Cartel Regulation

Venezuela

José Humberto Frías
D’Empaire

    Basics

  1. 1.

    Is your cartel enforcement regime criminal, civil, or administrative?

  2. The cartel enforcement regime in Venezuela is administrative, with the possibility of further appealing decisions of the authority before the administrative courts.

  3. 2.

    Please describe the relevant legislation and enforcement agency(ies).

  4. The relevant legislation is: (i) Antimonopoly Law, published in the Official Gazette No. 40,549 of 26 November 2014 (the Antimonopoly Law); (ii) Regulation No. 1 of Pro-Competition Law, published in Official Gazette No. 35,202 of 3 May 1993 (Regulation No. 1); (iii) Ruling No. SPPLC/036-95, published in Official Gazette No. 35,801 of 21 September 1995, containing the Block Exemption for Exclusive Distribution and Exclusive Purchasing Agreements; and (iv) Ruling No. SPPLC/038-99, published in Official Gazette No. 5,431 of 7 January 2000, containing the Guidelines for Assessing Franchise Agreements.

    The authority in charge of monitoring possible cartels is the Antimonopoly Superintendency (the Directorate), a body lead by a director appointed by the President of the Republic for a four-year term.

    The director is in charge of both investigating and resolving antitrust cases initiated of its own volition (ex officio) or at an interested party’s request. The tribunal is in charge of investigating cases and examining the evidence.

  5. 3.

    Describe the investigative powers of the enforcement agency(ies).

  6. Under article 31 of the Antimonopoly Law, all persons and companies, both private and state-owned, that carry out economic activities in Venezuela must provide all information and documents requested by the Directorate.

    Under article 34 of the Antimonopoly Law, the tribunal has broad investigative powers in prohibited practices proceeding (including cartels). These include the power to: (i) summon any person in relation to the facts under investigation; (ii) require any person (including both interested and third parties) to submit documents and information relating to the case; (iii) inspect books and documents relating to accounts; and (iv) summon anyone to provide information relating to the proceedings.

    In addition, under article 58 of the Organic Law on Administrative Proceedings, which supplements the procedure contained in the Antimonopoly Law, the tribunal may use the evidentiary means stipulated in the Venezuelan Civil Procedure Code and other procedural legislation. The tribunal has used this power to obtain evidence or order evidence to be obtained by the following means: (i) visual inspections of offices or premises of both interested and third parties; (ii) expert evidence or reports; and (iii) witness statements. This evidence is obtained directly by the tribunal without judicial assistance.

    However, the Directorate and the tribunal’s investigative and evidentiary powers must be exercised within the right to due process and to a fair defence. For example, interested parties must be allowed to review and contest the evidence, access the file and generally review all actions taken in the proceedings as regards the gathering of evidence.

  7. 4.

    Have there been any recent changes to the relevant legislation or are there any proposals for change to the law? If so, please describe.

  8. The new Antimonopoly Law, which replaced the Pro-Competition Law of 1992 was enacted by the President of Venezuela pursuant to an enabling law in 2014.

  9. 5.

    Does the law apply to corporations, individuals, or both?

  10. The law applies to both corporations and individuals.

  11. 6.

    May the law be enforced against cartel conduct that occurs outside the jurisdiction?

  12. The law only applies in Venezuela and may not be applied to cartels outside Venezuela.

  13. 7.

    Do your enforcement agencies cooperate with antitrust enforcement agencies in other countries? If so, what is the scope of and basis for that cooperation?

  14. It does not.

    Penalties for Cartel Conduct

  15. 8.

    What is the maximum penalty for a corporation found to have engaged in cartel conduct? Are there minimum penalties for corporations found to have engaged in cartel conduct? If so, please describe.

  16. Under article 49 of the Antimonopoly Law, the Directorate may order fines of up to 20 per cent of the infringing party’s gross sales as part of the final resolution of the case. There are no minimum penalties. The penalties imposed are administrative.

  17. 9.

    What penalties does your regime contemplate for individuals? Please describe maximum penalties and minimum penalties, if any.

  18. There is no distinction between the penalties applied to corporations or individuals. However, since the fines are calculated based on gross sales, it may be difficult to impose such fines to individuals. So far there has not been any case of a fine imposed upon an individual.

  19. 10.

    Does your regime provide for imprisonment of individuals for cartel conduct?

  20. The Antimonopoly Law does not establish criminal sanctions for prohibited practices. However, article 114 of the Venezuelan Constitution stipulates that the law must punish, among other offences, “cartelisation”. However, no criminal sanctions have been established so far. 

  21. 11.

    Describe the formal methodology for determining corporate fines.

  22. The fines are calculated by reference to the financial year immediately preceding that of the date of the ruling. In the event of repeat infringements, the Directorate may order fines of up to 40 per cent of the infringing party’s gross sales. In the case of corporate groups, the fine is based on the subsidiary’s sales, if applicable.

    The amount of the fine must be based on the seriousness of the breach, taking into account the following parameters: (i) the type and scope of the violation; (ii) the size of the affected market; (iii) the infringer’s market share; (iv) the effect of the restriction on other effective or potential competitors or users and consumers; (v) the duration of the restriction; and (vi) whether the conduct was repeated. In most cases, the Directorate has ordered fines of approximately 1 per cent of the infringing party’s sales.

