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Trends and climate
Have there been any recent changes to the cartel regime? If so, have they had a significant impact on enforcement activity?
Yes. The latest modification to the Colombian cartel regime was introduced by the Decree for Trade, Industry and Tourism (1074/2015). As well as regulating a broad range of issues, the decree developed the leniency programme contained in Article 14 of Law 1340/2009, which was further developed by Decree 1523/2015.
Decree 1523/2015 has had a significant impact on enforcement activity, as the companies and natural persons involved in cartels now have more incentives to blow the whistle on other members of the cartel, and even on other cartels.
Are there any proposals to reform or amend the existing cartel regime?
No. In August 2015 the Ministry of Trade filed Bill 38 before the Senate, introducing certain modifications to the competition regime, including a modification to the calculation of penalties in cases of restrictive trade practices. However, on April 7 2016 the minister withdrew the bill, apparently, for political reasons.
Have there been any recent key cases?
Yes. In Colombia, there have been several recent and publicly discussed cartel cases, such as the baby diapers case, in which three companies and 16 senior executives were fined more than $72 million. In addition, there have been cartel cases in, for example, the notebook, livestock and rice industries.
Which legislation applies to cartels and what are the relevant substantive provisions?
Cartels are regulated by the following national legislation:
- Article 333 of the Constitution – establishes the constitutional grounds of competition;
- Law 155/1959, which provides a general prohibition on conduct that could affect competition;
- Decree 2153/1992 – Article 47 provides a list of agreements that are considered to restrain competition unduly, while Article 48 provides a list of conducts deemed to be unlawfully restrictive;
- Law 1340/2009 – establishes the general regime for restrictive trade practices, particularly the general regime on merger control and restrictive trade practices;
- Decree 1074/2015 – Chapter 29 of the decree establishes the leniency programme for natural and legal persons that cooperate in the detection and dismantle of restrictive agreements;
- Decree 1523/2015 – develops Article 14 of Law 1340/2009 and modifies Decree 1074/2015;
- Decree 663/1993 – Article 98.2 establishes that the Superintendence of Finance can order the suspension of restrictive trade practices and impose penalties on companies under its surveillance;
- Decree 410/1971 – according to Article 1866, the Civil Aviation Authority has the faculty to review and approve all types of transaction carried out by aircraft operators that may result in restrictive trade practices; and
- Resolution 2058/2009 – establishes that the Telecommunications Regulation Commission may create regulations ex ante in order to protect competition.
Which bodies are the relevant regulatory and prosecutory authorities and what are their specific roles?
The principal regulatory entity in Colombia is Congress. According to the constitutional mandate, Congress is the only state organ that can enact laws. However, the president, ministries and the Superintendence of Industry and Commerce (SIC) may also issue regulations through decrees and resolutions. In addition, the Civil Aviation Authority, the Superintendence of Finance and the Telecommunications Regulation Commission may issue regulations on their specific scope of competence, such as regulations on mergers in their sector.
The prosecution authority in Colombia is the SIC. Law 1340/2009 delegated the SIC as the national antitrust authority; therefore, the SIC has exclusive competence regarding administrative investigations, penalty proceedings and the review and antitrust clearance of all types of transaction. However, the Superintendence of Finance has administrative powers to investigate and impose penalties on companies under its surveillance.
The General Attorney’s Office may prosecute cartels as a crime if they are formed to deal with the assignment of public contracts or to the detriment of public funds.
Are there any sectoral regulators with concurrent powers?
Yes. The Superintendence of Finance has administrative powers to investigate and impose penalties on companies in the banking and insurance sectors. In addition, the Civil Aviation Authority has powers to review and authorise all types of transaction that may result in restrictive trade practices.
Does the legislation apply to both formal agreements and informal practices?
Yes. Competition legislation sets out a broad concept of agreements and practices; it encompasses expressed, implied and formal settlements, including deliberately parallel conducts. Decree 2153/1992 applies to all types of agreement that have the purpose or effect of limiting ‘free competition’, as defined in Article 45 of Decree 2153/1992. There is a per se treatment for formal agreements and informal agreements.
Does the legislation apply to individuals, companies or both?
The legislation applies to both companies and individuals, and prohibits companies from paying an individual’s fines.
Does the legislation subject companies to civil liability, criminal liability or both?
In Colombia, legal entities are not subject to criminal liability; however, their legal representatives and officers may be liable for the company’s violations if they consented to, facilitated or tolerated such infringements. According to Article 410-A of the Criminal Code, criminal liability for restrictive trade practices occurs when the cartel agreement is made as part of public procurement procedures.
