What to Expect from the New Competition Law in Guatemala: Merger Control, Prohibited Conducts, New Authority

In December 2024, the Congress of Guatemala passed Decree 32-2024, the Competition Law. Although it is based on Initiative 5074, the bill was significantly modified by the congressional committee, resulting in a new draft presented to the plenary. The sections on anti-competitive conduct and merger control will come into force on December 9, 2026. The first board of the Superintendency of Competition has already been formed and appointed Jorge Miguel Castillo as the first Superintendent. Castillo has previously served in Guatemala’s competition authorities within the Ministry of Economy.

Effective Dates of the Law:

As of January 1, 2025, the General Provisions and the chapter on Promotion of Free Competition, along with all chapters related to the creation and regulation of the Superintendency of Competition, amendments, repeals, and Final and Transitional Provisions, came into effect. Two years after its publication in the Official Gazette—on December 9, 2026—the chapters on Defense of Free Competition and Economic Concentrations, Administrative Procedures, infractions, sanctions, measures, and statute of limitations will become effective.

At this point in time, the Superintendency will start the drafting of the guidelines to the law and the internal regulations for its functioning. We will be monitoring the developments they have in such drafting and publishing of said regulations.

Scope of Application and Relationship with Sectoral Laws

The law is of general applicability throughout the Republic of Guatemala and applies to all economic agents, as the specific legislation on competition. However, the original draft was modified to allow for supplementary application to economic agents subject to their own sectoral laws—provided those laws contain competition rules and are overseen by a regulatory authority. In such cases, the special provisions will prevail.

This means that competition rules embedded in special laws are not repealed. This is crucial for the law’s implementation, as sectors such as telecommunications, banking, energy, and professional associations would otherwise be subject to the Competition Law without regard to their specific nature and oversight bodies.

The intention remains for the Competition Law to apply broadly, even in areas governed by special laws, but without creating dual forums or jurisdictional conflicts that could be used as shields to avoid its application.

However, it is reiterated that for the Competition Law to apply only in a supplementary manner, the special law must include competition rules and be overseen by a regulatory authority. If either condition is not met, the Competition Law will apply fully.

The term “supplementary” is understood to mean that the special law will take precedence in competition matters, and the specific oversight body will regulate the issue. For example, in bank acquisitions, the Superintendency of Banks—not the Superintendency of Competition—will be responsible for authorizing the transaction, applying the Banking and Financial Groups Law, and supplementarily, the Competition Law.

Background of the Law’s Approval

It is important to highlight that the newly approved law represents a significant shift in philosophical and legal perspectives regarding competition. The narrative promoted by the government—both the executive branch and the ruling party in Congress—as well as the media campaign over the past ten to twelve years, has been that Guatemala lacked a competition law.

However, this view is only partially accurate. Guatemala did have legislation regulating anti-competitive behavior.

The first legal framework addressing such conduct was the Penal Code, which included three specific offenses:

Article 340 – Monopoly

Anyone who, with unlawful intent, engages in actions that clearly harm the national economy by absorbing the production of one or more industrial sectors, or a specific commercial or agricultural activity, or who exclusively exploits them through privileges or other means, or who engages in maneuvers or agreements—even disguised through the creation of multiple companies—to sell goods at fixed prices to the detriment of the national economy or individuals, shall be punished with imprisonment from six months to five years and a fine ranging from Q500 to Q10,000.

This article, though using different terminology, clearly addresses abuse of dominant position and collusive agreements under the label “monopoly.”

Article 341 – Other Forms of Monopoly

The following are also considered monopolistic acts contrary to public economy and social interest:

• Hoarding or withholding essential goods to provoke price increases in the domestic market.

• Any act or procedure intended to hinder free competition in production or commerce.

• Agreements made without prior government authorization to limit production with the aim of establishing or maintaining privileges.

• Selling goods below cost to prevent free competition.

• Exporting essential goods without proper authorization, potentially causing shortages or price hikes.

Violators shall be punished with imprisonment from six months to three years and a fine from Q200 to Q5,000.

These provisions already criminalized several behaviors now addressed in the new law.

Article 342 – Speculation

Anyone who spreads false rumors or uses deceptive means to distort the natural laws of supply and demand, or disrupts normal market conditions—causing unjustified changes in currency value, commodity prices, public or private rents, securities, wages, or any other tradable item—shall be punished with imprisonment from one to five years and a fine from Q1,000 to Q100,000.

If the offense occurs across a chain of businesses, each instance shall be treated as a separate offense.

