Artículos en Inglés
Francisco Diaz Rodríguez – Superintendent of Competition
Translated by Alexandra Monge
What did you study?
I’m a lawyer who graduated from the National University of El Salvador. Afterwards I studied Sociology of Development in Paris, France. After having worked as a lawyer I have worked as a consulter. I was member of the academic council of the National Academy of Public Security. After another long period working as consulter abroad and within this country, I am now with the Superintendence of Competition.
How and when is the Superintendence of Competition born and what is its purpose?
It was created at the end of 2004, but it started to function formally on January 1st, 2006, meaning that up to this date we have been operating for seven years. The institution was created after nine years of project planning and a discussion within the Economy and it reached the legislative powers during President Saca’s government.
Aside from the professional approach towards the subject, there was insistent pressure from international organizations, since today there are countries that lack an authority regarding competition. The Superintendence of Competition supports entrepreneurial freedom, and aims for economic efficiency and consumer well-being. The main job of the Superintendence is make sure that the market is free of road blocks and is in perfect conditions for competition; this is the Superintendence’s main purpose.
Why is a superintendence of competition so important in a country like El Salvador? Why is it important to make sure there is competition in the markets?
Competition is practically the engine of economic activity. Every product that is not a subsistence product goes to the market and to a third party. From this moment, either you sell that product or you lose it. For these types of cases, normally what is needed is producing a good product at a good price, so that the consumer can afford it. Everything moves around that need.
Can you give us an example where the competition benefits society?
For me the most interesting and current case is the TIC (Information and Communication Technologies). It is evident that there is a permanent rivalry between the big companies and big communication systems, such as Android, Apple and Microsoft as number eight. They are constantly releasing new products and better technology just to position them in the market, to not necessarily be the ones who control the market but be the ones who have more sales. In my point of view, this is the best example.
Do you consider the labor of the superintendence to be merely just technique or does it have a political agenda as well?
No action of a public entity is apolitical. By definition, a government agency, an instance of State is making a political action; this is in the strict sense, pure, academic, political term, not politicking. Obviously, there is a technical content, but there is a certain political level, in the way we just said.
In El Salvador there is currently a National Policy of Energy, whose main intentions are to amplify the range of energy production sources as a way to end the dependence on oil derived energy, to avoid the fluctuationin the prices of electrical or petroleum based energy, as well as environmental issues. This is a technical as much as political decision.
What about medications?
Medicine is another example. There has been terrible disarray in the medicine market, currently acknowledged by medicine producers. I heard ex-minister Lacayo say, “We have to admit that the medicine prices in El Salvador are high,” that is a fair acknowledgement of an irregular situation in the market. From a constitutional approach, we stated clearly that there are products and then there are products; medicine is a product that meets the requirement of an essential human right like health. Selling gum is not the same as selling medicine.
But the government will regulate prices against the free market…
In certain areas, like medicine, just like we said, the government can legitimately organize the market and establish and regulate prices. That was not the main proposal, but we created a short list of medicines for certain types of diseases (severe ones) and a large list of common medicines. For minor cases these could be subject to regulation, without this meaning that we are imposing a strict regulation for any type of product.
How easy was it to give continuity to the management of the former superintendent?
Hard and easy. It was hard because when I assumed this responsibility the institution had been leaderless. There had not been a superintendent for more than eight months. I started on February, 2011. The superintendent that has worked for a year had been transferred to another charge and the Superintendence was left without a manager. This caused a landslide, difficulties, and even confusion in the proceedings that were being started in the constitutional strategic plan. This caused a drop in the institution’s activity because there were no managers who could drive or not drive certain procedures.
On the other hand, it was easy because, like I said before, the technical and administrative team that this administration had is excellent, and it’s naturally evolving. It’s a team that has a lot of technical capacity and a lot of potential as an institution as well.
In that sense, do you think the next presidential elections could affect the superintendent’s work?
No, there is none. However, the results of the presidential elections will have an effect, because just like other institutions of the State, the governing period transcends, and goes beyond the presidential period. And that is precisely designed so the institution and staff can be independent from the Executive government. However, the future president has a lot of influence. In that sense, there can be a game of identity. Now, when the institution’s independence is restricted, another person must take charge.
The superintendence has become prevalent recently. Why do you think people did not hear much about the superintendency before? Is it because people did not take much notice on important cases like they do now?
