An extract from The Public Competition Enforcement Review, 12th Edition
Antitrust: restrictive agreements and dominance
Colombian law not only regulates restrictive agreements, as mentioned in Section II, it also regulates the following unilateral conducts deemed contrary to free competition per se, even in the absence of dominance: violating advertising rules contained in the Consumer Protection Statute; influencing a company to raise the prices of its products or services, or to desist from their intention to reduce prices; and refusing to sell or provide services to a company or discriminating against it when it may be understood as retaliation for their pricing policy.
The Constitution upholds free competition on principle, and mandates the government to prevent the abuse of market power in the Colombian market. Based on this principle, the law defines the following as abusive conduct, per se, if the offender has market power:
- the reduction of prices below costs to eliminate competitors or prevent their entry or expansion;
- the application of discriminatory conditions to equivalent transactions, which put a consumer or supplier at a disadvantage compared with another consumer or provider under similar conditions;
- conduct with the purpose or effect of subordinating the supply of a product to bundled sales;
- the sale to a consumer under conditions different from those offered to another consumer when it is intended to reduce or eliminate competition in the market;
- selling or servicing in any part of the country at a price different from that in another part of the country, when the purpose or effect of said practice is to reduce or eliminate competition in that part of the country (in this case, it will be considered abusive conduct only when the prices do not correspond to the cost structure of the transaction); and
- obstructing or preventing third-party access to markets or marketing channels.
The above list correlates with Articles 101 and 102 TFEU. The scope of the limitations is very similar, as dominance is not prohibited by the competition laws in Colombia.i Significant cases
In 2013, SIC sanctioned Empresa de Energía de Boyacá (EBSA) in Resolution 3694 of 2013, confirmed by Resolution 12,237 of 2013. EBSA is an energy distribution and commercialisation public utilities company with private and public capital. SIC found that EBSA had market power in the commercialisation of energy services in several municipalities of Boyacá and Santander (99.9 per cent of the market share), but that it did not have such a dominant position in the calibration of energy meters market. EBSA abused its dominant position in the commercialisation of the energy services market by subordinating the supply of its services to the acceptance of additional obligations independent of its business object, such as charging for the homologation of energy meters sold by third parties. This charge had two effects:
- to exclude or reduce the market of third-party competing calibrating laboratories, since the energy meters calibrated by such laboratories would cost more than the ones calibrated directly by EBSA; and
- to exploit the market, since a higher price would have to be paid either by the third-party competitor energy meter sellers or by their users. SIC fined EBSA with the highest monetary sanction at the time (4.7 billion Colombian pesos), and its legal representative with a fine of approximately 47 million Colombian pesos.
In 2014, SIC fined the operator of the San Andres International Airport for charging gasoline providers unfair prices for access to the aeroplane platforms, due to an unreasonable increase in the tarmac access fee. This is the first time that unfair pricing has being prosecuted as a unilateral conduct. The fine was assessed at 6 billion Colombian pesos.
In 2015, SIC found that two rice mills that were part of the same business group had engaged in resale price maintenance practices by threatening to cut distributors whose prices violated the mills' policies. The fines imposed exceeded 32 billion Colombian pesos.
In 2018, SIC launched an investigation against several companies for practices relating to their invoicing policies, which limited the ability of negotiating invoices in secondary markets. Most investigations were terminated when SIC accepted the guarantees offered by the companies under investigation to ensure that invoices would be freely negotiable.ii Trends, developments and strategies
SIC has considerably increased investigations, sanctions and fines of restrictive acts and abuse of dominance, as well as reducing the time frame of the investigations and decisions. It is also important to highlight that SIC does not have a general and objective rule to determine market power (i.e., there are no specific percentages for participation in the market to determine the existence of a dominant position) and market share is not considered to be the sole criterion of dominance. In addition, SIC is of the opinion that if abusive conduct is evident, there is no need for a thorough economic examination to assess whether said conduct produced any anticompetitive effects in the market or to its competitors.iii Outlook
It is likely that the recent enforcement trend will remain unchanged, meaning an increase in the number of investigations, and higher sanctions due to the enforcement of the sanctions under the Competition Act are expected. SIC has announced that it plans to actively prosecute false advertisements, which implies a violation of the advertising rules of the Consumer Statute can, therefore, also be prosecuted as a unilateral anticompetitive act if it significantly affects the market.