Although these provisions could be improved, they were already aligned with the principles outlined by Nobel laureate Friedrich Hayek, who advocated for competition protection through general norms and common legal procedures (see Law, Legislation and Liberty, Volume III, pp. 154–156).

The new law marks a 180-degree shift from Guatemala’s traditional approach. It replaces criminal sanctions (except for speculation) with administrative penalties and establishes a centralized authority to oversee competition matters.

Anti-Competitive Practices: Absolute and Relative

The law identifies two types of punishable conduct: absolute and relative anti-competitive practices.

Absolute Practices

These are committed exclusively by competitors and are known as horizontal agreements. They fall into four categories:

1. Price fixing: Agreeing to set, manipulate, or coordinate prices, fees, discounts, royalties, tariffs, or rates—directly or indirectly—for the sale or purchase of goods or services.

2. Market division: Allocating or imposing segments of a current or potential market by territory, sales volume, product type, time, space, clients, suppliers, or any other method.

3. Production or distribution limits: Restricting production, demand, distribution, or marketing of goods or services by quantity, volume, or frequency.

4. Bid rigging: Coordinating offers in public procurement processes such as tenders, quotations, contests, or auctions. Joint offers or consortia are exempt if clearly identified as such in the submitted documentation.

A significant change from the original draft is the removal of the per se rule. Now, the Superintendency of Competition must fully prove the existence of an agreement, and economic agents may present efficiency defenses.

If agents can demonstrate, with sufficient evidence, that their conduct:

• Improves production or distribution,

• Promotes technical or economic progress,

• Provides consumers with a share of the resulting benefits,

and that:

• The restrictions are necessary to achieve these goals,

• The practice does not eliminate competition in a significant part of the market,

then the Superintendency will not impose sanctions.

As with many competition laws, these concepts involve a high degree of subjectivity. Ultimately, jurisprudence will clarify what is “necessary” and what constitutes elimination of competition in a “significant part of the market.”

Relative Practices

Relative practices are prohibited when carried out by one or more economic agents that hold, individually or jointly, a dominant position in the relevant market, and when such conduct results in:

• Unfairly displacing other economic agents,

• Substantially preventing their market access,

• Creating exclusive anti-competitive advantages for one or more agents.

Examples of relative practices include:

• Imposing resale prices or margins: Forcing a buyer, distributor, or supplier to adhere to specific prices or margins when selling goods or services. Even “suggested prices” may trigger this provision.

• Restrictive conditions on transactions: Conditioning a sale, purchase, or contract on the requirement not to acquire, sell, distribute, retransmit, or use goods or services from third parties. This is a true restriction on trade, and while sometimes valid (e.g., in franchise or IP contexts), it must be justified.

• Predatory pricing: Selling below average variable cost, or below total average cost but above variable cost, when there is reason to believe the agent will recover losses through future price increases. This may include dumping or cross-subsidization, though efficiency defenses may justify introductory or clearance pricing.

• Raising rivals’ costs: Actions that directly increase costs or hinder the production process of other agents. These often require collusion or government complicity. For example, a large restaurant chain once threatened a supplier to block a smaller competitor’s access to a key ingredient.

• Unjustified price discrimination: Charging different prices or imposing different conditions on buyers or sellers in equivalent circumstances. Such differences must be demonstrably justified.

• Denial of access to essential inputs: Refusing or restricting access to an essential input, or offering access under discriminatory terms. An essential input is one that is indispensable for providing goods or services and cannot be reasonably substituted or acquired elsewhere.

• Collective pressure or boycotts: Coordinated actions by multiple agents to pressure or retaliate against another agent, or to force them into a specific decision.

• Unjustified exclusion from professional associations: Denying access to a professional or trade association that is essential for effective market participation. Associations must review their bylaws to avoid liability.

• Obstructing market entry or permanence: Preventing new or existing agents from entering or remaining in the market.

To sanction these practices, the Superintendency must demonstrate that the conduct harms market efficiency or negatively affects competition, consumer welfare, market supply, or product availability.

If the agent proves that the conduct generates efficiency gains that outweigh its anti-competitive effects and improves consumer welfare, no sanctions will be imposed. The burden of proof for efficiency defenses lies with the accused economic agent.

Permitted Practices

The law identifies certain practices that are exempt from its application, including:

• Cooperation in research and development: Activities aimed at developing new technologies or exchanging scientific, technical, or technological information that benefit national consumers and the economy.

• Acts authorized by international treaties: Conduct derived from treaties, agreements, or conventions duly approved by Congress.

In Guatemala, some laws grant concessions to specific groups that may limit competition. The Superintendency will need to analyze these and recommend their repeal. Ideally, a national competition policy would allow the Ministry of Economy—currently acting as the competition authority—to compile a list of such anti-competitive regulations.