The SIC is the authority in charge of investigating and prosecuting cartels only within the scope of civil liability. Competence for criminal investigation and prosecution is vested exclusively with the General Attorney’s Office.
Does the legislation subject individuals to civil liability, criminal liability or both?
Both. When an individual is found to be responsible for trade restrictive practices or agreements, he or she may:
- face an administrative penalty;
- be found liable in a civil court; and
- be convicted criminally.
Where cartel conduct is punishable by both civil and criminal penalties, can the enforcement authority pursue both types of penalty? How does the authority decide which penalties to seek?
No. In Colombia, each type of liability is pursued by different authorities and through different proceedings. The SIC is the only authority with powers to investigate, prosecute and impose civil penalties for restrictive trade practices in the administrative area. On the other hand, the Attorney General’s Office is the only authority with powers to accuse and prosecute criminal conduct before a criminal court. Accordingly, the Attorney General’s Office may initiate an investigation, accusation and prosecution either ex officio or following a notice filed by any person. For the Attorney General’s Office to start an investigation and prosecute a case, the allegedly illegal conduct must meet the requirements of Article 410A of the Criminal Code. Finally, any individual that has been affected by the conduct may sue the responsible parties for damages before a civil court.
Are there any sector-specific offences or exemptions?
Yes. Article 1 of Law 155/1959 provides that the government may authorise agreements that restrain competition, provided that they seek to protect the stability of a basic economic sector. Further, Article 1 of Decree 1302/1964 complemented Article 1 of Law 155/1959 by adding that the basic sectors for the production of goods and services are the following economic activities:
- the production or distribution of goods and services destined to satisfy the needs of feeding, dress, health and housing;
- the production and distribution of gas; and
- services such as banking services, education, transport, electricity, water, telecoms and insurance.
However, to date the agricultural sector has been considered the sole basic sector by means of Article 5 of Law 1340/2009.
To what extent, if any, does the legislation apply to extraterritorial conduct?
The Colombian competition regime has no cross-border effect, and therefore conduct outside Colombian territory is outside the scope of the Colombian authorities. However, the countries that make up the Andean Community (Bolivia, Ecuador, Colombia and Peru) must comply with the regional regulations contained in Decision 608/2005. Therefore, conduct performed within two or more of these countries falls with this regulation.
Initiating an investigation
Who can initiate an investigation of potential cartel conduct?
According to Article 11 of Decree 2153/1992, the Superintendence of Industry and Commerce (SIC) may initiate an investigation either ex officio or as a result of a formal complaint from any party. A criminal investigation may also be initiated ex officio by the Attorney’s General Office following a complaint filed by any party or if the SIC, in the course of a civil investigation, passes the case to the Attorney’s General Office.
If an investigation is initiated by complainants or third parties, what rights (if any) do they have?
If an investigation is initiated by a complainant, once the complainant is recognised as an interested third party it may submit consideration or evidence to the process. The complainant may also submit a reconsideration request against an SIC decision that closes an investigation without penalty. Recognised, interested third parties may even file an annulment action before the courts for the purpose of overturning the final decision. Now, according to Article 19 of Law 1340/2009, in order to be recognised as an interested third party, a direct and individual interest must be demonstrated.
What obligations does a company have on learning that an investigation has commenced?
The SIC must notify a company that an investigation has been opened under Article 23 of Law 1340/2009. A company has no obligations.
What obligations does a company have if it believes that an investigation is likely?
If an investigation is likely, there are no formal obligations. If a company detects a violation, it must file a criminal or administrative complaint against the individuals involved. If the company is involved, it is recommended that it explore the options available under the leniency programme.
What are the potential consequences of failing to act or delaying action?
The consequences of failing to act or delaying action are severe. According to Article 25 of Law 1340/2009, the penalty for infringing any requirement for the protection of competition, including failing to comply with an information request or any other order given by the SIC, is up to 100,000 times the minimum monthly wage (approximately $22 million).
A company that is being investigated should contribute to the investigation properly, in particular in delivering all the evidence required by the SIC.
Formal stages of investigation
What are the formal stages of and approximate timeframe for investigations?
According to Article 52 of Decree 2153/1992, the SIC’s procedure for punishing restrictive trade practices has three stages:
- Preliminary inquiry phase – the authority receives information from third parties or carries out its own inquiries in order to verify whether there is merit in initiating a formal investigation.
- Instruction phase – the authority concludes that it should open a formal investigation. At this stage, the SIC notifies the parties under investigation so that they can submit and request evidence and file arguments in their defence. This stage ends with a report presented to the head of the SIC recommending a penalty or closure of the files.
