The Law for the Promotion of Competition and Consumer Protection No. 7492 (the Competition Law) was enacted in Costa Rica in 1994 and came into effect in January 1995. The Competition Law contains provisions related to deregulation, competition, unfair competition, consumer protection, comparative advertising and strict liability. It also created the institutional arrangements for the competition regime and for consumer protection by creating two separate bodies ascribed to the Ministry of Economy, respectively the Competition Promotion Commission (the Commission) and the National Consumer Commission. While these bodies are part of the Ministry, they are independent on technical matters. This means that the decisions of the Commission can neither be appealed nor revoked by the Minister of the Economy. The Law is based on Article 46 of the Constitution. Furthermore, Costa Rica's free trade agreement with Canada contemplates a commitment by both countries to establish mechanisms to deal with anticompetitive conduct and concentrations.

The merger control regime contained in the Competition Law was enacted as an ex post system. In 2012, the legislature finally passed an amendment to the Competition Law that includes pre-merger notification provisions. The Law has been complemented by regulations issued by the government and by the Guidelines issued by the Commission. Merger control has absorbed much of the Commission's resources to the detriment of other anticompetitive cases.

In the telecommunications sector, General Telecommunication Law No. 8642, issued in 2008, contemplates specific competition regulations that include pre-merger notifications. Filings must be made before SUTEL, the telecommunications authority; and SUTEL must then request a technical opinion from the Commission prior to issuing its final decision. The Commission's opinion is not binding for SUTEL. The same applies to SUGEF in the banking sector, SUGEVAL regarding the stock markets, SUPEN in the pension funds sector and SUGESE regarding the insurance markets; according to the Competition Law, all these regulatory agencies must request the Commission's technical opinion prior to approving a concentration. The Commission must issue its opinion within 15 days of receiving a request. Again, this opinion is not binding; however, if a regulatory agency does not agree with the Commission's opinion and is not going to act upon it, it must explain the reasons why it will not do so.


The Commission continues to be very active in merger control. Compared to the number of horizontal and vertical restraints cases, it is clear most resources are being dedicated to merger control. This year the Commission approved all mergers without any conditions. Nevertheless, as discussed below, there are some matters that raised some particular points of interest, as follows.

Newell Rubbermaid Inc, has presence in the markets of (i) writing and crafts supplements; (ii) baby and maternity products; (iii) cleaning and hygiene products; (iv) home and retail products; and (v) tools; announced the purchase of Jarden Corporation, with presence in the markets of (i) writing and crafts supplements; (ii) baby and maternity products; (iii) cleaning and hygiene products; (iv) home and retail products; and (v) sporting gear. Newell Rubbermaid operates in Costa Rica through a Panamanian subsidiary, while Jarden Corp has direct presence through its Rawlings factory. The Commission failed to properly identify all the markets involved and ruled that the merger was a conglomerate merger, which has a favourable presumption according to Article 53 of the executive regulations of the Competition Law. The parties did provide sufficient evidence that they did not directly compete in the baby and maternity, sporting gear and tools market. Therefore, the Commission approved the transaction. It seems, though, that a more precise market definition was needed to properly weight the possible effect of the merger.

In another case, Abonos Agro notified the sale of its 40 per cent share of the capital stock in Mayoreo Abonos Agro to the other two shareholders, Ashland Financial, SA (Ashland) & Agriculture Advisory Corporation, SA (Agriculture) owners of 30 per cent each of Mayoreo Abonos Agro, SA the Commission determined that Mayoreo Abonos Agro, SA has the largest market share in the relevant market. The Commission also acknowledged that Ashland and Agriculture are the entities that control, respectively, Corporación e Industrial El Lagar, SA and Almacenes El Colono, SA, the other players in the market, which in turn control two important hardware chains that purchase many products from Mayoreo Abonos Agro, SA. Notwithstanding the foregoing, the Commission approved the transaction stating that there were no anticompetitive effects since there would be no shift in market power, as this was only an internal transaction, thereby not resulting in potential coordinated effects from the transaction.

