“The year 2009 has been aperiod of significant activityfor the CS. The investigationof anticompetitive practicesand the promotion of acompetitive environment inthe country have beencrucial achievements. TheCS intensified the fightagainst agreements amongstcompetitors in publictenders. The commitment towork in favor of competitionfor the benefit of consumersand economic efficiency willbe pursued again in 2010”,indicated the CompetitionSuperintendent, JoseEnrique Argumedo.

Press Release C. 56-09

El Salvador, December 17th, 2009.

Annual Work Report

2009 CS Achievements Report

In 2009, the Competition Superintendence (CS) sanctioned 8 economic agents with finesamounting more than 50 thousand dollars, authorized 1 merger, carried out 3 sector studieson competition conditions, and issued over 30 public policy recommendations to improveand promote competition conditions in the country, increase economic efficiency as well asconsumer welfare.

The CS achieved important results in 2009, through the investigation andsanction of anticompetitive practices, the analysis of mergers and acquisitions indifferent economic sectors, the constant study of the competition conditions onvarious sectors, and the promotion of competition in the public opinion. Theaforementioned achievements of the CS during 2009 are set forth below.

• Cases and Fines

In 2009, the CS imposed fines totaling US$50,668.10. Four travel agencieswere sanctioned with fines amounting US$21,325.50 for bid rigging in publictenders for the purchase of airline tickets in the public sector.

Furthermore, the CS concluded 7 administrative sanctioning proceedingsagainst 4 economic agents who did not supply information in the investigation ofanticompetitive practices in the telecommunications market. Said fines totalUS$29,342.604.

In addition, the CS received and analyzed 2 complaints which were ruled out,due to the fact that said complaints did not comply with hypothesis establishedin the Competition Law. With respect to case investigations, the CS monitoredactivities such as: the exclusive TV transmission of the National Mayor SoccerLeague games; the transmission of the Spanish Soccer League games; therelation between airlines and travel agencies; and the import of pharmaceuticalsused for the treatment of Influenza A H1N1.

• Activity in the Judiciary System

The CS issued 30 requirements to the Salvadoran General Attorney, requesting to collect the fines imposed todifferent sanctioned economic agents.

During 2009, the CS filed 42 reports and writs with the tribunals of the Justice Supreme Court. Thirty six of themwere filed with the Administrative Contentious Tribunal and 6 with the Constitutional Tribunal. By means of four ofsaid reports, the CS presented technical, legal, and economic arguments to justify the legality of the decisions ofthe Board of Directors (BD) of the CS. Nine reports confirmed the existence of the appealed resolutions.

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Four reports contained the final allegations prior to sentencing. The remaining 25 writs contained other requestsand considerations.

• Mergers and Acquisitions

In 2009, the CS reviewed 13 merger/acquisition authorization requests. Only one of said requests was authorized(the operation amongst “Inversiones Financieras Citi”, “Banco Citi”, and “Citi Info Centroamérica”). Six of theaforementioned requests were declared unsuitable due to the fact that these operations did not need priorauthorization from the CS (including the TACA/AVIANCA operation).pursuant to the Competition Law. Tworequests were declared inadmissible because they did not comply with the formalities to file this type of requests.Finally, one request was overruled due to lack of information and three are still been reviewed (amongst these isthe one related to the purchase of Shell El Salvador).

• Sector Studies on Competition Conditions

The CS carried out 3 sector studies on competition conditions in 2009.The sectors studied were rice, fertilizers,and fluid and powder milk. In addition, the studies on the cheese and iron sectors are in process. In 2010, thestudy on the competition conditions of the credit and debit cards sectors will be reassumed.

During 2009, the prices of products such as: fertilizers, rice, fluid and powder milk, beans, and the basic foodbasket were monitored.

• Recommendations y Opinions

Public Policy Recommendations: Thirty four public policy recommendations were issued, which wereaddressed to 8 governmental institutions.

From the aforementioned recommendations, 20 resulted from sector studies on competition conditions. Five ofthem resulted from monitoring activities or prior investigations. Nine recommendations resulted from theinvestigation of anticompetitive practices. In some cases, the same recommendations were addressed to morethan one institution, due to the fact that they are related for their enforcement. A chart with the recommendationsissued by the CS in 2009 is set forth below:

Recommendationaddressed to:

Recommendation resultedfrom:

Sector or Market Number ofrecommendations

Ministry of Agriculture andLivestock

Sector study on competitionconditions

Rice, fertilizers, fluidand powder milk

18

Ministry of Finance Sector study on competitionconditions

Rice 2

Ministry of Economy Sector study on competitionconditions

Rice and fertilizers 8

Ministry of Public Healthand Social Assistance

Sector study on competitionconditions

Fluid and powder milk 3

Salvadoran SoccerFederation

Monitoring activity or priorinvestigation

Open television 4

Civil Aviation Authority Monitoring activity or priorinvestigation

Travel agencies 1

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General Superintendenceof Electricity andTelecommunications

