Enforcement proceedings in dominance in Colombia

Enforcement proceedings

Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

The Colombian competition authority is the SIC. Internally, the SIC is divided into sections that specialise in issues such as competition law, unfair competition, consumer protection, industrial property and data protection. The main sections associated with competition law are the competition protection section, which manages antitrust practices and merger control and the jurisdictional affairs section, which manages unfair competition suits.

What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?

As for sanctions, pursuant to article 25 of Law 1340 of 2009, the SIC may impose sanctions on corporations of up to 100,000 monthly minimum legal wages or up to 150 per cent of the profit obtained from the prohibited behaviour, if this profit exceeds 100,000 minimum legal wages. Sanctions can be applied to each offender, and for each violation of the provisions on the protection of competition. In fact, in the Resolution 54303 of 2013, the SIC punished Claro for each of the violations of the provisions on the protection of competition.

To determine the sum of fines to be imposed on companies, the SIC considers the following factors (article 25 of Law 1340 of 2009): (i) the impact of the subject conduct on the relevant market; (ii) the size of the affected market; (iii)the benefits obtained by the offender through the subject conduct; (iv) the company’s degree of involvement (when not the infringing company); (v) the investigated party’s procedural behavior; (vi) the infringing company’s market share, as well as the portion of their assets and/or sales linked to the infringement; and (vii) the offender’s patrimony. For SIC, the following situations are considered aggravating in the imposition of fines: persistence of the abusive behavior; prior infractions of the antitrust laws; breach(es) of commitments or orders imposed by the SIC; and whether the subject company was a ring-leader. On the other hand, collaboration with the SIC is an important factor in reducing the amounts of fines.

The SIC can also impose penalties of up to 2,000 minimum monthly legal wages on natural persons who collaborate, facilitate, authorise, execute or tolerate behaviours that violate the antitrust rules under Law 155 of 1959, Decree 2153 of 1992 and any other regulatory instrument that should complement or modify it. To determine the value of these sanctions, the SIC will consider the following factors; (i) the persistence on the prohibited behavior; (ii) the behavior’s impact on the market; (iii) the reiteration of prohibited conduct; (iv) the person’s degree of involvement; and (v) the investigated party’s procedural behaviour.

The SIC’s power to impose sanctions for violation of antitrust regulation will expire five years after the proscribed behaviour was committed or ceased to occur. Under article 16 of Law 1340 of 2009, the SIC may, in lieu of penalties, accept commitments from the infringing parties. Investigated parties must offer the commitments before the expiration of the term to request or provide evidence to the SIC.

Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

The administrative action for an alleged violation to the antitrust regime may be initiated by a third-party complaint or ex officio by the authority. The SIC may initiate administrative action using information provided by the offenders. This last option was introduced by Law 1340 of 2009, which enables fine benefits to offenders who report and provide information about anticompetitive conduct in which they have participated.

Once the complaint is filed, the SIC conducts an admissibility examination and starts a preliminary investigation. The purpose of this phase is to verify the occurrence of the facts, collect evidence, identify the possible authors of the conduct and to determine a possible violation of the rules on protection of free competition. At this stage, the alleged offenders have not yet been identified and, therefore, there are no investigated parties or any type of debate between parties.

The formal investigation stage starts with the Investigation Opening Resolution. This administrative act contains the facts presented to the authority by a third-party complainant or the facts for which the process initiated ex officio, the allegedly infringed competition norms, the alleged offenders, evidence of each legal element constituting each illicit behaviour, date of occurrence of the events and the investigation period among others.

Once the investigation stage is completed, and evidence is examined, the Deputy for Protection of Competition presents a reasoned report to the Superintendent. The reasoned report contains a narrative of the behaviours for which the investigation was opened, an analysis of the relevant market and market power, a list of collected evidence and an examination of each one, an analysis of the investigated behaviours indicating whether there was an infraction and a recommendation on the decisions to be adopted by the Superintendent. At this point, the file is handed over to the office of the Superintendent of Industry and Commerce, and together with his or her advisory group he or she makes the final decision whether to sanction.

What is the recent enforcement record in your jurisdiction?

The most frequent sanctioned behaviour is the market access and commercialisation channel obstruction for competitors of article 50.6 of Decree 2153 of 992. Nonetheless, rules on abuse of dominance are not frequently enforced in Colombia. As a matter of fact, there are only eight sanctions for dominance abuse in the last 10 years. The average length of these 10 processes starting with the Opening Investigation Resolution and finishing with the sanction is approximately two-and-a-half years, the longest process took five years and the shortest only one year. The preliminary inquiry by the authority, before the formal investigation starts, usually takes an additional year.

The Empresa de Acueducto, Alcantarillado y Aseo de Bogotá - the EAB case, which was the only case sanctioned in 2018, involved the investigation for infringements to the general antitrust prohibition clause and articles 50.4 (sales on discriminatory conditions) and 50.6 (obstruction to market access) of Decree 2153 of 1992 in the water supply market in Bogota and 10 nearby municipalities. The SIC concluded that EAB supplied water to COJARDIN in different conditions than those offered to other buyers and obstructed COJARDIN’s activities for the commercialisation or provision of water as a public service by installing a flow reducing valve and two plates to supply water with lower flow and pressure. The authority concluded that the behaviour was ideal to eliminate COJARDIN from the public water service market and sanctioned the public entity.

Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

If a clause in a contract involves an infringement to free competition it is considered to have an illicit object according to article 46 of Decree 2153 of 1992, and thus, may be invalidated. Additionally, in arbitration, it is possible to argue that a clause that constitutes an abuse of dominance is not binding for the parties as it has an illicit object and, therefore, must be annulled (EPM v TGI, Cámara de Comercio de Bogotá, 2016,).

To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?

In Colombia, the SIC has exclusive jurisdiction over sanctions for violations of the antitrust laws. Nevertheless, it is possible to sue contractual clauses deemed as abusive for nullity and, if a person or firm is affected by anticompetitive behaviours it may take action for damages, both before the civil jurisdiction. Also, a group of people could file a collective action seeking compensation for damages. One group started a collective action against the companies investigated in Colombia’s diapers cartel, but later withdrew its claim.

Certain disputes regarding anticompetitive behaviour in contracts may be resolved through arbitration, provided that an arbitration clause was included in the subject contract. Lastly, there are special provisions for consumer protection in the financial sector, where pursuant to article 99 of Law 1328 of 2009 (the Financial Consumer Protection Act) financial institutions must implement self-regulation to identify restrictive practices (related to prices and fees) and promote fair trade.

Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?

Antitrust investigations on abuse of dominance by the SIC do not grant damages to harmed companies and exclusively impose fines to the offenders. Nonetheless, the authority may award damages via the unfair competition jurisdiction for norm infringements that cause illicit competitive advantages to agents in the market. The infringed norm may regard abuse of dominance regulation.

Also, as stated in the previous question, it is possible to take action or to file class actions for damages before the civil jurisdiction if affected by anticompetitive behaviours.

To what court may authority decisions finding an abuse be appealed?

Infringers may ask the SIC to review its decision, resorting to a reconsideration remedy but may not formally appeal the decision. Nonetheless, sanctioned firms may suit the SIC decision to before the contentious - administrative tribunals for procedural or substantial defects. In arbitration there is no possibility of appeal.