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ProCompetencia market studies on unfair practices

Monopolistic practices in three sectors have been unveiled in three studies carried out by ProCompetencia Commission. The entity has been able to take other actions given that Congress has held up the designation of its executive director.

Meanwhile, Michelle Cohen of ProCompetencia says that the three research papers describe the situation of the frequent and illegal abuse against consumers, Dominican economy and competition itself because of the barriers that are created.

The three studies are on the beer market, pharmaceuticals and insurance sectors.
The study on the beer market reveals that the Cerveceria Nacional Dominicana concentrates 99% of the beer sales in the country and has been engaging in anti-competitive practices that have generated additional revenues of RD$7 billion. The study says that after CND became the monopoly in the market, the company has increased prices (before taxes) 52%, in the case of Presidente beer, 128% in case of Brahma and 59% in case of Bohemia beer. The research says that the company demands exclusivity in order to dispatch the beer to vendors.

In the case of pharmaceuticals, new research describes that there are 456 pharmaceutical corporations in the country, but that 20 of them control 65% of sales. It explains the wholesale import and distribution serves as a bottleneck for the development of competitive sales. It mentions the existence of barriers for new product entrance, existence of exclusivity distribution contracts, and price setting agreements. Wholesaler profit margins are 20-40% compared to 10% in other countries.

The study on the insurance sector mentions that the Superintendence of Insurance has not issued authorizations for entry to market but instead demands the acquisition of an insurance company in financial difficulties. This is deemed a serious restriction to competition. It mentions the excessive linkages between banks and insurance companies. It reveals that credit for a vehicle or a home mortgage is tied to an insurance policy from a company affiliated to the lending bank. With 33 companies in operation, the market is controlled by four companies Seguros Universal (25.27% marketshare, affiliated with Banco Popular), Seguros BanReservas (18.66% marketshare, affiliated with BanReservas), Mapfre (15% marketshare, affiliated with Banco BHD-Leon) and Colonial de Seguros (10% marketshare).

The studies were carried out by the National Commission for the Defense of Competition and financed by the Inter-American Development Bank.

The Brazilian-owned Cerveceria Nacional Dominicana called the findings unfounded and denied it incurs in unfair practices and abuse of monopolistic position.

Source: DR1, DiarioLibre

Aug 20, 2016

Category: DR News |

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Last updated December 3, 2016 at 11:52 PM
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