In a divesting case, Holcim Costa Rica, SA decided to sell the assets for its premixed concrete business Ready Mix to Concretera Nacional, SA, a company incorporated by a non-related party for the purpose of purchasing the assets and intellectual property required to continue commercialising and distributing Ready Mix. Holcim, however, would be the exclusive supplier for Ready Mix for the next seven years after the sale, since Holcim financed 90 per cent of the sale for Concretera Nacional, SA and the credit had a term of seven years, but with the possibility of early repayment without penalisation. This divestment meant the creation of a new economic agent, and since new companies are usually required by banks to be operating for four years before being eligible for a loan, the Commission determined that the exclusivity clause was not an abuse of dominance by Holcim, but rather a condition necessary for the creation of this new economic agent. The Commission approved the merger without conditions.

Sociedad Portuaria Regional de Buenaventura, SA (Buenaventura) sold 51 per cent of its participation in the capital stock of the Sociedad Portuaria de Caldera, SA and Sociedad Portuaria Granelera de Caldera, SA to SAAM Operadora de Puertos Empresas de Estiba y Desestiba Costa Rica, SA (SAAM). Buenaventura is a government contractor that operates both ports in Caldera (in the Pacific coast), which are under the supervision of the Instituto Costarricense de Puertos del Pacífico (INCOP). SAAM's parent company is the sole shareholder of Concesionaria SAAM Costa Rica, SA which is also a government contractor that operates the towing services to and from the ports overseen by INCOP. Article 9 of the Competition Law establishes an exception to government contractors if there is a law that excludes the Commission's ability to oversee such actions or transactions. Both SAAM and Buenaventura notified the merger before the Commission but requested that the Commission determine it was not competent to oversee the merger, since the law that created INCOP states that the latter must guarantee that its contractors cannot limit or hinder competition, thus interpreting that INCOP was the competent authority to review the merger. The Commission denied the request but offered no justification and proceeded to review the merger, determining it had no anticompetitive effects, since INCOP was the owner of the assets and services being operated through the government contract, in charge of determining the terms and conditions that companies involved in this transaction would undertake their day to day operations and that INCOP, alongside the Public Services Regulator are the entities in charge of determining the rates for the services offered by the Caldera ports and the towing services. Thus, the transaction was approved without conditions.

The Commission also authorised a a transaction in which Corporación Comercial e Industrial El Lagar SA purchased half of the capital stock of Grupo Dasa de Gravilias SA. The relevant market in which both parties are involved is construction materials and hardware stores and at the geographical level, the buyer has 14 stores nationwide, and the seller has five stores nationwide. The Commission determines that there is only one location with stores from both parties, but there are many competitors in that location, therefore, the substantial power in the relevant market is limited. This case is important because of the geographic market definition and the competition analysis based on such definition.

Finally, there was a merger that caused a lack of clarity and legal uncertainty regarding the powers of the Superintendence of Telecommunications (SUTEL), as exclusive regulator of the competition of the telecommunications sector, and the Commission. On 17 December 2015, a merger was authorised between the companies Multivisión (acquirer) and As Media (acquired), which owns the entire share capital of Celestron, a company that provides the broadcasting service through several frequencies. SUTEL decided to declare itself lacking jurisdiction, since the transaction was related to broadcasting service, the global advertising markets, the production of audiovisual content and the production and distribution of channel, all of which SUTEL considered out of its jurisdiction, and sent the case to the Commission. The Commission decided that Sutel had jurisdiction becasue the transaction was related to the purchase of shares of a company that operates in telecommunications. SUTEL finally ruled the merger authorisation, authorising the merger without any conditions, because the transaction does not give market power to Multivision, because the company does not have concessions in the telecommunications networks.