- Resolution phase – the last phase begins with delivery of the report to the parties so that they can file their closing arguments, and ends with the SIC’s final decision.
The timeframe for investigations depends on the complexity of the case. The whole procedure usually takes between three and five years.
What investigative powers do the authorities have?
The SIC has discretionary power to practise all types of evidence gathering allowed by law, including:
- documental evidence gathering;
- dawn raids; and
- other practices that can clarify the conduct subject to the investigation.
What is the geographic reach of public enforcement actions?
They cover the whole Colombian territory.
When is court approval required to invoke these powers?
The SIC need not obtain court approval to exercise its powers. According to Article 1 of Decree 4886/2011, the SIC has broad administrative investigative powers and can even carry out business searches and interrogations.
Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?
Yes, searches of business and personal premises are authorised. The SIC has officers expressly commissioned for these duties.
What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?
As stated above, the consequences for failing to cooperate are severe. According to Article 25 of Law 1340/2009, the penalty for infringing any requirement for the protection of competition, including failing to comply with an information request or any other order given by the SIC, is up to 100,000 times the minimum monthly wage (approximately $22 million).
It is advisable for a company and its employees to contribute trustfully to the investigation.
A company that is being investigated and its employees should contribute to the investigation properly.
Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?
Yes. The Colombian Political Constitution establishes that professional secrecy, which encompasses attorney-client privilege, is an inviolable right. Accordingly, attorney-client privilege, including in-house counselling, should always be inviolable – there is still discussion as to whether an in-house counsel should be treated as a standard employee. However, in practice, the SIC usually copies the company’s server, which includes personal documents unrelated to the business and documents protected by attorney-client privilege.
Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?
Yes. All personal information and documents protected by attorney-client privilege should not be subject to search and seizure by the authority; however, this is now common practice.
What is the process for objecting to an authority’s exercise of its claimed powers?
During a business search or the exercise of any of the SIC’s other powers, it is better to cooperate with the SIC. However, after the search, a Tutela action can be filed before a judge, which is an expedited process to protect the constitutional rights and liberties of individuals (eg, privacy). The Tutela action must be resolved within 10 working days.
In addition, during the procedures it is advisable to dispute the admissibility of the documents obtained through a violation of due process. Further, even if the outcome of the administrative procedure is an unfavourable decision due to the use of evidence obtained through a violation of due process, it is possible to seek the nullity of the decision by means of an annulment action before the administrative courts.
Publicity and confidentiality
What information about investigations will be made publicly available and at which stage(s) of the process?
During the first stage of the procedure (preliminary inquiries) the dossier is reserved and none of the investigated parties are yet linked to the procedure, since at that stage there is no formal investigation. Once a formal investigation has been opened, which occurs during the second stage of the procedure, the investigated parties are notified and the dossier is then open to public access.
Is any information automatically confidential and is confidentiality available on request?
No information is automatically treated as confidential. Nonetheless, according to Article 15 of Law 1340/2009, the investigated parties can request that any document which the law states is of reserved nature be kept confidential. For this purpose, the investigated party requesting confidentiality must present an abstract of the information contained in the document which it seeks to reserve. The SIC will then file the abstract in the public dossier and will open a reserved dossier in which the confidential documents are preserved.
Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?
Yes. Colombia is part of several bilateral free trade agreements and other international agreements involving a commitment to international cooperation in regard to antitrust and restrictive trade practices. In particular, according to Article 15 of Andean Community Decision 608, the SIC must participate in investigations carried out by the general secretary of the Andean Community.
Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?
No. This is not applicable in Colombia.
How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?
A cartel investigation may be resolved in various ways. If the investigation ends with inadequate findings to impose penalties, the SIC will close the process without penalties. In addition, once the SIC has informed an investigated party of an investigation, the party may offer warranties to cease or modify its conduct. In such case the SIC will terminate the investigation without imposing any penalties and without defining the conduct as infringing or non-infringing. In addition, the SIC will establish a way to confirm compliance with the commitment. Finally, at the end of the investigation penalties may be imposed of up to 100,000 times the minimum monthly wage (approximately $22 million) for legal persons and 2,000 times the minimum monthly wage (approximately $440,000) for natural persons.
In regard to settlements, plea bargains and other negotiated resolutions, Colombian law establishes two ways to negotiate with the SIC:
- the offer of commitment with no penalties; or
- the leniency regime, which consists of accepting participation in a restrictive trade agreement and cooperating with the SIC. In contrast to the first option, this option involves defining conduct as infringing and imposing reduced penalties.
