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Legislation, triggers and thresholds

Legislation and authority

What legislation applies to the control of mergers?

The relevant legislation is set out primarily in Law 1340 (July 24 2009), which establishes the general rules governing antitrust matters. This law provides general guidelines for merger control, covering aspects such as the procedure and the sanctioning regime. Law 1340 also empowers the Superintendence of Industry and Commerce (SIC) to act as the national antitrust authority. SIC Resolution 12193/2013 further develops antitrust clearance proceedings and establishes certain guidelines.

The following laws also deal with merger control directly or indirectly:

  • Law 155/59 – establishes certain antitrust norms (modified by Law 1340);
  • Decree 2153/92 – establishes the structure and functions of the SIC (modified by Decree 4886/11);
  • Article 333 of the Constitution – establishes the constitutional grounds for free competition;
  • Article 1 of Law 680/2001 – establishes a limit of 40% foreign investment in national television concessionaries;
  • Article 15 of Law 1122/2007 – establishes a maximum of 30% vertical integration between health management organisations and health services providers; and
  • Articles 55 to 71 of Decree 663/1993 – establishes the merger regime for financial entities under the control of the Superintendence of Finance.

What is the relevant authority?

Law 1340/2009 designates the SIC as the national antitrust authority. Accordingly, it has exclusive competence over administrative investigations, sanctioning proceedings and the review and antitrust clearance of mergers, acquisitions and all other types of business integration, regardless of their legal form.

The Civil Aviation Authority authorises all commercial operations between aircraft operators that involve codeshare contracts, joint operation, use of aircraft in chartering and aircraft space block and exchange agreements.

According to Article 9 of Law 1340, the Superintendence of Finance is the competent authority to authorise the merger of entities under its surveillance. 

Transactions caught and thresholds

Under what circumstances is a transaction caught by the legislation?

According to Article 9 of Law 1340, all companies engaged in the same economic activity or participating in the same value chain must notify the SIC of any transaction which they plan to carry out if either of the following circumstances occurs:

  • The companies, individually or jointly, had an operational turnover during the previous fiscal year which exceeds a threshold periodically established by the SIC. For 2017 the monetary threshold is set at 60,000 minimum legal monthly wages (around $15.5 million). This amount was established by SIC Resolution 90556 of December 29 2016.
  • During the fiscal year preceding the transaction, the parties had, individually or jointly, assets amounting to or exceeding the same amount established for the first standard. Accordingly, for 2017 the monetary threshold is set at 60,000 minimum legal monthly wages.

If any party to the transaction meets at least one of the above conditions, but would still hold less than 20% of the relevant market – even together with the other interested parties – the transaction will be considered as authorised. In this case, notification of the transaction to the SIC will suffice.

Transactions of companies belonging to the same business group are not subject to the merger control regime.

Do thresholds apply to determine when a transaction is caught by the legislation?

Yes, as set out above. 

Informed guidance

Is it possible to seek informal guidance from the authority on a possible merger from either a jurisdictional or a substantive perspective?

No, but the formal procedure does involve a preliminary evaluation. By means of Annex 1 of Resolution 12193, the SIC established a pre-evaluation guide comprising a checklist of the documents required to submit a pre-evaluation request, which is the first step of merger clearance. According to Article 2.2 of the same resolution, if companies require further assistance, they may request a hearing with the SIC in which it reviews all Annex 1 documents and provides guidance on the subsequent submission.

Foreign-to-foreign

Are foreign-to-foreign mergers caught by the regime? Is a ‘local impact’ test applicable under the legislation?

Yes, a local impact test is applicable in accordance with Article 2 of Law 1340. Accordingly, as explained in the Guide for Merger Analysis published by the SIC, foreign-to-foreign transactions may be subject to this regime if the participating foreign corporations:

  • are legally established in Colombia;
  • engage in economic activities by contract in the Colombian territory;
  • have property or real rights in Colombia; and/or
  • participate in Colombian companies and act on them within the legal prerequisites of control or a business group.

Joint ventures

What types of joint venture are caught by the legislation?

The legislation applies to all joint ventures that may culminate in merger and parties which coordinate their market conduct as if they were merged. Although there is no statutory provision establishing which joint ventures fall within the scope of Law 1340, according to case law – particularly Resolution 4851/2013 – joint ventures caught by the legislation are those constituting a genuine business integration, leaving aside joint ventures formed through collaboration agreements among competitors.

The SIC has established the following criteria to determine when cooperation among competitors constitutes business integration:

  • where the joint venture is meant to be permanent and might restrain competition;
  • where the joint venture involves the union of premises or assets that previously belonged to two separate agents and the union serves a unified purpose; and
  • where the joint venture culminates in a unified business.

Mergers that are not the result of a joint venture must still comply with general antitrust legislation which prohibits agreements that restrain competition or are intended to do so.

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