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Colombia

Last Verified on Friday 3rd March 2017

    Basics

    • Colombia

      Collusion and anticompetitive conducts are primarily regulated by article 1 of Law 155 of 1959, which prohibits any agreement with the direct or indirect purpose of restricting production, supply, distribution or consumption of raw materials, goods or services.

      Also Law 1340 of 2009, by virtue of which new regulations are issued for the protection of competition, is one of the most relevant laws in Colombian antitrust legislation. This law includes prohibition of any acts or agreements that may lead to unfair or unlawful competition, such as merger control dispositions to prevent market concentrations or any other act or abuse that that may lead to a cartel.

      In addition, the Superintendency of Industry and Commerce (SIC) is recognised as the competent antitrust authority.

      With regard to potential cartel violations, the SIC applies articles 25, 26 and 27 of Law 1340 of 2009, which relate to considerations regarding the amount of the sanctions or fines applicable to conducts that might harm the freedom of a certain market.

      Specifically in article 14 of Law 1340 of 2009, there is a leniency programme broadly regulated by Decree 1523 of 2015 by means of which corporations, managers, employees and ex-employees who collaborate with the antitrust authority by giving proof and information regarding a cartel can be fully or partially exonerated of the fines and penalties associated with such practice, depending on the reliability, accuracy and usefulness of their cooperation with the SIC’s investigation. In addition, our civil law system establishes that any individual or entity is liable for the damages caused to third parties. Based on this general rule, any third party is entitled to seek indemnification for damages caused to them.
      Finally, with regards to criminal law, the Anti-Corruption Statute set in Law 1474 of 2011 modified the Criminal Code, introducing punishments and fines for collusion when a cartel activity involves public resources, a public entity or affects public procurement. In this case the SIC will have jurisdiction to investigate the conduct of individuals – not companies – and will issue an administrative decision, but it is up to criminal prosecutors whether or not to conduct a criminal trial.

      Last verified on Friday 3rd March 2017

    • Colombia

      SIC’s officers are entitled to enter the premises of companies and homes of the company’s staff to seize documents and data and they are entitled to ask for all files, copies of specific documents or categories of documents and to ask and compel answers to their questions.

      Failure to provide the requested information is sanctioned according to what is set forth in articles 25 and 26 of Law 1340 of 2009, in the terms explained in questions 8 and 9.

      Last verified on Friday 3rd March 2017

    • Colombia

      Yes, but they do not have any multilateral or bilateral agreements with other antitrust authorities neither do they have any obligation to cooperate with other authorities. They only collaborate by exchanging communications and information, in an informal way, especially with the European Commission and the CADE in Brazil. Nevertheless, recently signed free trade agreements with the United States, Canada, Central America and South Korea include certain basic guidelines regarding minimum guarantees and cooperation related to competition matters.   

      Last verified on Friday 3rd March 2017

  • Penalties for Cartel Conduct

    • Colombia

      The breach of anti-cartel dispositions entails the imposition of the sanctions foreseen in article 25 of Law 1340 of 2009, in the terms set forth below:

      Article 25. Amount of the fines to legal persons: owing to a breach in any of the provisions on protection to competition, including the failure to duly comply with information requests, orders and instructions issued by the authorities, the obstruction of investigations, the failure in the obligation to report merger operations or the failure to comply with the obligations set by a conditional approval of a merger, the SIC can impose fines for each breach and to each infractor for an amount up to 100,000 minimum legal wages or if higher, up to 150 per cent of the profit derived from the behaviour of the offender.

      As a result, legal entities that infringe competition regulations could be fined up to 100,000 minimum legal wages (approximately US$23,000 million) or up to 150 per cent of the revenues derived or associated to the conduct performed by the infractor.

