In Nicaragua, until very recently, we were referring to Unfair Competition in a very literal way, which it did not really indicate its actual usefulness nor its true legal meaning and importance for the businesses´ world. However, the concept and its regulation has evolved; and, this has allowed us to distinguish how and when to use it.
Nowadays, due to the growth of commercial activities and entrepreneurship of young professionals, permanently searching for success and with high standards of competitiveness, we must understand that Unfair Competition is the conduct contrary to the guidelines of good faith and honesty, and that to practice it will bring economic sanctions.
In Nicaragua, it is regulated by Law 601: Ley de Promoción de la Competencia (Law for Promotion of Competition), adopted on September 28, 2006, published in La Gaceta (Official Gazette) No. 206, on October 24, 2006. Such Law has the main purpose of assuring the free exercise of competition and entrepreneurial freedom; and it created the National Institute for Promotion of Competition known as PROCOMPETENCIA, as an institution of Public Law, with legal personality and its own patrimony, institute that is in charge of solving the cases that are brought to its knowledge, as well as carrying out a public education program to promote a culture of Competition.
According to Article 23 of the above mentioned Law, the conduct of Unfair Competition is defined as: “It is considered unfair competition any act or conduct carried out by economic agents in the exercise of a commercial activity that is contrary to honest practices in commercial matters“.
According to that definition, the acts or behaviors of Unfair Competition are: a) Acts of Deception; (b) Acts of Denigration; (c) Acts of Comparison; (d) Subtraction of Secrets; (e) Acts of Confusion; (f) Acts of Fraud; (g) Acts of Induction; and, f) Acts of Imitation.
The Law establishes a general prohibition against acts or behaviors, agreements, covenants, and contracts, between economic agents, competitors and non-competitors, irrespective of whether they are express or tacit, written or oral, which have as object to limit or restrict competition or to prevent access or eliminate from the market any economic agent.
The mentioned Law describes the procedure that has to be executed by PROCOMPETENCIA, because of an economic agent´s complaint against another economic agent, due to acts of Unfair Competition. Such a complaint must meet certain characteristics, and it has to be initiated by the interested party.
If such acts or behaviors are confirmed by PROCOMPETENCIA, without prejudice of the corresponding civil actions, the economic agent will be sanctioned. Sanctions are applied individually or jointly, as appropriate, for an amount that goes from one hundred minimum wages up to a maximum of ten thousand five hundred minimum wages; a fine equivalent to a minimum of one percent (1%) up to a maximum of ten percent (10%) of annual net sales obtained by the offender during the preceding fiscal period; and, in case of failure to comply with the resolutions provided by PROCOMPETENCIA, this institution may order the temporary closure of national activities of the responsible economic agents, until they have complied with such resolutions or provided warranties of compliance.
For more information, please contact LatinAlliance Nicaragua, Attorneys at Law, at the following email address: [email protected]
By: Ana Carolina Barquero
Associate – LatinAlliance Nicaragua