Competition and intellectual property in Latin America and the Caribbean

4. Competition advocacy and co-operation in the region

As mentioned in section 2, although competition and IP law seek to achieve common objectives, including the promotion of innovation, economic growth and consumer welfare, some tensions may emerge in this interaction. This is because IP rights typically limit competition in the short term in order to encourage greater dynamic efficiency and innovation in the long run. It is therefore essential to strike the right balance in this trade-off, by taking competition effects into account when designing and applying IP law. In this context, competition law can serve as an effective tool to ensure that IP rights promote competition to the greatest extent possible.

Section 3 described several areas where competition concerns may arise in relation to IP rights. Beyond enforcement, competition authorities can also contribute to promoting competition in the exercise of IP rights through competition advocacy. In fact, advocacy can be a powerful tool for integrating competition principles into IP law, often serving as the initial avenue through which competition authorities engage in this domain.

Competition authorities have undertaken advocacy initiatives with IP agencies and other governmental bodies to raise awareness of competition-related issues. For instance, in many jurisdictions such efforts have focused on promoting the integrity of patent systems and preventing the granting of ill-founded rights that could harm competition or hinder follow-on innovation without delivering legitimate countervailing benefits (OECD, 2018[56]).

In particular, some LAC competition authorities have carried out market studies in IP-intensive sectors, especially the pharmaceutical industry, to identify limitations in the IP legal framework and its application by IP agencies and suggest potential improvements to strengthen competition in these markets. The box below summarises some of these advocacy efforts.

Box 9. Market studies in the pharmaceutical market in Chile and Mexico

Supplementary Patent Protection System in Chile (2016)

FNE, in collaboration with the Chilean National Institute of Industrial Property (INAPI), conducted a market study on the impact of the supplementary patent protection system introduced by Law No. 20.160 of 2007. This law was designed to compensate for administrative delays in patent approvals, but in practice it has resulted in unintended competition concerns.

The market study found that the system allowed unjustified extensions of market exclusivity, delaying generic drug entry and increasing healthcare costs. FNE highlighted that the approval process was merely formal and lacked a substantive evaluation, leading to excessive extensions beyond the intended compensation for delays. As a result, competition in the pharmaceutical sector was restricted, preventing the price reductions typically associated with the entry of generics. The study recommended the adoption of a new law to clarify the interpretation and scope of the existing legislation in order to ensure that supplementary protection is granted only when administrative delays genuinely impact the effective patent term​.

Expired-Patent Drug Markets in Mexico (2017)

The Federal Economic Competition Commission (COFECE) conducted a market study on competition in the market for expired-patent drugs in Mexico. It found that generics typically entered the market an average of two years after patent expiration, which is considerably slower than in the United States and the European Union. In this context, COFECE identified competition concerns related to failures from both the government and the market itself, including regulatory barriers, strategic patenting behaviours, and weak demand for generics.

To strengthen competition in the market for drug products with expired patents, the study recommended several modifications to the regulatory framework and the development of more pro-competitive public policies. In particular, COFECE recommended establishing clear rules for the linkage system to limit discretion and minimise opportunities for incumbents to abuse judicial processes aimed solely at extending their market exclusivity and delaying the entry of generic drugs. Moreover, COFECE suggested that the regulations of the Industrial Property Law should restrict the granting of certain types of patents that are prone to abusive use for blocking market entry.

Pharmaceutical Market in Chile (2019)

FNE also conducted a comprehensive market study on the pharmaceutical market, from the production of medicines to their sale. It identified regulatory and structural barriers that restrict competition. One key issue highlighted by FNE was the lack of transparency in patent expiration dates, which creates uncertainty for generic manufacturers seeking market entry. The study found that the Chilean Public Health Institute (ISP) did not provide publicly accessible information on the expiration of primary and secondary patents, forcing laboratories to conduct costly patent studies and increasing uncertainty. According to FNE, this lack of information raised entry costs and delayed competition, as potential generic producers struggle to determine the best timing for launching alternative drugs.

Among its recommendations, FNE proposed regulatory reforms to improve transparency in patent data, streamline the approval process for generics, and remove unnecessary regulatory obstacles that restrict competition in pharmaceutical distribution​.

Source: FNE (2016[57]), Estudio sobre el Sistema de Protección Suplementaria de Patentes en Chile y sus Efectos en Materia de Libre Competencia, https://www.fne.gob.cl/wp-content/uploads/2016/02/FNE-Proteccion-suplementaria.pdf; COFECE (2017[58]), Study on free market and competition in the expired-patent drug markets in Mexico, https://www.cofece.mx/wp-content/uploads/2017/11/Studies-drug-markets_vF-BAJA.pdf; FNE (2019[59]), Estudio de Mercado sobre Medicamentos, https://www.fne.gob.cl/wp-content/uploads/2019/11/Informe_preliminar.pdf

Advocacy can also arise from competition enforcement actions, even if not successful. For instance, Argentina has recently introduced a new legal framework to govern copyright collecting societies, providing for a more competitive and transparent system for the management of copyrights, both for IP holders and users. In particular, the new regime gives rights holders the option to manage their rights individually or through collecting societies, abolishing the legal monopoly that existed under the previous system (Rivero and Viecens, 2025[60]). One of the reasons for this reform was an investigation carried out by CNDC,1 which sanctioned the society that collectively managed the copyrights for music works, even though the decision was ultimately overturned by the courts.2

In this context, it is crucial that competition authorities and IP agencies collaborate closely to leverage the benefits of technical co-operation, even outside the context of enforcement actions, so as to maximise the synergies between the protection of IP rights and the promotion of competition (Saavedra et al., 2019[61]). The OECD Recommendation on Intellectual Property Rights and Competition also stresses the relevance of establishing procedures to allow effective policy co-operation between competition authorities and IP bodies.

In LAC, Memoranda of Understanding (MoUs) between competition authorities and IP agencies exist in several jurisdictions, typically covering exchange of information and technical expertise, as well as capacity-building initiatives for their staff, including joint events, seminars and studies.3 While the existence of MoUs does not guarantee that co-operation will occur in practice, they generally serve as a strong starting point, offering a more formal framework for collaboration and signalling a willingness of the authorities to engage in dialogue. Nonetheless, informal co-operation remains common even in the absence of MoUS (OECD, 2022[6]).

Notes

← 1.  Secretariat of Trade decision No. RESOL-2018-371-APN-SECC#MP of 26 June 2018, based on CNDC opinion No. 43 of 17 May 2017.

← 2.  Another example comes from Brazil. In 2018, CADE dismissed an investigation into abuse of dominance by IP holders, concluding that the investigated parties were exercising their legal exclusive rights as provided for in the IP legislation, despite the impact on competition. Nonetheless, CADE forwarded its decision to the IP agency to consider potential regulatory reforms that could address the identified issues (CADE’s Administrative Proceeding No. 08012.002673/2007-51, decision of 14 March 2018).

← 3.  For instance, this is the case in Brazil (MoU between CADE and INPI from 2018 and renewed in 2024), Chile (MoU between the FNE and INAPI from 2011), the Dominican Republic (MoU between Pro-Competencia and ONAPI from 2014), and Paraguay (MoU between CONACOM and DINAPI from 2024).