The Law defines concentrations as any change in control of an entity or of productive assets, as a result of a transaction between two independent entities. The Commission shall approve:

  • a concentrations that do not have the object or effect of creating or significantly incrementing market power when this may result in a limitation or reduction of competition;
  • b concentrations that do not facilitate express or tacit coordination among competitors, or that may not result in adverse effects for consumers; and
  • c concentrations that do not reduce, damage or prevent competition and concurrence on similar or closely related goods or services.
i Thresholds and deadline to notify

All concentrations where the amount of the assets of the entities involved, and those of their respective parent companies, exceed 30,000 minimum wages (about US$15 million), or where the total income generated in Costa Rica during the last fiscal year of all entities involved in the concentration exceeds that amount, must be notified to the Commission. Concentrations must be notified to the Commission before closing, or within five calendar days after closing.

The Government Decree2 narrows this threshold, indicating that concentrations shall be notified to the Commission where at least two of the entities involved have operations in Costa Rica, and also indicating that when the purpose of the concentration is the acquisition of part of the assets or a specific operation of an entity, then, only the value of those assets or the income of said part of the operation shall be considered. The Government Decree also clarifies that only productive assets registered in the last annual financial statement shall be considered, but they must include the value of the productive assets of all affiliates that have had business activity in Costa Rica during the two years prior to the concentration. Income shall also include sales by all affiliates in the country (excluding sales among affiliates).

Once approved, the Commission cannot review a merger again, unless approval was granted based on false information, or the parties do not comply with the conditions or remedies imposed by the Commission.

The application may be filed by any of the entities involved in the concentration, and must include:

  • a a detailed description of the transaction;
  • b a description of the entities involved;
  • c audited financial statements of the past three years; and
  • d a description of the relevant markets, competitors and market shares, and the economic justification for the transaction.

The application must also include an analysis of the possible anticompetitive effects of the concentration, and a proposal to counterbalance such effects. The Government Decree includes a more detailed list of requirements, including a description of the barriers to entry.

ii Analysis of the Commission

In the analysis of each concentration, the Commission shall determine whether the concentration is needed to achieve economies of scale or develop efficiencies that may offset the anticompetitive effects. If the Commission finds that the concentration may cause anticompetitive effects, it must also determine if such effects may be counterbalanced by structural or behavioural remedies or conditions. The Commission may also approve a concentration, even if it may cause anticompetitive effects, if it finds any other circumstance that may protect the interest of local consumers, including if the merger prevents productive players from leaving the market.

Efficiencies must be directly generated by the concentration, not achievable by less restrictive means, verifiable, and enough to counterbalance the potential anticompetitive effect of the concentration.

According to the Government Decree, some concentrations do not create anticompetitive effects and shall therefore be approved by the Commission. This will happen in concentrations where:

  • a the parties involved do not participate in the same relevant market, horizontally or vertically, when the market share of the parties is less than 25 per cent jointly, or less than 40 per cent if the delta is less than 2 per cent;
  • b when the parties do not reach a 30 per cent market share in a vertically related market where one of them has operations;
  • c when the concentration is to complete ownership of an entity already controlled by the buyer; and
  • d when the entity created does not have or will not have business in the local territory.

This presumption shall not apply if the current market share of the parties is reasonably likely to increase, when there are indications of coordination among competitors, or when the Commission determines that the presumption shall not apply.

The Government Decree also allows concentrations under the failing firm scenario. In this case, the concentration shall be authorised regardless of its effects, provided the financial situation of the target entity is such that it will exit the market in the short term if it cannot be reorganised under any insolvency proceeding; and when, prior to the concentration, efforts have been made to seek other purchasers or alternatives to the concentration.

iii Remedies and conditions

If the Commission finds that the concentration may cause anticompetitive effects, it may approve the concentration subject to one or more of the following conditions:

  • a transfer or sale of assets;
  • b limiting the sale of products or services;
  • c an obligation to provide or sell certain products or services;
  • d introduction, amendment or elimination of certain contractual provisions; and
  • e any other condition that may be required to prevent, reduce or counterbalance the anticompetitive effects.

