Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

Filings must be delivered before closing. The breach of this duty is regarded as a violation of Colombian Competition Law, which may result in investigations against the parties and the responsible individuals. 

Which parties are responsible for filing and are filing fees required?

All the undertakings taking part in the transaction are responsible for filing. Notwithstanding the latter, the filing could be made by any of the parties, as long as such party manages to submit all the required information before SIC.

Filing fees are required. Through Resolution No. 2103 of 2021, SIC established filing fees for all merger control procedures as described below:

  1. Fast-track (abbreviated notice): if the aggregated market share of the parties to the transaction is below 20 per cent in all of the overlapping markets, the rate is of 2.62 million Colombian pesos (approximately US$750);
  2. Phase 1: preliminary assessment: for the preliminary assessment the rate is of 14.2 million Colombian pesos (approximately US$4,060); and
  3. Phase 2: in-depth study:
    • if, during the fiscal year preceding the transaction, the parties had, individually or in the aggregate, operating incomes or total assets amounting to equal or over three times 60,000 Colombian minimum legal wages, equivalent to 163,534,680,000 Colombian pesos (approximately US$46.8 million for 2021) the rate is of 37,380,000 Colombian pesos (approximately US$10,680);
    • if, during the fiscal year preceding the transaction, the parties had, individually or in the aggregate operating incomes or total assets amounting to equal or over two times 60,000 Colombian minimum legal wages (approximately US$31.2 million for 2021) the rate is of 31.77 million Colombian pesos (approximately US$9,077); or
    • if during the fiscal year preceding the transaction, the parties had individually or in the aggregate operating incomes or total assets amounting to below two times 60,000 Colombian minimum legal wages, equivalent to 109,023,120,000 Colombian pesos (approximately US$31.2 million for 2021) the rate is of 26.16 million Colombian pesos (approximately US$7,474).

 

Rates must be paid before submitting the filing.

 

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

Colombia applies a suspensory system, so that clearance is required prior to closing. For notifications (ie, the parties have joint market shares below 20 per cent in all the relevant markets), the parties can close immediately after filing, but SIC has the power to order a prior approval proceeding within 10 business days from the date of filing, if it considers that the parties are not to properly support the fact that the transaction did not meet the market shares threshold. Therefore, it is advisable to wait until SIC acknowledges receipt of the notification.

In pre-approval procedures, parties to the transaction must wait until the decision is approved.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

Closing and performing integrated activities before clearance are violations of Colombian Competition Law to which the following sanctions apply:

  • fines against the parties: up to 100,000 monthly minimum legal wages (approximately US$25 million as at 2020), or 150 per cent of the revenue or profit obtained from the infraction, whichever is higher;
  • fines against individuals: up to 2,000 monthly minimum legal wages (approximately US$600,000 for 2020); or
  • reversion of the transaction: if it is determined that the transaction it produced an undue restriction on competition (there are no legal precedents).

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

In theory, penalties would be applicable to foreign-to-foreign mergers, but they are difficult to enforce in practice.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

In the context of a prior approval proceedings, parties can either file a formal carveout proposal to SIC to obtain its approval of the hold-separate mechanisms within five business days; informally notify SIC about the carveout remedies to be implemented, or apply private remedies without informing SIC, facing the risk of gun-jumping sanctions. For successful carveouts, the parties must guarantee that no transfer of control or exchange of sensitive information will occur on a lasting basis with respect to the business in Colombia.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

For public takeover bids, SIC can, on behalf of the interested party, request the target to submit the statutory information to carry out the merger control proceeding.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

The level of detail depends on many factors and should be evaluated case by case. In general terms, Resolution No. 10930 of 2015 subrogated by Resolution 2751 of 2021 establishes the minimum required information. For prior approvals, the filing must include detailed information regarding the proposed transaction, the parties, relevant markets, competitors, customers and distribution channels. For notifications, it is necessary to provide the financial statements of the parties to the transaction, a description of the transaction, market definition and market shares of the parties to the transaction and their competitors.

Providing incomplete information may delay SIC’s decision, as decision timings do not start until all information has been filed before SIC. Providing false or misleading information is subject to sanctions and could even face criminal prosecutions.

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

For notifications, SIC has 10 business days to issue an acknowledgement of receipt, or to order a prior approval if it does not agree with the methodology used by the parties to define relevant markets or to calculate their market shares.

Prior approval proceedings are organised through phases, during which the information and assessment burdens increase. During the initial stage or Phase I, SIC may bring forward a preliminary assessment of the transaction within 30 business days (Phase I). SIC can thereafter decide to perform an in-depth analysis of the transaction by requiring additional statutory information (Phase II), as a result of which it has three additional months to take a decision from the time Phase II information has been provided in full form. In exceptional circumstances, SIC can make a single request for supplementary information to the parties, extending the time it has to make a decision for an additional three-month period (for the ease of understanding we refer to this circumstance as a Phase III, even though it is still part of Phase II). If SIC does not issue a decision within three months from the date the parties submit all the required information for Phase II or Phase III, it is understood that the transaction has been authorised by Law.

What is the statutory timetable for clearance? Can it be speeded up?

While a decision can be issued at any time during a prior approval proceeding, the following is a timetable summarising each phase:

Phase I

  • Phase I information provided by the parties.
  • Public announcement: the filing goes public for third parties to comment or request a private interest to be recognised in the proceeding.
  • Preliminary assessment: 30 business days – duration defined by law and cannot be modified.

Phase II

  • Phase II information provided by the parties.
  • Comments by other regulatory authorities (when applicable).
  • In-depth study (remedies proposal).

Three months from the time all Phase II information request has been provided.

Phase III

  • Additional information request, which resets the three-month period once only.
  • Final decision.

(Three months)

Law stated date

Correct on

Give the date on which the information above is accurate.

15 May 2020