Competition law enforcement in informal markets in Latin America and the Caribbean

This paper examines the challenges faced by competition authorities in Latin America and the Caribbean (LAC) when enforcing competition law in markets affected by informality. Informal markets represent a significant share of economic activity in the region and may influence competitive dynamics both where informal firms compete with formal firms and where competition occurs within informal markets. The paper focusses on competition enforcement issues related to informality including the definition of relevant markets, the investigation of informal firms and the calculation of fines. Although informality can create substantial evidentiary and procedural difficulties, the paper identifies opportunities for competition authorities to mitigate those challenges, including the use of official datasets, market studies and institutional co-operation with organisations addressing informality. The paper argues that competition authorities in LAC should be mindful of informal markets when enforcing competition law, and can apply proportionate, pragmatic and targeted enforcement to address competitive harm involving informal markets, while supporting better market functioning and the transition towards formality.