Conditions and remedies must have a maximum term of 10 years, which may be extended for five additional years if there are still anticompetitive effects. The conditions imposed by the Commission must be to address the specific effects of the concentration, and not to improve existing market conditions.

iv Time frames

The application may be filed by any party involved in the concentration before closing, or within five days after closing. After filing, the Commission has 10 days to request additional information, which must be filed by the parties within 10 days. Parties may request an extension, which is usually granted. The Commission has started to dismiss cases if the additional information is not filed before the deadline.

The Commission has 30 calendar days to issue the resolution. However, in cases that are particularly complex, the Commission may extend this term prior to its expiration for an additional 60 days. Only one extension is allowed. In the telecommunications sector, the extension is only 15 working days.

If the Commission fails to issue the resolution within said time frames, the concentration is automatically approved.

According to the proposed regulations, temporary acquisitions do not have to be notified. This includes acquisitions where assets are subsequently sold to a third party within a year, and where the buyer does not participate in any decision-making in spite of its ownership.

v Parties' ability to accelerate the review procedure, tender offers and hostile transactions

It is important to include all information requested by the Competition Law and the regulations, and any additional information that may make it easier for the Commission to determine that there will be no anticompetitive effects so that the case may be completed in 30 days.

The application must include a description of the concentration and the possible anticompetitive effects of the concentration. Parties may also include proposals to counterbalance these anticompetitive effects. This seems to be the only way to expedite the procedure in cases where anticompetitive effects may be easily identified. If the Commission agrees that the concentration may cause the effects described by the applicants and determines that the proposals supplied by them will be effective in counterbalancing the anticompetitive effects, it must approve the concentration subject only to the remedies or conditions proposed by the applicants.

If the Commission determines that the proposal is insufficient to counterbalance the anticompetitive effects, it will notify the parties, and they will then have an additional 10-day term to submit a second proposal. If the Commission is still unconvinced by the proposals of the parties, it will decide whether the concentration is authorised subject to different remedies or conditions, or whether it is not authorised.

Implementing the possibilities of parties to propose remedies and conditions depends on the ability of the Commission to quickly understand the market and the rationale of the concentration. In this sense, the parties need to be able to approach the Commission to explain and discuss ideas for the proposal, and to try to anticipate what the authority's reaction might be. While approaching administrative and judicial authorities in somewhat informal meetings to discuss matters before them is quite usual in Costa Rica, the Government Decree offers a more formal approach. Both the applicants and the Commission's staff may take the initiative to request a meeting to clarify information filed by the parties, and a summary of the meeting must be signed by all participants at the end of the meeting. This should facilitate more realistic and effective proposals from parties.

vi Third-party access to the file and rights to challenge mergers

The Commission shall order the applicant to publish a brief description of the concentration in a newspaper, including a list of the parties involved. The Government Decree aims to expedite this step by indicating that applicants must make such publication within three working days of filing, and send a copy to the Commission within three working days of the publication. Third parties shall have 10 days to file information and evidence before the Commission. There is a case in which a third party intervened and appealed the Commission's decision to approve the transaction.

The Commission can also request information from third parties (e.g., competitors, suppliers and clients of the parties involved in the transaction), and these third parties must respond within the term granted by the Commission. The Government Decree establishes that this term shall be five working days.

vii Resolution of competition concerns of the authorities, appeals and judicial review

As explained above, decisions of the Commission cannot be revoked by the Minister of Economy. Appeals are made before the Commission itself to reconsider its own opinion. Opinions can also be challenged in court.