Case analysis of an allegedanticompetitive practice

Telecommunications 4

Vice Ministry ofTransportation

Case analysis of an allegedanticompetitive practice

Public transportation ofpassengers

5

Opinions on Legal Framework : 6

A. To the draft of the Credit Cards System addressed to the Legislative Assembly;

B. To 3 technical regulations on pasta, premixed cement, and fluorescent lamps issued by the NationalScience and Technology Council;

C. To a draft of a postal remitances project of El Salvador´s Mail System; and,

D. As a follow-up of the preliminary conclusions of the “Regional Study of Air Transportation of Passengers”.The BD of the CS issued an opinion with recommendations to the Civil Aviation Authority on the Civil AviationOrganic Law and applicable regulations, by means of the resolution RC-AE-04/2009, dated April 21st, 2009.

Opinions on public tender processes: 3

A. Long term contracts through proceedings called by the “Compañía de Alumbrado Eléctrico de San SalvadorS.A. de C.V.”;

B. Public tender documents issued by Executive Port Commission: “Contracting Companies to Provide LaborForce and other Resources to the Executive Port Commission, in order for Port of Acajutla to Render Servicesduring the Period Starting on January 1st, 2010 until December 31st, 2010”; and

C. Policy to be applied to public tender processes of the Salvadoran Social Security Institute.

• National and International Cooperation and Coordina tion Agreements

3 national : Customs, Consumer Protection Authority, and renewal with the Civil Aviation Authority;

3 international : Fiscalía Nacional Económica of Chile, Instituto Nacional de Promoción de la Competencia ofNicaragua, and the renewal of the agreement with the Tribunal de Defensa de la Libre Competencia of Chile;

2 Academic Sector: Agreement renewal with the Escuela Superior de Economía y Negocios and with theUniversidad Centroamericana “José Simeón Cañas”.

Furthermore, the Internship Program was broadened to include students of any career studying at universitieswith which the CS has subscribed an agreement and to give the possibility of executing their social work at theCS.

• Central American and International Activity

Competition Policy Working Group in the Central Ame rican Integration

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Five meetings and nine video conferences took place. Three Central American Bulletins were published. Thestudy of the competition conditions of the pharmaceutical sector was initiated with the non refundable cooperationof the Interamerican Development Bank for the Regional Public Goods Project. In addition, the Regional TrainingProgram was carried out by the Federal Trade Commission of the United Stated of America.

Active Participation in Forums: Tenth Session of the Intergovernmental Experts Group in Competition Law andPolicy, Central American Competition Forum, Competition Global Forum (OECD), Latin American CompetitionForum, Ibero American Competition Forum, and the ICN Seminar on the Agencies Effectiveness.

Participation in Trade Negotiations and Training:

3 Negotiation Rounds: Negotiation Round of the Canada - CA4 Free Trade Agreement; VI Negotiation Round ofthe Central American – European Union Association Agreement; and, Reduced Negotiation Round of the CentralAmerican – European Union Association Agreement.

4 Central American Coordination Rounds: 2 Central American Coordination Meetings with respect to theCentral American – European Union Association Agreement and 2 Central American Coordination Meetings withrespect to the Canada - CA4 Free Trade Agreement.

National Training carried out by International Cons ultants: 23 activities with the Justice Supreme Court theSalvadoran General Attorney´s Office, Customs, National Registries Center, National Judicial Council, GeneralSuperintendence of Electricity and Telecommunications, universities, and thinking tanks.

Participation in International Training: 9 international organizations forums and seminars.

The international activity carried out by the CS includes the renewal of the program “Strengthening Institutionsand Capacities in the Areas of Competition Policy and Consumer Protection” (COMPAL II), for competitionadvocacy activities to complement those executed in the first stage of said program.

Additionally, the Interamerican Development Bank provided non refundable financial resources for pre investmentprojects called “Regional Public Goods Project”, presenting the proposal “Development of the RegionalCompetition Policy”. The Central American countries, including Panama, are the project´s beneficiaries and theCS has been designated to execute said project.

• Special Events

The CS launched the following manuals: “Let´s Learn about Competition” and “Detecting and Preventing BidRigging in El Salvador”, as well as a new web site www.sc.gob.sv, and the board discussion “Challenges andDefiances of the CS”.

• More Competition Advocacy Activities

The CS has carried out 74 informative presentations. A space in Facebook has been created for the CS, whichcurrently has 1,300 registered users. The CS has produced the following institutional publications: “White Book”or “Libro Blanco”, which contains procedural amendments to the Competition Law; the manuals “Let´s Learnabout Competition” and “Detecting and Preventing Bid Rigging in El Salvador”; 2006-2009 Recompilation ofPublic Policy Recommendations; Recompilation of Articles and Essays written by the CS. Besides, the CS hasmade the necessary contacts to gain presence in a newspaper with nationwide readers, in a specializedmagazine, and in a virtual media to publish essays and articles on Competition Law topics, free of charge.

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