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Guatemala has some of the most concentrated industries across Latin American industry, ranging from cement to telecoms to traditional media to chicken to beer. This made it all the more striking when legislators from Semilla, President Bernardo Arévalo’s social-democrat minority party, got 110 of 160 votes in the big business-friendly Congress to support a new law purportedly challenging that grip on Guatemalan commerce.
Until now, Guatemala and Cuba were the only countries in Latin America and the Caribbean to not have anti-monopoly codes. On December 6, Arévalo signed the Competition Law, which had been debated in different iterations for 25 years. His party had named the passage of the bill as one of their top priorities in 2024.
In practice the law will kick into gear in up to two years, after the creation of an autonomous Superintendency of Competition that will be tasked with applying it. The Superintendency’s three-seat board of directors will include economists or lawyers chosen by the Executive; the Economic Commission of Congress, supported by an unspecified international entity; and the Guatemalan Monetary Board.
While some business people have shrugged that they already operate under competition laws in neighboring countries, the conservative business association CACIF has framed the law as a big-government chokehold: “As we create more regulations, we raise prices, and what ends up increasing is the cost of the basic basket of goods,” CACIF President Carmen Torrebiarte told Canal Antigua. “This [law] disincentivizes businesses from wanting to join the formal market.”
Economist José Luis Moreira, who advocated for the law, expects that one aspect of the law will anger the largest economic actors: “If your company is of a certain size and you want to buy or merge with another, you have to ask for permission, and the Superintendency will decide whether it authorizes it or not,” he told El Faro English. “This is necessary because it is easier to prevent monopolies from being formed.”
Moreira also argues that the Superintendency will intentionally reduce reliance on Guatemalan courts: “Many people advocated that the Competition Law be based on the U.S. model [including the Federal Trade Commission], where courts decide the sanction,” he says. “But it would have been a nightmare: In a country like Guatemala, with a judicial system so co-opted, impunity is guaranteed.”
The new law allows the board of directors of the Superintendency to decide whether to issue sanctions of up to 200,000 minimum daily wages for anticompetitive practices. Those sanctioned will have the right to appeal to a specialized court that will be created specifically for competition litigation.
“Prices will go down,” claims Moreira, leading to “more innovation, more choice, and small and medium-sized companies that could not enter the market will be able to.”
Economist Hugo Maúl points to Guatemala’s institutional void itself as a reason that he thinks the law will fail: “In countries with institutional weaknesses and poor legal systems, this type of law runs the risk of not giving the results that everyone expects,” he says. He also points to existing prohibitions of monopolies in the Code of Commerce and the Constitution: “All we need to do is enforce the existing law.”
In a recent op-ed, Maúl critiqued “exceptions for specific sectors, weakening the reach of any regulation and perpetuating anti-competitive structures.” Speaking with El Faro English, he cited existing regulations for the sugar, electricity, and television industries as possible workarounds to skirt the new law. “This creates an unequal playing field and opens the door for the most powerful groups to elude market competition,” he wrote.
Maúl asserts that appointments to the board of the Superintendency allow for co-optation by “political interests” and says the criteria to evaluate market concentration “reduce the complexity of the phenomenon of competitiveness to a matter of prices and quantities, ignoring essential factors like quality, innovation, and [market] access.”
Legislator Samuel Pérez, Arévalo’s lead political operative in Congress, acknowledges that industries with pre-existing competition regulations, like hydrocarbons, will be exempt. But he argues that those carve-outs will be “extremely minimal”. These select few will be given more free rein, he says, “as long as they do not expel other competitors from the market, concentration is not excessive, and prices do not affect the consumer.”
A legislative foothold
The Arévalo administration has repeatedly asserted that they will not negotiate with corrupt actors, some of them in Congress. In a legislature historically stained by allegations of vote-buying and extortion, and where his party has struggled to make inroads, the passage of the Competition Law seems an extraordinary maneuver.
It also points to a political shift for Semilla. In recent years, Pérez has occasionally used the slogan “A future without CACIF”. Arévalo, meanwhile, has struck a cooperative tone with the Guatemalan and U.S. private sectors, appointing multiple ministers from CACIF —who have since left the government— and launching a public-private partnership to revamp Guatemala City’s airport.
Now, Pérez downplays that past stance: “We have to move from a corporatist state toward a more democratic state,” he says. “I don’t think CACIF should disappear. They are an organized group in civil society that can have influence in their space. The problem is when they make public decisions without being legimitated by anybody.”
Pérez says promoters of the law looked to broaden the political inclusion of economic actors with a different political vision, like the progressive National Business Council (CNE). Congress sent the bill to Arévalo’s desk on November 20 with 110 of 160 votes, over two-thirds of Congress, allowing for an expedited vote with support from at least one legislator from each of Guatemala’s 17 congressionally represented parties.
One week later, a judge ordered the cancellation of Semilla’s party status, leaving the 23 legislators as “independents” and barring them from positions setting the legislative agenda. Semilla had been provisionally suspended since last year, as the Public Prosecutor’s Office launched a series of attacks against the 2023 election results.
Despite those attacks, Semilla has made other strides. Earlier in the year, Congress refused to even appear for discussions of a bill allowing for easier removal of Attorney General Consuelo Porras, accusing Arévalo of pursuing an overly narrow agenda. That bill has yet to go anywhere, but Congress has passed less controversial laws regulating credit cards, giving tax exemptions to agriculture, and approving the 2025 national budget.
Jorge Ayala, president of the Economy Commission from former presidential candidate Zury Ríos’ opposition party Valor, says that Pérez, of Semilla, invited them and other parties in January to seek a “political agreement” for the anti-monopoly law, “so that consensus could be reached on the amendments that would make the initiative viable.”
Perez asserts that this negotiation can set a precedent for the next session, which begins in January, although he assures that “Congress is very volatile and depends on specific situations. It receives a lot of input from outside symbols and there is rejection of some issues and support for some others. Congress is very receptive to this issue.”
While Arévalo’s party is eagerly promoting the new law as a victory, political scientist Celia Luna argues that delays in implementation could turn it into a loss, depending on the prices of the basic food basket next year. According to CID Gallup, Arévalo’s approval rating slipped from 78 percent in January to 54 percent in June.
“The image that citizens had of the government of Semilla [in the 2023 campaign] is becoming more and more distant,” Luna says. “This enchantment is like a balloon that is going to burst in our faces. [The odds that prices will drop] is probably an overrated idea.”
Luna says that, in a political system with co-opted institutions, the new Superintendency of Competition is up for grabs. “Is that competition entity going to be politicized? Is there really anyone in Guatemala who has the necessary experience?” she asks. “If there is, it is a person who gets along well with the sectors involved. Political institutions and the business sector may want to influence the Superintendency and the person who will lead it.”
But the bigger political question, weeks after the law’s passage, is whether the new market competition rules will ultimately challenge or reinforce the decision-making influence of the most powerful economic actors in Guatemala.
This article first appeared in the January 2 edition of the El Faro English newsletter. Subscribe here.