Judicial review may include both the formalities and the substance of the case. In the cases ruled up to date by the judiciary, courts have focused on procedural matters, but have also made some considerations on the substance of cases, which is an indication that judges have a good understanding of competition matters.

viii Effect of regulatory review

Concentrations on regulated markets (i.e., telecommunications, banking, stock, pension funds and insurance) are examined and decided by the regulatory agencies. In all cases, the regulatory agency must request the Commission's technical opinion and justify its own decision if it differs from the Commission.

ix The Merger Guidelines (Guidelines)

The Guidelines, were issued by the Commission on 28 May 2014. They are not binding; they were issued to give stakeholders an indication of the economic analysis the Commission will use in merger control analysis. The Guidelines are extensive and detailed; therefore, reference is made here to the most relevant topics covered by the guidelines. Besides, application of the guidelines by the Commission has not been apparent.

The Guidelines include definitions of some concepts that are not covered herein (e.g., a definition of economic control, plus suggestions of a variety of ways in which a change of control may take place), and a definition of the different types of mergers and how they are likely to impact competition.

In horizontal mergers that involve intermediate goods, if the Commission finds a negative impact for the clients, it will assume that such impact will also affect consumers of the final goods. However, if the merger is vertical or conglomerate, the Commission shall seek to determine the impact on consumers.

Market shares and market concentration will be more significant in the analysis of more stable markets. With regard to market power and the calculation of market shares, the Commission will generally use annual sales. However, in certain markets this may not be appropriate, such as very dynamic markets or markets where transactions are rather sporadic (i.e., wind turbines); therefore, different periods of sales might be used. In some cases, units sold or production capacity will also be used instead of sales.

In mergers that involve an entity with a large market share and a recent entrant to the market, the Commission will also look at the potential of the entrant to challenge the established competitors. Similarly, in mergers involving a maverick, the Commission will look more closely at the transaction.

The general standard based on the HHI will be:

  • a no anticompetitive effects: HHI variation <100 and HHI <1,500;
  • b potential anticompetitive effects: in markets with moderate concentration (1,500-2,500), HHI variation >100, and in highly concentrated markets (HHI >2,500), HHI variation 100-200; and
  • c where market power can be increased: in highly concentrated markets (HHI >2,500), HHI variation >200, particularly if market share exceeds 50 per cent.

The Guidelines list in detail the criteria the Commission will use to evaluate unilateral and coordinated effects, including the specifics of bid markets. This is conducted separately for each type of merger.

With regard to efficiency gains, consumer welfare shall prevail over internal efficiencies; thus, efficiencies should create benefits for consumers. Evidence must be based on studies conducted through sound technical methodology, and the studies should probe specificity, cost estimates, likelihood, when and how benefits will be transferred to consumers, how they stimulate capacity to compete, which consumers will benefit, and any other evidence requested by the Commission. Reductions in variable costs will be more appreciated than reductions in fixed costs, although the latter will not be ignored.

Finally, the Guidelines include some particularities regarding the analysis of mergers in specific markets such as telecommunications, air transport, energy and financial services. For instance, according to the Guidelines, with regard to telecommunications the definition of markets made by SUTEL is for regulatory purposes only. For competition purposes, such definition is not binding, although it might be used as a reference point by the Commission in its definition of the relevant market on a case-by-case basis, where the Commission will favour supply substitution over demand substitution.


The merger control system is more like a hybrid than a pure pre-merger system. The possibility to notify within five days after closing poses a challenge to everyone involved. This is not an issue in regulated markets, where pre-closing notification is compulsory for all mergers. If parties notify after closing, it is likely the Commission will face the same challenges that it was used to under the ex post merger control that existed prior to the amendment of the Competition Law. Likewise, the parties should be ready to face post-closing scrutiny that may end in an order to partially or totally undo the concentration.

Notifying prior to closing was a concern in local trade associations when the bid was being discussed in Congress. Many felt that notifying prior to closing would allow third parties to intervene, putting the transaction at risk. Thus, in those concentrations where local entities are involved, if they are not used to merger control and comparative law, it is likely they will want to notify after closing. Local entities are usually on the selling side of the transaction, and the decision of when to make the filing is more likely to fall on the buyer's side. Therefore, this has not been an issue.

