El Salvador

Launch of the Peer Review of Competition Law and Policy in El Salvador


Remarks by Angel Gurría, OECD Secretary General

28 October 2008, San Benito, San Salvador
Mr. President, Madam Vice-President, ladies and gentlemen:

It gives me great pleasure to be here in the lovely city of San Salvador, to launch the Peer Review of Competition Law and Policy in El Salvador.

This report, prepared by the OECD in conjunction with the Inter-American Development Bank (IDB), is evidence of the OECD's growing interest in Latin America and its increasingly fruitful collaboration with the IDB in the region, as well as underlining the Salvadoran government's firm commitment to improve its country's economic performance.

In these especially difficult times, we must redouble our efforts to provide our economies with better regulatory frameworks.

Competition policy is a key tool for strengthening a country's economic structures, improving enterprise performance, and promoting innovation, strategic partnerships, foreign trade and foreign investment.

There are many examples of OECD countries that have made significant economic progress by strengthening their competition policy — Australia, for instance, where in 1990 a series of reforms to promote competition set off the longest economic expansion since the 1960s; or Finland, which posted the lowest inflation rates in the euro zone in 2006, by increasing competition in key sectors such as telecommunications.

Exchange of experiences in designing and implementing competition policies has become a cornerstone of the OECD's work, and is an area in which we can help create a better world economy.

Peer reviews are one of the most useful tools we have to help countries improve their policies and structures. The success of these reviews depends on each country's willingness to undergo an exhaustive review by other countries and international experts.

The government of El Salvador showed an immediate willingness to put its competition policy under the microscope; and the cooperation provided throughout the process by the competition authority has been exemplary.

As Secretary General of an increasingly global and inclusive organization, but also as a Latin American myself, it gives me great pleasure to bring El Salvador into the family of countries that have requested an OECD review of competition policy, alongside Argentina, BrazilChileMexico and Peru.

This report on competition law and policy in El Salvador, which was discussed during the Sixth Meeting of the OECD Latin American Competition Forum held in Panama City in September, is the outcome of a wide-ranging process of consultation among key competition stakeholders in this country.

Colombia and Mexico participated as lead examiners in a joint effort based on a pluralistic approach. My thanks go to all those involved in the process.

The detailed findings and recommendations of this report will be presented later today. But it gives me great pleasure to tell you that the balance of the review of competition policy in El Salvador is very positive.
Although a recent instrument — because the Competition Law only came into force in January 2006, as you know   — competition policy in El Salvador is off to an excellent start.

The young competition agency is doing excellent work; particularly in terms of protecting competition and developing a competition culture. Recently it took its first decision on cartels, imposing a US$4 million fine on the country's two leading wheat producers, and I applaud this effort.

Nonetheless, now is not the time to rest on one's laurels, as they say. This is only a start. The competition authority continues to face major challenges, including constant judicial review of its decisions.

The appeals process before the country's Supreme Court remains slow and unpredictable in competition cases. All but one of the Superintendent's decisions in which sanctions have been imposed, have been appealed, and none has yet reached a final ruling.    

Looking ahead, it will be very important for the competition authority to work ever more closely with the Salvadoran government to ensure that the design of new laws and regulations takes account of their potential impact on competition. Especially now when a number of adjustments will be needed to cope with the international crisis.

Aware of the importance of this exercise, in the OECD we have developed a practical and innovative toolkit to help our member countries (and a growing number of nonmember countries also), to systematically gauge the impact of laws and regulations on competition. We call this the Competition Assessment Toolkit, or OECD Toolkit for short.

The Toolkit lays out general principles for promoting competition in regulated sectors. These are simple and flexible enough to be applied to government activities across many different sectors and countries. A growing number of countries — including Australia, Canada, the United Kingdom, the Republic of Korea and Turkey — now have this assessment process in place.

The government of Mexico is also using the Toolkit to launch a major project to review laws and regulations aimed at improving competition throughout the economy. In all modesty, I have to say that this project is groundbreaking in its breadth and vision.

The Toolkit is available in 11 different languages, including Spanish of course. Copies can are available in the room today; and you can also find it on the OECD website.

Ladies and gentlemen:
In these times of great uncertainty, governments must persevere with measures to modernize and strengthen their economies. While the international financial storm and its impact on the outlook for economic growth will require emergency measures, these must not distract us from medium and long-term goals.

Economies that have a more solid, transparent and effective competition framework will be best able to withstand the perverse effects of this crisis; and they will recover quickest.

Now is the time to strengthen competition policy, and to harness and complement it with other business support policies. The credit drought and economic slowdown may cause competitive imbalances as ailing firms have to be absorbed by larger enterprises. Now is the time for major endeavours, and this must be one of them.

The report on the Peer Review of Competition Law and Policy in El Salvador provides a roadmap for progress in this direction. The OECD Toolkit will also be very useful; and I'd like to reaffirm our support for you in this and many other fields.

Rest assured that the OECD will continue to share its knowledge and experience to help you build a stronger and more competitive economy for the benefit of all Salvadoran people.
Thank you very much.


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