Finally, when the SIC opens a formal investigation, it has usually already assumed that a cartel was very likely formed, and therefore penalties are probable.
What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?
The investigated parties may offer commitments within 20 working days of notification of the formal investigation. The acceptance of the commitments and warranties is at the SIC’s discretion.
In regard to plea bargains, the infringer may apply to the leniency programme at any point until 20 working days after notification of the formal investigation. The application may be submitted by email, letter or oral report.
Within five days of submission of the application, the SIC will inform the applicant whether the application complies with the requirements established in Article 18.104.22.168.2.3 (accepting participation in the cartel, providing useful information, complying with the SIC’s orders and concluding the restrictive agreement) and will issue certification of the applicant’s position in the order of benefits. The benefit for the first applicant is full exoneration, while for the second and further applicants the benefit is partial exoneration.
If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?
There is no special procedure for adjudicating a charge of cartel conduct when no settlement is reached. The regulation provides only that the applicant may withdraw the application for the leniency programme at any time.
Which party must prove its case? What is the relevant standard of proof?
The SIC must prove its case as there is a presumption of good faith in favour of the accused. In regard to the standard of proof, the case must be proved to the civil standard of proof (the balance of probabilities).
Is there a hearing? If so, what is the process for submitting evidence and testimony?
Yes. Witness hearings are common and a final hearing before the investigating officer and the head of the SIC Antitrust Office is mandatory. However, if no witnesses are called there may be no hearings during the evidence gathering stage.
What are the accused’s procedural rights?
Due process, which entails the right of proper defence, confers on the accused the right to request and submit evidence and arguments. In addition, the statute of limitations is five years following the conduct.
What is the appeal process?
There is no administrative appeal, although it is possible to file a request to reconsider the decision with the head of the Superintendence of Industry and Commerce, which issues the initial decision. Judicial review of a final decision is available.
To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?
The whole decision is subject to review.
Penalties for companies
What are the potential penalties for companies involved in a cartel?
For a legal entity, the penalty is a fine of up to 100,000 times the minimum monthly wage (approximately $22 million) or 150% of the benefit resulting from the infringement.
Are there guidelines in place for penalties? If not, how are penalties normally calculated?
Yes, the guidelines are established in Article 25 of Law 1340/2009, which state that the entity should calculate the penalty considering:
- the impact of the conduct in the market;
- the size of the affected market;
- the benefit obtained from the conduct;
- the infringer’s level of participation;
- the accused’s procedural behaviour;
- the company’s market share in the affected market; and
- the infringer´s assets.
Do the authorities take into account any penalties imposed in other jurisdictions?
How can a company mitigate its exposure to fines?
A company can mitigate its exposure to fines by cooperating with the investigation.
Penalties for individuals
What are the potential penalties for individuals involved in a cartel?
For individuals the penalties are fine may be up to 2,000 times the minimum monthly wage (approximately $440,000).
Do the authorities take into account any penalties imposed in other jurisdictions?
Is a company permitted to pay a penalty imposed on its employee?
No. In accordance with Article 26 of Law 1340/2009, companies are prohibited from paying penalties imposed on their employees or personnel, directly or indirectly.
Is a company permitted to continue to employ an employee involved in cartel conduct?
Yes – no statutory provision prohibits that practice.
Private damages actions
Can private actions for damages be brought in your jurisdiction? If so, who may assert such actions?
Yes – civil claims may be filed before the civil courts. There is no special regime for this; the party with a legitimate interest is the party which suffered the alleged damage.
What relief may be awarded to successful claimants (eg, damages, costs, injunctive relief or attorneys’ fees)?
Damages, costs and attorneys’ fees may be awarded to successful claimants.
How are the amounts of any damages, costs or attorneys’ fees calculated?
Attorneys’ fees are calculated based on whether the process has one or two instances and the amount claimed. On average, the first-instance fees are calculated as between 4% and 10% of the amount sought in damages. For the second instance, the fee is between one and six times the minimum monthly wage. The procedural costs are calculated based on Articles 365 and 366 of Law 1564/2012.
No maximum amount is set for damages; rather, their calculation depends on the evidence submitted.
Have there been any notable recent cases in which a private action was the subject of adjudication?
Various class actions have been filed by consumers or groups of consumers pending final decisions.
Can class actions be brought in your jurisdiction? If so, what is the procedure for such cases?
Yes. The procedure for such cases is as follows:
- A complaint is filed.