In addition to the difficulties discussed above, the possibility of filing after closing makes coordination with authorities from other countries more difficult if other jurisdictions are involved, because in most other countries there is a pre-merger control system, and by the time they make their decisions, the application may not have been filed in Costa Rica.

If that is not an issue and all parties agree to notify before closing, then it is important to determine whether the possible anticompetitive effects are similar in all jurisdictions. If the possible anticompetitive effects are similar in all jurisdictions, the local authority may accept and adopt similar remedies or conditions imposed by more experienced authorities. However, because the time frame to reach a final decision is usually longer in other jurisdictions than that contained in the Competition Law, parties to a multi-jurisdictional concentration may want to schedule the filings so that they receive a resolution from a more experienced agency first, which may then be used as reference by the less experienced agencies.


The Commission's response continues to be up to the challenge in many respects. On the merger control front, the Commission managed to complete its review of all the cases filed before it within the term established in the Competition Law. With regard to the substantial analysis, there were cases where more in-depth discussion was necessary regarding key issues.

Costa Rica is seeking to be accepted as a member of the Organisation for Economic Co-operation and Development (OECD). As part of this process, the country is being evaluated in many aspects by the OECD's experts. Competition is one of the areas undergoing this evaluation. The OECD has conducted two peer reviews. The first one was published in 2014,3 and the second one was conducted in.

The conclusions and recommendations of the experts point particularly to the lack of independence of the Commission, and advise that the Commission be transformed into an entity that is independent from the Ministry of the Economy, and that full-time commissioners be established to promote specialisation and avoid conflicts of interest. As a result of the OECD recommendations, the government has published a bid to amend the Competition Law to eliminate the Commission and create an Administrative Competition Tribunal, which will have three full-time members. The draft also includes leniency provisions and the elimination of the possibility to notify mergers after closing. The bid has been under discussion for about a year and many modifications have been made, including the name of the new authority, which will be the National Council of Competition. Even though the government has worked with the OECD, there are still many unresolved issues in other areas, that are not as advanced as competition. So, it is not clear whether the government is going to push Congress to approve the bid before the end of the term in May 2018.

In the longer term, all stakeholders face a major challenge. The Association Agreement signed by the Central American countries and the European Union contains a competition chapter, Chapter VII, according to which all countries in the region must have in place a competition law that includes regulations regarding horizontal and vertical conducts and merger control. If a country does not have a competition law in place (like Guatemala), it should enact one within three years of the ratification of the Agreement by all countries. In addition, within seven years Central America must have a single competition law and competition authority. While this may be far in the future, as time passes we should begin to see greater coordination and teamwork between the competition authorities of the region.


Pragma Legal

Edgar Odio is a founding partner of Pragma Legal. He has been licensed to practise law in Costa Rica since 1989. He has a master's degree in economic development from Essex University, and a postgraduate in EU competition law and economics for competition from King's College London.

His practice focuses on foreign investment and mergers and acquisitions. He has served as a local consultant for the Competition for Latin America Programme (COMPAL) implemented by the United Nations Conference for Trade and Development (UNCTAD) to draft the amendment to the competition law. He served for four years as member of the Commission, the local competition authority. He served as senior adviser in competition for UNCTAD in Geneva, Switzerland, and is a member of the Advisory Group of Experts of COMPAL. In this capacity, he has participated in training and advisory missions to countries including Bolivia and Guatemala. He teaches a competition course at University of La Salle and a postgraduate course on competition and intellectual property at UNED, the distance learning university. He is regularly invited to workshops and training sessions by local and multinational companies, and continuously offers advice on competition matters to local and foreign clients.


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1 Edgar Odio is a founding partner of Pragma Legal. The author wishes to thank Juan Pablo Lara and José Miguel Zamora who contributed to the review and discussion of opinions issued by the Commission over the past year.

2 In September 2013, the regulations were published as a Government Decree for the proper implementation of the amendment of the Competition Law.

3 www.oecd.org/competition/competition-law-and-policy-in-costa-rica-2014.htm.