      The estimate of the fine to be imposed by the SIC depends on several elements that are objectively analysed by the competition authority, and based on reasonableness and proportionality with which the sanction must comply. In the cases in question, elements are taken into account such as the level of market disruption, the benefit obtained by the offender with the conduct, the degree of participation of the person implied, the size and financial capacity of the companies, the market share of the infractor company, the type of asset sold, how memorable the trademarks are, the time the conduct lasts, the existence of substitute goods, the reiteration of the conduct, among others. However, it is important to clarify that the amount of the sanctions depends on the individual and the concrete analysis made in each particular case.

      As previously mentioned, there are no criminal sanctions for companies for the breach of anti-cartel dispositions. 

      Last verified on Friday 3rd March 2017

    • Colombia

      The breach of anti-cartel dispositions made by individuals, entails the imposition of the sanctions foreseen in article 26 of Law 1340 of 2009, in the terms set forth below:

      Article 26: Amount of the fines to individuals. Any person who collaborates, facilitates, authorises, executes or tolerates conducts that breach the regulation regarding protection to the competition to which Law 155, 1959, Decree 2153, 1992 refers and/or other regulations complementing or modifying them, will be sanctioned with fines for up to the equivalent of 2,000 minimum legal wages, in favour of the Superintendency of Industry and Commerce.

      In other words, individuals who facilitate, authorise, perform or tolerate practices contrary to competition regulations could also be subject to fines up to 2,000 minimum legal wages (approximately US$470,000).

      Please note that the paragraph of article 26 of the above-mentioned law states that payments to the SIC of the fines imposed on individuals may not be covered, ensured or guaranteed by the legal entity to which the individual was linked when he or she was involved in the conduct; nor by the main office or subordinate companies thereof; nor by the companies belonging to the same business group or subject to the same control thereof. Thus, companies may not respond for the fines imposed on their employees either directly or indirectly.

      With regard to criminal enforcement, the breach of anti-cartel disposition by individuals entails the following sanction:

      Article 31 of Law 1474 of 2011:

      When someone illegally alters the contractual procedure on a public bidding process, auction, abbreviated selection, contest or similar, he/she may be liable to imprisonment from six (6) to twelve (12) years and may have a fine of 20) to one thousand 1,000 monthly statutory minimum wages (approx. US$230,000) and inability to contract with state agencies for eight years.

      Also, if the SIC grants a full exemption of the fine in the administrative procedure, such individual will receive the following benefits: reduced sentence by one third, 40 per cent of the fine to be imposed and a ban on contracting with state agencies for five years.

      Last verified on Friday 3rd March 2017

    • Colombia

      According to article 25 of Law 1340 of 2009, for the calculation of fines the SIC will take the following criteria into consideration: (i) impact of the conduct in the market; (ii) size of the national market; (iii) profits obtained from the illegal conduct; (iv) level of involvement in the illegal conduct; (v) the accused’s conduct during the procedure (ie, the extent or lack of cooperation with the investigation); (vi) the market share of the infringing company; (vii) assets of the infringing company; (viii) recidivism; and (ix) whether the infringing company is found to have been a ringleader.

      Last verified on Friday 3rd March 2017

    • Colombia

      The corporations and/or individuals can appeal the decision by requesting the SIC to reconsider its decision to impose fines. The request for reconsideration should be filed within five days of the notification of the decision.

      The final decision can also be challenged by a nullity action before the judicial authority. The nullity action should be filed within four months of the notification of the decision. The participation of third parties during the procedure is not regulated.

      Last verified on Friday 3rd March 2017

    • Colombia

      The Colombian civil law system establishes that any individual or entity is liable for the damages caused to third parties. Based on this general rule, any third party is entitled to seek indemnification for damages caused. In antitrust cases, these third parties could be any affected competitor, consumer, supplier, distributor, etc. In addition, class actions have a constitutional basis and they have the purpose to claim civil remedies for damages caused to a large number of people, regardless of other existing individual tort actions for the same purpose.

      To date there has been no precedent of civil litigation in cartel cases.

      Last verified on Friday 3rd March 2017

    • Colombia

      The SIC holds the burden of proof. Once the SIC determines that the conduct analysed violates antitrust regulations, the parties are able to prove that their conduct does not violate any cartel regulations or that the violation was justified according to the exceptions contained in article 49 of Decree 2153 of 1992. However, if the SIC determines that there is not sufficient evidence to establish an infringement of antitrust regulation, it must request the acquittal of the parties.

