed by the SCPM is intended to promote free competition and market efficiency, by verifying the legitimacy of regulatory barriers and, based on this analysis, the subsequent proposal for regulatory improvements or their elimination.

The procedure comprises two phases: on the one hand, the test of legality, in which the authority's faculties to issue the regulation under analysis are verified, and then the coherence of said regulation with the law in force, in consideration of the hierarchy of the norms determined in the Constitution. If it is determined that the regulation is illegal in the first phase, either because the authority did not have the faculty to issue it or because it contradicts a regulation of higher hierarchy, the SCPM must propose its elimination.

If the regulation passes the test of legality, in the second phase, the SCPM must weigh the reasonableness and proportionality of the restriction it imposes, against the protected legal good: the public interest. For this analysis, the SCPM must determine, in the following order:

• The appropriateness of the measure imposed by the regulation to achieve the purpose it pursues. That is, if the means employed - the restriction imposed - is indeed...