- The complaint is served on the defendant within 10 working days of the complaint being filed.
- The defendant has 10 working days from service of the complaint to reply.
- Within the next five working days, any member of the group of complainants may request to be excluded from the procedure.
- Within the next five working days, the judge will schedule a hearing to take place within 10 working days. This hearing is intended to give the parties a chance to settle.
- Once the hearing is over, the judge will order that the requested evidence be examined. This evidence must be gathered and examined within the following 20 working days.
- Once the evidence gathering and examination is complete, the judge will give the parties five working days to file their final statements.
- After the final statements are filed, the judge will decide the case within 20 working days.
Immunity and leniency
Immunity and leniency programmes
Is an immunity and leniency programme available for companies? If so, how does it operate?
Yes. The leniency programme is regulated in Article 14 of Law 1340/2009, which was further developed by Decree 1523/2015. This programme operates on a first-come, first-served basis – that is, the benefits that a company can obtain depend on when it came forward to inform on the cartel.
Can the enforcement authority decline or withdraw leniency? If so, on what basis?
Yes. The authority can decline leniency when the applicant does not comply with the requirements of Article 22.214.171.124.2.6 of Decree 1523/2015. The authority can also withdraw leniency if the informer commits any conduct set out in Article 126.96.36.199.3.1 of the decree.
Are there benefits for cooperators that do not qualify for immunity? If so, how are these benefits determined?
Yes. The first applicant receives immunity; the second receives a reduction of between 30% and 50% of the fine; and the others may receive a discount of up to 25% of the fine.
What benefits (if any) are available for employees and former employees of a company that seeks leniency?
According to Article 188.8.131.52.3.2 of Decree 1523/2015, the benefits granted to a company applying for leniency are automatically extended to its employees and former employees.
Is an immunity or leniency programme specifically available for individuals? If so, how does it operate?
Yes. The same leniency programme is available to individuals. However, if an employee applies to the programme individually, the benefits will not extend to the company.
Have there been any notable recent cases in which a leniency application was the subject of adjudication
Yes – there are applications to the leniency programme in most cartel cases.
Is immunity from criminal prosecution available? If so, how and under what conditions is immunity granted?
There is no total immunity from criminal prosecution, but there are some benefits, including:
- the prison sentence will be reduced by two-thirds;
- the fine imposed by the criminal judge will be reduced by 40%; and
- the prohibition on contracting with the state will be reduced from eight years to five years.
What is the procedure for a leniency application?
The infringer may apply to the leniency programme within 20 working days of notification of the formal investigation. The application may be submitted by email, letter or oral report.
Within five days of submission of the application, the Superintendence of Industry and Commerce (SIC) will inform the applicant whether the application complies with the requirements established in Article 184.108.40.206.2.3 (accepting participation in the cartel, providing useful information, complying with the SIC’s orders and concluding the restrictive agreement) and will issue certification of the applicant’s position in the order of benefits. The benefit for the first applicant is full exoneration, while for the second and further applicants the benefit is partial exoneration.
What is the typical timeframe for consideration of a leniency application?
The SIC must inform the applicant within five days of the application whether the application complies with the requirements. If the SIC fails to inform the applicant within this term, the application is automatically assumed to comply with the requirements.
What information and evidence is required?
To apply for the leniency programme, the following information is required:
- an assertion that the applicant has participated in the anti-competitive agreement; and
- brief information regarding:
- the agreement;
- the way it works;
- the product involved; and
- the parties thereto.
What information and evidence is disclosed to subjects of the investigation other than the leniency applicant?
No information is automatically treated as confidential. Nonetheless, according to Article 220.127.116.11.4.3 the confidentiality of the application for the leniency is governed under Article 15(2) of Law 1340/2009, which provides that on request, the SIC may order the confidentiality of an application if there is a risk that the applicant will suffer commercial retaliations.
What level of cooperation is required from applicants?
Article 18.104.22.168.2.6 of Decree 1523/2015 sets out the activities that the applicant must perform in order to sign a leniency benefits agreement. These activities imply a high level of cooperation. For example, the applicant must provide complete information about:
- the anti-competitive agreement;
- the main activities;
- the identity of the participating parties;
- the level of participation of each party to the agreement; and
- the geographical affected area.
What confidentiality protection is offered to applicants?
The confidentiality offered to applicants is set out in Article 15(2) of Law 1340/2009.
Can the company apply for a marker? If so, under which conditions?
No. The company will be considered for benefits only once its leniency application has been found to comply with the requirements set out in Article 22.214.171.124.2.2 of Decree 1523/2015.