(Unofficial translation)

The Commission of the Cartagena Agreement,

HAVING SEEN:Chapter VIII of the Cartagena Agreement, Decisions 230, 258 and 281 and Proposal 226/Rev.1 of the Board.

CONSIDERING:

That the Commission approved Decision 230, that contains the norms to prevent or correct practices that could distort competition;

That the Commission, as set out in Decision 258 and as proposed by the Board, will review the norms on commercial competition;

That the Comission, as set out in Decision 281, will establish, no later than 31 March 1991, as proposed by the Board, will review the norms on commercial competition established in Decision 230;

That to obtain the objectives of the integration process it is convenient to perfect the subregional norms on competition, in order to build efficient mechanisms that would allow prevention and correction of distortions arising from business behavior that restricts, impedes, or undermines competition.

That due to its origin and scope it is necessary to distinguish between the practices considered under this Decision and those practices related to dumping and subsidies, and export restrictions;

DECIDES:

I. Scope of Application

Article 1

The purpose of the norms considered in this Decision is to prevent or correct distortions of competition arising from practices that restrict free competition.

Article 2

Member Countries or companies that have legitimate interest may ask the Board for authorization or mandate to apply measures to prevent or correct imminent damages or damages to production or exports, resulting from practices in the subregion that restrict free competition, or practices of a company that carries on economic activity in a Member Country.

Practices in the subregion means practices of companies that engage in economic activity in one or more Member Countries. Intervention of a Member Country means a practice linking companies that carry out economic activity in one or more Member Countries and companies located outside the subregion.

This decision does not include practices undertaken by one or more companies located in a single Member Country that do not have effect in the subregion. These cases are subject to the respective domestic legislation.

For the purposes of this decision, imminent damage includes appreciable delay in starting production.

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Article 3

Practices which restrict free competition are those agreements, parallel actions, or joint practices among companies that produce or could produce the effect of restricting, impeding, or undermining competition.

The agreements mentioned in the preceding paragraph shall include horizontal or vertical ones entered into between parties linked to the companies.

For the purposes of this Decision, abusive exploitation of a dominant position in the market by one or more companies shall also be considered an anticompetitive practice.

A dominant position by one or more companies exists when they can act independently without regard for competitors, buyers, or providers, due to factors such as a significant participation by the companies in the respective markets, the characteristics of supply and demand of the products, the technological development of he products involved, the access of competitors to sources of funding and supplies, as well as distribution networks.

Article 4

Agreements, parallel actions, or joint practices can consist of:

1. improper manipulation or direct or indirect fixing of prices or other market terms, in a discriminatory manner with regard to those prevalent in normal commercial transactions;

2. limitation or control of production, distribution, technical development, or investment. Also, limits or prohibitions on exports, imports, or competition;

3. allocation of the market or supply sources, particularly measures designed to disrupt the normal supply of raw materials;

4. the application in commercial relations of discriminatory conditions for similar services that place some competitors at a disadvantage with regard to others;

5. the making of contracts contingent upon supplementary conditions that by their nature or in accordance with usual business custom have no relation to the purpose of the contracts; and

6. other actions with similar effects.

Article 5

Abuse of a dominant market position means:

II. Procedures

Article 6

Requests can be presented by:

1. the Member Countries through their respective liaison organs; and

2. the company or companies that have legitimate interest, to the extent permitted by domestic legislation.

The request shall include the following information:

• the nature of the restrictive practices and the length of their duration;

• the characteristics of the products or services involved in the practices;

• the characteristics of the products affected;

• the companies involved;

• evidence that makes it possible to presume the existence of damage or imminent damage to production or exports from anticompetitive practices;

• the type of measures requested.

After receiving the complaint, the Board shall send it to the national liaison organs in the country where the companies involved in the investigation carry out their economic activity.

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Article 7

The Board will not begin an investigation if the request is incomplete. In such a case, within ten working days after the presentation of the request, the Board should inform the complainant, giving details of the missing information.

If the request is considered to be complete, within ten days after the presentation of the request, the Board shall issue a explanatory Resolution. Likewise, the complainant company or companies will be notified of said Resolution.

Article 8

In the course of the investigation, the Junta may request and collect evidence and information from the national agencies and, through them or directly, from the producers, exporters, importers, distributors or consumers who may have legitimate interest in the investigation. Likewise, they may submmit information or present allegations to the Junta.