      Last verified on Friday 3rd March 2017

    • Colombia

      In December 2012, the SIC imposed a fine to the telecommunications provider Claro for an amount of approximately US$46 million for the breach of competition dispositions.

      Later on, in October 2015, the SIC imposed a fine on 15 sugar mills and various employees for approximately US$110 million dowing to cartelisation and because they had participated for several years in a concerted, sustained and coordinated conduct to obstruct imports of sugar from other countries to Colombia, namely Bolivia, Guatemala, El Salvador and Costa Rica. This sanction is the highest fine imposed in Colombia so far. 

      In addition, the SIC imposed fines for approximately US$70 million, US$62 million and US$20 million to a series of corporations engaged in price fixation in the diaper, tissue products and notebook markets, correspondingly, all of which resulted from the application  leniency programs. These investigations are the first one of their kind in Colombia. 

      There are also numerous ongoing investigations which could result in the imposition of fines.

      Last verified on Friday 3rd March 2017

  • Raids

    • Colombia

      Yes. In Colombia, the competition authority is entitled to review files, documents, computers and other electronic data that may contain information about the competition practices of a company or a person. Companies are required to comply with any requests for copies of documents, including those held on computers.

      Last verified on Friday 3rd March 2017

    • Colombia

      Usually, the SIC sends to the premises of the company a team entitled to review all files, documents, computers, etc. They can also interview the officers of the company or any worker and make copies of all documents within the scope of the investigation.

      The authorities can look at and make copies of privileged documents, but they cannot use such documents as evidence against the parties during the investigation.

      The company can have its attorney present at all times, and can make comments on the record of proceedings and supervise the investigation and conduct of the SIC team to ensure no abuses or irregularities are being committed. If there is a matter on which the company or the company’s attorney disagrees, they can ask the officials to include that in the document registering the investigation.

      Last verified on Friday 3rd March 2017

    • Colombia

      No documents seized by the SIC in the scope of the investigation are returned, but this is only because the authority only requests the parties to hand over copies of the documents and not the originals. Nevertheless, even though the copies of the documents are never returned to the companies investigated, they are treated as confidential documents.

      Last verified on Friday 3rd March 2017

  • Leniency/Amnesty

    • Colombia

      In July 2015, a Decree that regulates the conditions for receiving total or partial immunity was issued. Note that if there are multiple companies being investigated by the authority for possible cartel practice, only the first company to cooperate would receive total immunity, and only if certain conditions are met (eg, acknowledgement of the conduct before the authority, the company was not the instigator or promoter of the conduct, its participation in the conduct had already ended, providing documents and information, etc). Only one company can receive full immunity. If several parties file the request together it will not be accepted.

      Whether a company receives total or partial immunity depends on the quality of the information that it provides to the SIC, its collaboration with the investigation, as well as the timing of the company’s collaboration, it has to be the first one to acknowledge the conduct and provide information and evidence.

      After the first request (that would receive up to full immunity) and if certain conditions are met, the second would receive a 70 per cent reduction, the third would receive a 50 per cent reduction and any after the third would receive up to a 30 per cent reduction.

      The requests to receive total or partial immunity have to be presented before the authority opens a formal investigation.

      There is no regulation in relation to civil liability in the case of leniency processes. Consequently, the liability for the parties remains unchanged, with the problem being that the party has accepted its participation in the cartel.

      Last verified on Friday 3rd March 2017

    • Colombia

      To be part of the leniency programme, the applicants must: (i) provide information, orally and/or written, including evidence related to the alleged infringement of competition law; (ii) cooperate with the practice of the require evidence; (iii) respond to the requirements from the SIC to clarify the facts; (iv) refrain from destroying, altering or concealing information or evidence relevant in connection with the alleged infringement of competition regulations; and (v) it is vital that the applicant must not be the instigator or promoter of the illegal conduct(s) and end its participation in the restrictive agreement.