• Temporary public policy measures: Actions taken to comply with public policy, environmental emergencies, or to protect vulnerable groups. The Superintendency may approve these based on technical and legal criteria.

For example, regulations requiring fuel to be mixed with ethanol fall under this category, even though they are inherently anti-competitive.

• Financing and investment arrangements: Agreements aimed at securing funding or ensuring specific projects, including syndicated loans or insurance arrangements where multiple agents share risk.

These are common in large-scale financing, where banks form syndicates to manage risk. It is important that competition assessments in financial markets be conducted by the same authority to avoid conflicting evaluations.

• Application of intellectual property laws: Practices based on national or international IP laws. For instance, franchise agreements may restrict suppliers to maintain brand identity and quality.

• Export pricing and conditions: Setting prices or conditions exclusively for exports or international sales, including promotion, production, logistics, and distribution strategies.

In international markets, prices may also be influenced by stock exchanges or global agreements.

• Agricultural cooperatives: Practices carried out by agricultural cooperatives are exempt. While this exemption is debatable—since cooperatives are economic agents like any other—their internal procurement methods may be justified as cooperative mechanisms. External conduct, however, is harder to justify.

• Logistical cooperation: Sharing facilities for distribution, marketing, or export of goods or services. Many specialized storage and collection centers serve multiple agents, and banning them would increase market costs.

• Promotion of financial inclusion: Practices that encourage banking and the use of digital payment methods.

An earlier draft included an exemption for anti-smuggling efforts, but this was removed through a floor amendment.

Economic Concentrations

The law defines economic concentration—in a way we consider problematic—as the integration of two or more previously independent economic agents through any act, contract, or agreement that results in the transfer of control of one agent to another, or the creation of a new agent under the individual or joint control of the others.

Originally, the law only applied to mergers between competitors, but now any merger is subject to prior authorization, which raises concerns about overregulation.

Thresholds for Prior Authorization

Authorization is required when the following thresholds are met, measured in millions of non-agricultural daily minimum wages:

1 EUR ≈ 8.5 GTQ (October 2025):

Assessment Criteria

The Superintendency must analyze whether the concentration:

• Grants or may grant a dominant position under the law, or increases such a position, potentially harming free competition.

• Has the purpose or effect of creating barriers to entry, preventing access to the relevant market or essential inputs, or displacing other agents.

• Facilitates the possibility of engaging in anti-competitive practices prohibited by the law.

Our concern is that the law allows sanctions based on potential future conduct or underlying intent, even if no actual anti-competitive behavior has occurred. The mere possibility is enough to trigger intervention.

Authorization Outcomes

The Superintendency may:

• Authorize the concentration if it improves market efficiency and benefits consumers.

• Authorize conditionally, under terms set out in Article 19 of the law.

• Deny the concentration.

If the Superintendency does not respond within 30 business days from the date the request is deemed complete, the concentration is considered unobjectionable, and the agents may proceed.

Economic agents may present efficiency defenses during the administrative process if the concentration is denied or conditioned.

Statute of Limitations

Liability for violations and the sanctions established under this law expire after four years, counted from the date the infraction was committed. For continuous or ongoing violations, the period begins on the day the conduct ceases.

Resistance to Verification

The law establishes a fine of Q529,150.00 for resisting verification by the Superintendency of Competition.

Administrative Procedure

The law outlines an administrative investigation process, which includes:

1. Investigation

2. Hearing

3. Presentation of evidence

The Board of Directors issues the resolution. If the affected party disagrees, they may file a motion for reconsideration. If disagreement persists, the party may file a Contentious Administrative lawsuit.

Sanctions and Leniency

The law provides for:

• Monetary fines, calculated in daily minimum wages.

• Corrective measures, such as partial or total deconcentration of economic agents or reversal of anti-competitive practices.

Previous drafts included a leniency program, which would have exempted whistleblowers from fines. This was removed in the final version.

Derogated Criminal Offenses

The law repeals the criminal offenses of Monopoly and Other Forms of Monopoly previously found in the Penal Code. However, the offense of Speculation remains in force.

This repeal is significant. Earlier proposals had suggested maintaining a dual enforcement system, increasing penalties and creating new criminal offenses alongside administrative procedures. The final version opts for a single administrative forum, with the exception of speculation, which remains a criminal matter.

We believe this approach is more appropriate, as it avoids overlapping jurisdictions and ensures that competition matters are handled primarily through administrative channels, promoting clarity and legal certainty.