  23. 12.

    How are fines determined in practice?

  24. Fines are determined by the Directorate after the proceedings. There is no negotiation with the parties for the determination of the amount of the fines.

  25. 13.

    Does your jurisdiction allow cartel sanctions to be appealed? If so, describe the process.

  26. The Directorate’s rulings may be appealed before the Administrative Courts within 45 calendar days following notification of the ruling being appealed.

    When filing the appeal, a person affected by a fine ordered by the Directorate may apply for suspension of enforcement. This must be accompanied by posting a bond for the amount specified by the Directorate in the decision (usually the amount of the fine). The affected person may also apply for suspension of the effects of orders issued by the Directorate.

    Rulings issued by the Administrative Courts may be challenged by appealing to the Political Administrative Chamber of the Supreme Court of Justice  within five days following the ruling or notification thereof.

  27. 14.

    Does your jurisdiction allow private litigants to sue for cartel violations? If so, under what circumstances? What are the parameters of private litigation in the cartel context?

  28. Under the Antimonopoly Law, proceedings in cases of cartels may be initiated by the authorities at the request of an interested party. This leads to the conduction of a preliminary investigation before the start of the procedure. These preliminary investigations are not subject to a maximum time limit and are not notified to interested parties. They usually involve the Directorate using its authority to request information from persons and firms carrying out economic activities.

    If elements identified during a preliminary investigation suggest that a cartel is taking place, the director may order the opening of proceedings of his or her own volition. The decision to start proceedings must be reasoned, clearly identifying the facts showing the alleged violation committed by the infringing party, as well as any specific prohibited practices whose commission is suspected.

    Interested parties – usually those affected by the conduct – may ask the director to open a file for prohibited practices, including cartelisation. If the request contains facts which prima facie suggest restrictive practices have been committed, the director must begin proceedings. If no such presumption arises from the request, however, the director may refuse to start proceedings, giving reasons for doing so. If there is a material defect in the request, the director must notify this to the interested party, who has 15 days to rectify the notification in accordance with article 50 of the Venezuelan Organic Law on Administrative Proceedings. 

    Once the director has ordered the initiation of proceedings, either of his own volition or at an interested party’s request, he must send the file to the tribunal, which will notify the alleged infringers of the proceedings (article 36 of the Antimonopoly Law). The notification must contain a copy of the decision to initiate proceedings.

    The 15-working day hearing period begins after notification. This may be extended for a further 15 working days to enable the tribunal and the interested parties (both the alleged infringer and the party who made the request, if applicable) to produce evidence.

    On expiry of the hearing period (or its extension) the tribunal must send the file to the director, who must issue a final ruling within 30 working days. This deadline may be extended for up to two more months. However, the Directorate will retain its authority to decide on the restrictive practices even after the end of the extension and up to the date of the ruling.

    According to the Directorate’s decision-making practice, evidence must be produced by the parties during the hearing period but may be examined either during that period or after it, in other words, during the ruling period. The Administrative Court has ruled in this regard that the hearing period does not restrict the Directorate’s investigative and evidence-gathering powers. These are exercised by the tribunal, which may order new evidence after the hearing period and up to two days before the final decision is given.

    This means that parties may produce evidence even on the last day of the hearing period, and the tribunal must decide whether to admit it even after the end of the hearing period. At the same time, interested parties are entitled to object to any evidence adduced by the other party or the tribunal itself, and to review the evidence during its examination.

    Interested parties are acknowledged the right to due process. In this context, interested parties are allowed access to the file throughout the proceedings and may present their arguments until two days before the final decision is given.

  29. 15.

    Which party holds the burden of proof in cartel matters regarding both liability (conduct) and damages issues?

  30. The burden of proof is held by the Directorate; additionally, a requesting interested party may produce evidence.

  31. 16.

    Please describe any recent examples of significant penalties imposed upon corporations or individuals that engaged in cartel activities.

  32. In the past two years there have been no cases involving cartelisation. However, the past two cases that dealt with the subject were the Air-lines case (Ruling No. 20-2008 of 3 November 2008), in which almost all airlines were sanctioned for cartelisation and ordered to pay fines and the Credit Cards case (Ruling No. 19-2010 of 29 December  2010), which determined that there was no cartelisation.

    Raids

  33. 17.

    In your jurisdiction, may competition authorities raid company headquarters? May they seize documents? Computers and other electronics?

  34. Under the Antimonopoly Law, the Directorate has broad investigative powers, which have been used in order to carry out raids in company head-quarters. During those raids the Directorate is entitled to access all the documents (both physical and electronic). The general practice of the Directorate has been to obtain copies of both physical and electronic documents, without taking the original ones.

  35. 18.

    Please outline the procedures for a “dawn raid”.

  36. Dawn raids are not specifically regulated under the Antimonopoly Law. The Directorate, when carrying out a raid, gives written notification to the company, usually a few days before the raid takes place; however, there have been cases where the notification of the raid has happened only a few hours before it takes place.

  37. 19.

