Cartel Regulation

Last verified on Thursday 9th November 2017

Colombia

Mauricio Jaramillo Campuzano and Biviana Helo Villegas
Gómez-Pinzón (Bogotá)

    Basics

  1. 1.

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

  2. Colombia’s cartel enforcement regime is civil and administrative. Nevertheless, when there is collusive bidding, breach of an antitrust and anti-competition practice regulation can be considered a criminal offence.

  3. 2.

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

  4. The Superintendency of Industry and Commerce (SIC) is the enforcement authority.

    Collusion and anticompetitive conducts are primary regulated by article 1 of Law 155 of 1959, which prohibits any agreement that directly or indirectly restricts production, supply, distribution, commercialisation or consumption of raw materials, goods or services.

    The most relevant legislation is developed in Law 1340 of 2009, which regulates the protection of competition. Such law includes (i) prohibition of any acts or agreements that may lead to competition restrictions such as cartels, (ii) unfair or unlawful competition, (iii) merger control dispositions to prevent market concentrations that may diminish competition or (iv) any other act or abuse that that may lead to cartel substantial lessening of competition.

    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 providing evidence and information regarding a cartel, can be fully or partly exonerated of the fines and penalties associated with such practice, depending on how trustful, accurate and useful is 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 damage caused.

    In connection to the sanctions for cartels, the SIC applies articles 25, 26 and 27 of Law 1340 of 2009, which relate to the amount of the fines applicable to cartels or any conducts that might harm the freedom of competition in a relevant market.

    Finally, as regards of criminal law, the Anti-Corruption Statute set in Law 1474 of 2011 modified the Criminal Code, introducing the prohibition for collusive practices  when a cartel activity involves public resources, a public entity or affects public procurement. In these cases the SIC can investigate the conducts and will issue an administrative decision, but is up to criminal prosecutors whether to conduct a criminal trial or not.

  5. 3.

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

  6. 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 for 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.

  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. No. The last relevant change on the cartel legislation were made by Decree 1523 of 2015, which regulates the Leniency Programme and by Law 1474 of 2011, which introduces criminal liabilities when the cartel activities involve public resources, a public entity or affects public procurement.

  9. 5.

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

  10. The law applies to both, except for criminal penalties as explained above, which apply only to individuals.

  11. 6.

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

  12. No. The jurisdiction of the SIC is limited to Colombia. However, it is entitled to investigate the effects in Colombia of conduct carried out in other countries, according to article 1 of Law 155 of 1959. 

  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. 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.   

    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. 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$27,000 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 and it is not predictable.

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

  17. 9.

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

  18. 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$630,000).

    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, 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 or she may be liable to imprisonment from six to 12 years and may be fined between 200 and 1,000 monthly statutory minimum wages (approximatley US$6 million to US$31,400 million) and a ban on to contracting 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.

  19. 10.

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

  20. Yes, it does, as mentioned above.

  21. 11.

    Describe the formal methodology for determining corporate fines.

  22. 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.

  23. 12.

    How are fines determined in practice?

  24. Fines are imposed by the authority taking into account the criteria described above. 

  25. 13.

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

  26. Corporations or individuals can appeal the decision by requesting the SIC 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.

  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. 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 their purpose is 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.

  29. 15.

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

  30. The SIC holds the burden of proof. Once the SIC determines that the conduct under scrutiny 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 the law (ie, 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.

  31. 16.

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

  32. Recently, the SIC has imposed several fines because of the breach of competition dispositions such as: fines for the telecommunications provider Claro for approximately US$146 million and to Movistar a fine for US$400 million, fines on sugar-cane companies for approximately US$100 million, to name but a few.

    Also, the SIC imposed a fine of US$460 million on several companies in the cement industry for price agreements and other actions contrary to free competition.

    In addition, there are numerous ongoing investigations that can result in the imposition of fines.

    Finally, it is important to mention that the SIC has already imposed significant fines on some companies in the toilet paper and diaper industries, but they were significantly reduced due to the Leniency Programme, and those cases were the first of their kind.

    Raids

  33. 17.

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

  34. 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.

  35. 18.

    Please outline the procedures for a “dawn raid”.

  36. 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.

  37. 19.

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

  38. 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.

    Leniency/Amnesty

  39. 20.

    Does your jurisdiction allow leniency for cooperating corporations/individuals?

  40. Yes. There are leniency programmes for both corporations and individuals, as mentioned above and explained below.

  41. 21.

    Describe your country’s leniency programme.

  42. On 5 August 2010, the first Decree that regulates the conditions to receive total or partial immunity was issued. This Decree has being modified by the current Decree 1523 of 2015.

    If there are multiple companies that are being investigated by the authority for a 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.

  43. 22.

    What types of cooperation are expected from a leniency applicant?

  44. 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.

  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. 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.

  47. 24.

    What confidentiality assurances are given to leniency applicants?

  48. The applicant has to negotiate the confidentiality of the information provided with the SIC. If such confidentiality is alleged and the SIC agrees, the fact as to whether there are applicants, their names and the order in which they applied for the benefits is reserved.

  49. 25.

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

  50. 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.

  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. 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.

  53. 27.

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

  54. No.

  55. 28.

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

  56. No, in Colombia in order to receive a marker or actual grant of leniency the name of the requesting entity is fundamental.

  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. Colombian law requires written materials. Nevertheless, the legal system is gently migrating towards admitting oral proceedings, so probably in a few years this will be possible.

  59. 30.

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

  60. There are no examples of leniency granted up to this date, nevertheless, as it was previously stated, there is currently a leniency investigation taking place.

  61. 31.

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

  62. No.

Interested in contributing to this Know-how?

E-mail our Co-Publishing Manager


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