      Last verified on Friday 3rd March 2017

    • Colombia

      Whether a company receives total or partial immunity depends on the quality of the information that it provides to the SIC, its collaboration with the investigation, as well as the timing of the company’s collaboration. 

      That being said, it is likely that when the first company to acknowledge illegal conduct and provide information and evidence to the antitrust authorities of such conduct it will have total immunity. After the first “applicant” for immunity (which would receive up to full immunity), the second one may have the right to receive up to a 70 per cent reduction, the third one may have a 50 per cent reduction granted, and any applicant after the third one would receive up to a 30 per cent reduction. Such reductions will be granted only if certain conditions are met, such as the consent on cooperation, the time of response and the information provided.

      It is necessary to clarify that the requests for immunity, whether it is total or partial, have to be presented before the authority opens a formal investigation.

      Last verified on Friday 3rd March 2017

    • Colombia

      When an applicant meets the conditions specified in the law, the SIC and the applicant set up a document that contains the date and time of receipt of the application and the period in which the applicant is obliged to provide evidence of the infringement.

      The date and time contained in the document will establish the order of priority of the respective application, with respect to other applications of the same alleged agreement against competition.

      If the applicant that comes first fails to provide evidence within the time limit specified in the document, the next applicant will have priority for the signing of the cooperation agreement indicated below. This rule applies every time an applicant fails to provide the evidence to the SIC within the time limit agreed.

      Upon receipt of the evidence provided by the applicant with priority, the SIC verifies whether it meets the conditions set forth in paragraph 2 of article 5 of Decree 2896 of 2010.

      If so, the SIC will enter into a collaboration agreement with the applicant. Otherwise, the SIC will examine the application for benefits made by the next person to see if it complies with what is requested.

      Last verified on Friday 3rd March 2017

    • Colombia

      The applicant must be the first in time to: (i) recognise the participation in the agreement or agreements restricting competition; (ii) provide information on all of the following aspects: objectives, main activities, operation, names of all participants, degree of participation, address, product(s) or service(s), geographic area affected and estimated duration of the alleged agreement restricting competition; (iii) provide, immediately or within the time agreed, evidence available on each and every one of the above-mentioned aspects; and (iv) satisfy the conditions described in question 22.

      Last verified on Friday 3rd March 2017

    • Colombia

      As previously mentioned, a series of cases (involving the diaper, tissue products and notebook markets) were recently decided under leniency programmes. In the diaper case, Kimberly executed a leniency agreement with the SIC under which it was exempt from paying a fine for approximately US$23 million. 

      Additionally, in the tissue product case Kimberly acted as first applicant to the leniency programme (exempted from paying the 100 per cent of a fine for an amount of approximately US$10 million), followed by Familia as second applicant (exempted from paying only 10 per cent of a fine for an amount of approximately US$20 million), and Cartones y Papeles de Risaralda as third applicant (exempted from paying the 30 per cent of a fine for an amount of approximately US$1.2 million). In this particular case, Familia did not receive the total of the programme’s benefits, as it will be furtherly explained in the answer to the question below.

      Finally, in the notebook case, Kimberly (exempted from paying a fine for an amount of approximately US$10 million) acted as first applicant and Scribe followed as second applicant to the referred programme with the SIC (exempted from paying a fine for an amount of approximately US$4 million), while Carvajal, which did not apply, was finally fined for an amount of approximately US$5.5 million.

      Last verified on Friday 3rd March 2017

    • Colombia

      No. All of the benefits granted under leniency programmes have been maintained by the SIC.

      However, in the tissue products market case referred above, the SIC did deny the benefits of a leniency programme to Familia as second applicant, having to pay 90 per cent of a fine for an amount of approximately US$20 million as the SIC considered Familia had failed to disclose sufficient information during the investigation. The 10 per cent exemption was granted for the company’s public apologies and its admittance of guilt to its price-fixing practices.

      Last verified on Friday 3rd March 2017

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