    Please outline the company’s right of return for seized materials.

  38. Since the usual practice of the Directorate is to take copies of the documents, and not the original ones, there are no issues regarding the right of the companies to have the taken materials returned.

    Leniency/Amnesty

  39. 20.

    Does your jurisdiction allow leniency for cooperating corporations/individuals?

  40. No, there is no leniency under the Antimonopoly Law.

  41. 21.

    Describe your country’s leniency programme.

  42. Not applicable.

  43. 22.

    What types of cooperation are expected from a leniency applicant?

  44. Not applicable.

  45. 23.

    Does leniency apply only to the first cooperating entity, or can subsequent applicants in the same market also qualify for leniency or reduced sanctions?

  46. Not applicable.

  47. 24.

    What confidentiality assurances are given to leniency applicants?

  48. Not applicable.

  49. 25.

    Is there a “marker” system, and how is it used in the leniency application process?

  50. Not applicable.

  51. 26.

    What are the standards for receipt of a marker, and how do they differ from the standards that apply to the ultimate receipt of leniency?

  52. Not applicable.

  53. 27.

    Can the availability of leniency in a particular market be ascertained on a “no-names basis”?

  54. Not applicable.

  55. 28.

    Can a leniency marker be obtained by counsel on behalf of an unidentified client?

  56. Not applicable.

  57. 29.

    May presentations for leniency purposes be made to the government on an oral basis, or are written materials required to be submitted?

  58. Not applicable.

  59. 30.

    Please describe any noteworthy examples of leniency being granted in a cartel case in your jurisdiction.

  60. Not applicable.

  61. 31.

    Has the government ever attempted to revoke a grant of leniency in your jurisdiction? If so, describe the circumstances.

  62. Not applicable.

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Questions

    Basics

  1. 1.

    Is your cartel enforcement regime criminal, civil, or administrative?


  2. 2.

    Please describe the relevant legislation and enforcement agency(ies).


  3. 3.

    Describe the investigative powers of the enforcement agency(ies).


  4. 4.

    Have there been any recent changes to the relevant legislation or are there any proposals for change to the law? If so, please describe.


  5. 5.

    Does the law apply to corporations, individuals, or both?


  6. 6.

    May the law be enforced against cartel conduct that occurs outside the jurisdiction?


  7. 7.

    Do your enforcement agencies cooperate with antitrust enforcement agencies in other countries? If so, what is the scope of and basis for that cooperation?


  8. Penalties for Cartel Conduct

  9. 8.

    What is the maximum penalty for a corporation found to have engaged in cartel conduct? Are there minimum penalties for corporations found to have engaged in cartel conduct? If so, please describe.


  10. 9.

    What penalties does your regime contemplate for individuals? Please describe maximum penalties and minimum penalties, if any.


  11. 10.

    Does your regime provide for imprisonment of individuals for cartel conduct?


  12. 11.

    Describe the formal methodology for determining corporate fines.


  13. 12.

    How are fines determined in practice?


  14. 13.

    Does your jurisdiction allow cartel sanctions to be appealed? If so, describe the process.


  15. 14.

    Does your jurisdiction allow private litigants to sue for cartel violations? If so, under what circumstances? What are the parameters of private litigation in the cartel context?


  16. 15.

    Which party holds the burden of proof in cartel matters regarding both liability (conduct) and damages issues?


  17. 16.

    Please describe any recent examples of significant penalties imposed upon corporations or individuals that engaged in cartel activities.


  18. Raids

  19. 17.

    In your jurisdiction, may competition authorities raid company headquarters? May they seize documents? Computers and other electronics?


  20. 18.

    Please outline the procedures for a “dawn raid”.


  21. 19.

    Please outline the company’s right of return for seized materials.


  22. Leniency/Amnesty

  23. 20.

    Does your jurisdiction allow leniency for cooperating corporations/individuals?


  24. 21.

    Describe your country’s leniency programme.


  25. 22.

    What types of cooperation are expected from a leniency applicant?


  26. 23.

    Does leniency apply only to the first cooperating entity, or can subsequent applicants in the same market also qualify for leniency or reduced sanctions?


  27. 24.

    What confidentiality assurances are given to leniency applicants?


  28. 25.

    Is there a “marker” system, and how is it used in the leniency application process?


  29. 26.

    What are the standards for receipt of a marker, and how do they differ from the standards that apply to the ultimate receipt of leniency?


  30. 27.

    Can the availability of leniency in a particular market be ascertained on a “no-names basis”?


  31. 28.

    Can a leniency marker be obtained by counsel on behalf of an unidentified client?


  32. 29.

    May presentations for leniency purposes be made to the government on an oral basis, or are written materials required to be submitted?


  33. 30.

    Please describe any noteworthy examples of leniency being granted in a cartel case in your jurisdiction.


  34. 31.

    Has the government ever attempted to revoke a grant of leniency in your jurisdiction? If so, describe the circumstances.


Other chapters in Cartel Regulation

  • Colombia
    Gómez-Pinzón Zuleta (Bogotá)
  • Mexico
    Hogan Lovells BSTL (Mexico City)
  • Venezuela
    D'Empaire Reyna Abogados