Supreme Court Judgment
A recent Supreme Court decision declared Article 52 of the Pro-competition Law null and void. This article formed the basis on which the Pro-competition Superintendency fined companies for failing to respond to questionnaires, even where those companies were not under direct investigation by the administration.
Article 52 of the Pro-competition Law contemplates fines of up to Bs3 million for any violation of the law and its regulations, which themselves provide express penalties. The amount fined reflects the seriousness of the violation. The Pro-competition Superintendency is responsible for this determination.
If a party affected by a decision of the superintendency files a judicial appeal, Article 54 requires that a bond be posted to suspend the effects of the decision. The power of the superintendency to determine the amount of the bond is granted by Article 38(2).
In 1996 the Supreme Court of Justice was requested to declare Articles 52, 54 and Article 38(2) of the Pro-competition Law null and void, on the grounds of unconstitutionality. The petitioners alleged that Article 52 violated the constitutional principles of legality and right of defence, and the principle that there should be no penalty for an offence not expressly established in the law.
The petitioners claimed that Article 54 and Article 38(2) undermine the right to effective judicial protection, because they require the posting of a bond. This could, they claimed, be disproportionately calculated by the superintendency in order to dissuade the party from filing the appeal.
It was also alleged that this power violates the constitutional principle of the separation of powers. As the law makes the First Court of Contentious Administrative Matters competent to try these appeals, it should be the court, and not the superintendency, which establishes the amount of the bond required to suspend the effects of the decision.
In June 2002 the Supreme Court of Justice declared Article 52 null and void, because it authorizes the superintendency to act on factual assumptions of the illicit act, and further allows it discretion to decide on the amount of the fine.
The court stated that Article 54 and Article 38(2) neither violate the right to effective judicial protection, nor breach the constitutional principle of separation of powers. The fact that the law enables the superintendency to calculate the amount of the bond required actually facilitates obtaining the judicial protection sought. The court stated that the superintendency's calculation is merely a technical opinion, which can be changed by the Court of Appeals if it is deemed disproportionate or unreasonable. It added that there are other procedural mechanisms available to the affected parties to request the suspension of the effects of the decision.
The Supreme Court issued this ruling through its Constitutional Chamber, and analyzed points not argued by the petitioners. It noted that the protective measure contained in Article 54 could seriously impact on the market, consumers and economic agents affected by the acts of the party who violated the law. It therefore ordered the jurisdictional entity examining the superintendency's decisions to take into account, on a case-by-case basis, (i) the consequences of granting the suspension of effects, and (ii) the damage which the suspension could cause to general interests or to the interests of defined third parties.
As a result of this Supreme Court decision, the superintendency retains the right to request information from any economic entity, but will no longer be able to fine companies for not providing it.
The superintendency's public reply to the Supreme Court decision was that the judgment will not prejudice the investigative powers of the administration, because parties are still obliged to provide the required information. This comment refers to the application of Article 485 of the Criminal Code, which states: "Whoever disobeys an order legally issued by the competent authority shall be punished with detention from five to 30 days." The superintendency added that it may resort to Article 80(2) of the Organic Law on Administrative Procedures. This allows the administration to impose successive (and potentially incremental) fines of Bs10,000 on those who continue to breach an order.
For further information on this topic please contact Olga Nass de Massiani, Isabel Victoria Márquez or Vera De Brito de Gyarfas at Travieso Evans Arria Rengel & Paz by telephone (+58 212 277 3333) or by fax (+58 212 277 3334) or by email ([email protected] or [email protected] or [email protected]).