Critical Analysis: Guatemalan Markets: Dominated by Monopolies

Cementos Progreso Plant located in San Miguel, Sanarate, El Progreso. It is the largest cement production plant in the country. Source: Guate360
Cementos Progreso Plant located in San Miguel, Sanarate, El Progreso. It is the largest cement production plant in the country. Source: Guate360

Although laws discussing the country’s disfavor for monopolies exist in Guatemala, the lack of enforcement and compliance with these laws has engendered a market riddled with monopolies and oligopolies.  Essentially, there is no antitrust, or “leyes de la competencia,” legislation currently in effect in the country, which turns the current laws into mere words without any real-life impact.  As such, there are only a select number of high-power families that control virtually the entire Guatemalan market in various commodities.

There are several sources of laws in Guatemala discussing the country’s opposition to the existence of monopolies in the market.  Article 130 of the Constitution of the Republic of Guatemala prohibits the existence of monopolies in the Guatemalan market.  This Article states that Guatemala will limit the functioning of the companies that absorb or intend to absorb, with prejudice to the national economy, the production in an industrial branch, farming, or commercial activity.  However, the utopian ideal of having a market without monopolies does not exist in Guatemala.

Another legislative attempt to prohibit monopolies is found in Guatemala’s Penal Code.  Article 340 pronounces that a company operating as a monopoly is a crime.  The main problem with these existing laws is that they are reactive and reparative, rather than being proactive and preventative.  This is the opposite of existing legislation in the United States, such as the Sherman Act, Clayton Act, and the Federal Trade Commission Act, all of which take preventative measures to ensure competitive practices and that monopolies never take over the market.

One of the reasons why antitrust legislation is not in force in Guatemala is due to the overwhelming power of the select group of wealthy families that control the country’s largest companies.  As a group, these families constitute a unique type of economic oligarchy that dominates many of the main and essential sectors of the market.  Between these families there is an unspoken pact that is called a “Pacto de Caballeros” in Spanish.  This pact signifies the understanding between the parties that, as translated from Spanish, “a dog doesn’t eat a dog,” meaning that each family can control their own economic sector of the market without any interference from any of the other powerful families.  It is easy to see that these families are not in favor of the adoption of an antitrust law in Guatemala, as this would destroy their untouched control of the market.

There are several examples of high-power families that control essential sectors of the market in Guatemala.  The Castillo family owns Cervecería Centro Americana, a brewery that dominates nearly 90% of the beer market.  The Gutiérrez family enjoys a monopoly over essential staples such as flour, oil, and chicken, which led to the creation of Pollos Camperos, a restaurant chain that essentially allows the family to preside over the distribution of the food they control.  Another indicative example is the Novella family, who owns Cementos Progreso, a cement company that controls the entire Guatemalan market in this commodity.  Due to the lack of enforcement of antitrust legislation, these families have commanded the markets of their respective products for decades.

Without a more rigid system of enforcement and mandatory compliance by the dominant companies, Guatemala’s marketplace will continue to be an oppressive one that does not encourage competition and as a result prohibits the country from participating and competing successfully on a global scale.

Laura Brodie is a 2L and a Staff Editor on the Denver Journal of International Law and Policy.