The interplay between competition policy and the informal economy has gained increasing relevance, particularly as digitalisation expands the reach of informal actors and enhances their visibility through online platforms. Understanding how informality affects market structure, enforcement capabilities, and competitive neutrality is essential for ensuring that competition policy is effective and responsive to the full range of economic activity.
As seen in previous OECD discussions, informal markets can shape competitive dynamics across a wide range of sectors, for instance when informal firms compete with formal firms, as well as when informal firms compete between themselves (competition within informal markets). Competition issues may also arise in vertical relationships, namely when informal firms provide inputs used by formal firms to further produce goods and services, influencing market outcomes in the entire economy, as well as in relation to labour markets involving informal workers.
In Latin America and the Caribbean (LAC) countries, informal markets represent a significant portion of the overall economy. According to the World Bank, approximately half of LAC’s economy is informal, reaching 60%-65% in certain countries such as Bolivia, Panama and Peru (World Bank, 2024[1]). The presence and scale of the informal economy in LAC countries reflect structural features of labour markets, regulatory frameworks, taxation and the overall cost of compliance, all of them having influence on the well-functioning of markets including competition policy (OECD, 2018[2]).
Over the past years, competition authorities in LAC countries have increasingly undertaken enforcement actions involving informal markets, seeking to minimise anti‑competitive conduct while acknowledging the economic functions that informality fulfils in many jurisdictions. These actions include the assessment of mergers where informal operators materially influence market definition (e.g. former CNDC in Argentina, CADE in Brazil and INDECOPI in Peru), investigations into collusive behaviour among informal suppliers that affect pricing and market access (e.g. FNE in Chile and CNA in Mexico), and the examination of how informal supply structures may either alter competitive dynamics or suffer from anti-competitive behaviour of dominant firms when exercising buying power (e.g. FNE in Chile).
This paper will address the challenges that competition authorities in LAC countries may face when taking enforcement actions in informal markets, examining the particularities of LAC countries, such as markets that are commonly prone to informality in the region, and contributing to a more consistent understanding across authorities that can enhance the effectiveness of competition policy in the region. It builds on previous work done by the OECD, which focussed mostly on competition policy aspects of the topic, particularly the interface between competition policy and informal economy, which acknowledged the risk of a “blind spot” for competition authorities when enforcing competition law in informal markets (OECD, 2010[3]; 2018[2]).
The paper will adopt the following structure: a section with an overview of informal market in LAC jurisdictions including key indicators and particularities, then a section focussing on enforcement challenges faced by competition authorities of the region, in addition to a section on further ways that competition authorities may contribute to address informality, and finally a short conclusion with key takeaways. The paper also benefits from a list of 25 selected cases involving informal markets dealt by 10 competition authorities in LAC jurisdictions since early 2000s (i.e. Argentina, Barbados, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Paraguay and Peru), indicated in the Annex of this paper and resulting from public information.