No, that is not the problem. Several cases the Superintendence has examined are case studies which had been revised in 2007, 2008 and 2009. There three factors influencing this: The first one is that each new government has generated different conditions of receptivity, public debate, and points of view.
This is a new phenomenon in the country’s history. So the institutions, the people and the critics have more space and are more receptive. This is a more receptive government than the previous ones. And this has to be said clearly, before each ministry had a different arrangement with a certain sector. Now, without discussing particulars we are aware of how certain ministers did not take heed of the recommendations issued by the superintendence and simply said, “Yes, receive them, but don’t pay attention to them anyway.” This is because the superintendence is like a radiologist; we are only allowed to point out the problem.
So now do you think there is more receptivity?
Yes, now there’s a more receptive environment, greater debate, and greater preoccupation concerning the institutions’ opinion. That is one factor. The other factor is the natural development of the institution. A first resolution is very different from a twentieth one, which is what we’ve had to do. A third factor, also part of the same matter, would have to lower the rigor of the resolutions, the technical rigor and the methodological rigor. The key is to use a more direct and comprehensive language. I think that’s a change that should be written down, and because of that I’ve had more audience and more understanding.
What has been the most difficult moment within the superintendency?
Two moments have been hard, because of the technical difficulty and the magnitude of the cases. One of them was the economic, where Claro intended to purchase Digicel. We solved it by disavowing the procedure, after speaking about the alternatives the institution has. Not only were economic matters involved, particularly by Claro’s side, property of Carlos Slim, which involved global importance, but we also had to be aware of the impact this could have for the country in many ways. This matter required a lot of work, analysis and discussion, until it was possible to have a resolution with an unquestionable technical and legal foundation. Until this day, there hasn’t been a problem.
What do you consider has been the effect of this resolution?
Very positive for El Salvador’s competition. You must have noticed that from last October to the present day, the sales offer packages, cellphone price regulation, and charges are noticeable. We think we have hit the mark.
Is there any other case?
Yes, another case was penalizing Dizúcar, because it is also known that the sugar industry is one of the most important economic foundations in the country. There is even a law that regulates all the agro industry’s activity; we knew that if we imposed or ordered a cease of activity this would have a significant impact. But the resolution is right there, just as many others, and has been appealed before the Administrative Dispute Board.
Are there any anticompetitive practices that are penalized jail time or is everything penalized with a fine?
In El Salvador there is no anti-competitive practice that is sanctioned with jail time. In the United States there is, when there is an arrangement or cartel that tries to set a price or a quantity of product, or even to determine a territory where “either you go in or only I go in” this has been penalized. This has also been the case in Mexico and other parts of the world.
Is there a possibility of a legal reform to change that?
The Superintendence has presented the Executive branch a proposal of legal reforms with the purpose of speeding procedures. Its purpose is to open the breadth of intervention the Superintendence already has thus making the action more effective.
We could speak of being more repressive and at the same time more permissive allowing flexibility and clemency. Clemency allows a member of a cartel to approach the Superintendence and present a complaint and provide the evidence the Superintendence requires thus allowing the breakup of the cartel and thus not penalizing the entity that provided this information. This currently exists, but it is so mediated that it does not really provide an incentive for anyone, because the only thing that would be reduced is the fine, so it’s not worth all the consequences that follow it. By implementing the measure of clemency, the proposal leads to a system of royal clemency, reaffirming what I am saying. On the other hand, establishing penalties or criminal sanctions in the cases where you can prove the existence of such agreements.
Do you consider that the superintendent’s budget is enough for what you aim to achieve?
The budget is poor. Out of all the decentralized institutions, the Superintendence, who has a responsibility over the country’s markets, has the seventh lowest budget. That makes it absolutely insufficient. How does this translate to practical terms? The Superintendent’s staff only has twenty people in charge of technical matters and the communications team only has three people out of the forty whom work for the company.
At a quick glance:
Francisco Diaz: Independent public officer
El Salvador: A country that deserves more than it is
Superintendence of Competition: An important institution that is not valued
Market competition: Base of economic development.
Politics: Necessary, indispensable. If only everybody used it.
Claro Digicel Case: The most important issue we have solved.
The youth: The future as well as the basis of the current Superintendent.