In the cases in which the Junta requests, collects or receives evidence and information directly, it shall communicate it to the respective national bodies.

Article 9

In use of the Junta authority to request and collect evidence, it may give confidential treatment to such an information in regard to the aspects requested by the provider once justified such a treatment on the basis of likely unfavorable consecuences.

Likewise, internal documents elaborated by the Junta or the member countries shall enjoy confidential treatment in regard to the parts of such a nature.

When pretending to provide confidential treatment to an evidence, the person soliciting it shall provide a brief of the information likely to be divulged or an explanation justifying the reason by which it is not possible to brief it. In the latter case, the Junta may not accept such a justification and disregard such an evidence.

By the same token, and notwithstanding the request being justified, the Junta may not take the information into consideration if who provided it does not also provide a non-confidential brief of it, if possible.

The interested parties in the investigation may request by writing the information provided or elaborated during the application of this Decision so long as they do not have confidential character.

The present article does not restraint the dissemination of general information and, particularly, of the motives on which are based the Resolutions referring the present Decision, so long as they are requested in the course of a judicial proceeding. This dissemination shall not reveal commercial secrets of the parties with legitimate interest in the investigation.

Article 10

In the course of an investigation, the Junta may call ex-officio or at request of the interested parties meetings aimed at procuring a direct settlement whose commitments and findings shall be recorded in a minute.

No interested party shall be bound to attend a meeting and his absent shall not be in detriment of his cause.

The Junta shall issue a motivated resolution indicating the commitments reached and, if the investigation is suspended or proceeds at the interested party's request.

The firms or authorities of the country where the practice occurs, shall provide the relevant information to verify the fulfilment of the commitments reached. When the commitments do not fulfil or the information is not provided, the Junta shall proceeed the investigation.

Article 11

For the investigation, the Board has two months from the date of publication the Resolution referred in Article 7 of this Decision.

In cases of exception, the period may be extended up to two months in which case the Junta shall notify it to the interested party.

Article 12

In its finding, the Board shall consider the relevant evidence with regard to:

1. the anticompetitive practices;

2. the damage or imminent damage; and

3. the relation of cause and effect between the practices and the damage or imminent damage.

Article 13

The determination of the existence of damage or threat of damage and the relation of cause and effect involving the anticompetitive practices shall be based on the following elements, among others:

1. the volume of trade in the products affected by the practices, particularly in order to determine whether its has changed significantly in absolute terms and in relation to the production and consumption in the affected member country;

2. the prices of the products and services affected by the practices, particularly to determine if they differ substantially from the prices of similar products or services in the absence of the practices; and

3. the effects on production or exports affected by the practices, according to the real or apparent trends of the pertinent economic factors, such as: production, domestic sales, exports, distribution, market share, utilization of installed capacity, employment, stocks, and benefits.

Article 14

At the conclusion of its investigation, within 10 working days of the time provided in Article 11, the Board shall issue a finding with explanation, setting forth its conclusions on the basis of available information.

The resolution shall indicate the measures adopted, the deadline for their adoption, and their duration. When appropriate, it shall also indicate the conditions that determine the duration of the measures.

Article 15

Once the Junta verifies, at national authorities or parties interested's request, that the causes that originated the Resolution referred in the above Article modified or ceased, it shall leave it partially or totally without effect, by modifying or abolishing it. For its decision, the Junta shall have two months.

The Junta likewise may verify ex-officio the causes that originated the Resolution modified or ceased, by modifying or abolishing it.

III. Measures

Article 16

The Board shall issue an injunction when it determines the existence of an anticompetitive practice that causes damage or imminent damage. It may also decide to apply measures tending to eliminate or alleviate the distortions that gave rise to the complaint. The Member Countries shall adopt the necessary measures to halt the practices.

The corrective measures may consist of authorization for the countries in which the affected companies carry on their economic activity to apply preferential tariffs with regard to subregional tariff commitments, in cases of imports of products affected by the anticompetitive practice.

Article 17

When the damage or imminent damage is evident, the Board may, in the course of its investigation, make recommendations to cause the practice to cease.

IV. Final Provisions

Article 18

This Decision supersedes Decision 230 in those provisions related to preventing or correcting distortions to competition as a result of restrictive practices of competition.

Signed at Lima, Peru, on March 21, 1991.