Private mergers and acquisitions in Panama | Competition/anti-trust issues


María de Lourdes Marengo

Nadya Price

Q&A guide to private mergers and acquisitions law in Panama.

The Q&A gives a high level overview of key issues including corporate entities and acquisition methods, preliminary agreements, main documents, warranties and indemnities, acquisition financing, signing and closing, tax, employees, pensions, competition and environmental issues.

Chapter 4: Competition/anti-trust issues

Competition/anti-trust issues

34. Outline the regulatory competition law framework that can apply to private acquisitions.

Panama enacted competition legislation for the first time in 1996 through Law No.29 of 1 February 1996. In 2007, Law 29 was repealed by Law No.45 of 2007 (Competition Law).

The objective of the Competition Law is to:

  • Protect and ensure free economic competition.

  • Eradicate monopolistic practices and other restrictions in the efficient functioning of the markets of goods and services.

  • Preserve the interests of consumers.

Triggering events/thresholds

Any act, contract or practice that restrains, diminishes, harms, impedes or that in any other way damages free economic competition in the manufacturing, processing, distribution, supply or commercialisation of goods or services is prohibited.

There are no threshold requirements under Panamanian law. It is presumed that the acquisition of a company, or the merger of companies, has an objective or effect prohibited by the Competition Law if the act or attempt:

  • Grants or may grant to the merging entity, the acquirer or the economic agent that results from the concentration, the power to fix prices unilaterally or to substantially restrict the supply in the pertinent market, without competitors being able to effectively or potentially neutralise that power.

  • Has or may have as an objective the shifting or displacement of other existing or potential competitors or the impeding of their access to the relevant market.

  • Has or may have as an objective substantially facilitating a prohibited act or attempted act.

Notification and regulatory authorities

Acquisitions that are considered to be concentrations under the Competition Law can be voluntarily notified to the Competition Authority and are subject to verification by the Competition Authority.

Acquisitions considered as concentrations under the terms of the Competition Law that have been verified and passed by the Competition Authority can validly take place and cannot be challenged later, except when the favourable decision is granted based on false or incomplete information provided by the interested parties.

Substantive test

The following criteria are considered by the Competition Authority in determining if the acquisition is a prohibited concentration under the Competition Law:

  • The market share of the economic agents in the relevant market and the effects with respect to other competitors and buyers of the relevant product or service, as well as with respect to other directly-related markets and economic agents.

  • Whether the concentration facilitates the implementation of conducts, practices or agreements that restrain or limit free competition or the imposition of barriers to the entry of new economic agents.

  • Whether the acquisition facilitates the unilateral rising of prices, without allowing other economic agents to actually or potentially counteract or block that power.

  • Whether sufficient opportunities are maintained for the entry of economic agents into the market to avoid price increases above the level before the concentration.

  • Whether the concentration is necessary to avoid the exit from the market of productive assets of one of the economic agents that participate in the concentration.

  • Whether the concentration would result in the improvement of the manufacturing, processing, distribution, supply, commercialisation or consumption conditions of the products or services.


35. Who is liable for clean-up of contaminated land? In what circumstances can a buyer inherit and a seller retain liability in an asset sale and a share sale?

A party that commits or causes contaminating activity is liable for the cleaning up of the contaminated land and must:

  • Repair the damage caused.

  • Apply prevention and mitigation measures.

  • Assume the corresponding costs.

It is uncommon for a buyer to inherit liability in an asset or share sale. Indemnity agreements and insurance releases are generally included in the sale agreement to limit liability. The authorities will retain the ability to initiate actions against the contaminating party.

Previous chapter: Pensions

First published in Thomson Reuters - Practical Guides.


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