Cartels have been considered an antitrust offence since Law 159 of 1959 came into force; however, this regulation did not explicitly mention cartels but rather 'agreements with the purpose of, directly or indirectly, restricting the supply, distribution or consumption of raw materials, products, goods or services'. This legislation was updated in 1992 and anticompetitive agreements were legally defined. Subsequently, Law 1340 (the Competition Law) was enacted in 2009, increasing fines on companies and individuals who participate in the commission of anticompetitive conduct. The Competition Law also introduced a leniency programme, which allows members of a cartel to blow the whistle in exchange for benefits during the subsequent investigation.
The following agreements between competitors are considered anticompetitive per se when they have the purpose or effect of:
- directly or indirectly fixing prices;
- fixing discriminatory commercialisation conditions for third parties;
- allocating markets among producers or distributors;
- allocating production or supplying quotas;
- allocating or limiting the supply of production inputs;
- limiting technical developments;
- bundling sales mandatorily;
- refraining from producing goods or services, or affecting their production levels;
- bid rigging or effectively distributing the awards of contracts in competitions, or setting terms for requests for proposals (RFPs) for both public and private processes; and
- preventing third parties from accessing markets or marketing channels.6
Furthermore, Article 410a of the Colombian Criminal Code7 created a criminal offence of bid rigging in public institution RFP processes, with sanctions of six to 12 years' imprisonment, a fine of approximately US$52,000 to US$263,000, and disqualification from entering into contracts with state entities for eight years.
These provisions correspond to Article 101 of the Treaty on the Functioning of the European Union (TFEU), which also enumerates agreements that are prohibited because they restrict free competition; however, Colombian law regulates not only restrictive agreements but also unilateral conduct, as discussed in the next section.i Significant cases
Since 2016, the SIC has issued several major decisions against cartels in the toilet paper, baby nappies and sugar markets. The decisions involving toilet paper and baby nappy producers are significant, as the investigations were initiated through the leniency programme and marked the first instance in which fines were waived in exchange for collaboration during the investigation proceedings.
In the Toilet Paper case, in which the SIC found evidence of a price-fixing scheme, the agency levied fines totalling 185 billion Colombian pesos against four companies and 21 individuals, with fines of 260 billion pesos imposed on 12 sugar mills and 12 individuals found to have engaged in a scheme to allocate production quotas.ii Trends, developments and strategies
Since 1991, the SIC has evolved significantly. During its early years, it developed its doctrine on cartels through its initial investigations, using EU and US jurisprudence as its main points of reference. Until recently, both vertical and horizontal agreements were deemed to be illegal per se. However, recent decisions have clarified that vertical agreements should be judged using the rule-of-reason approach, to evaluate any efficiencies and benefits to consumers of such agreements.
The Competition Law provides for early termination of an investigation if the offender offers sufficient guarantees (structural or behavioural) to desist from harming its competitors or consumers.8 This alternative has proven to be very effective for the early termination of anticompetitive conduct investigations, and the SIC has developed specific provisions to be included in the guarantees to allow close follow-up scrutiny of the offender's conduct. However, the use of guarantees has been decreasing to the extent that they are now an exceptional mechanism.9 In recent cases, the SIC has stated that, as a matter of public policy, guarantees will only be admitted in cases involving unilateral conduct.
Under the powers granted to the SIC by the Competition Law, the SIC may also initiate investigations and impose sanctions on companies that do not follow its instructions, or that obstruct investigations by refusing inspections or not furnishing required information.iii Outlook
After using the leniency programme effectively to prosecute cartels, the SIC determined that it was necessary to refine the leniency rules, therefore, in July 2015, new rules were duly enacted. Although some issues limiting application of the leniency programme were addressed, others would require the amendment of Law 1340 (such as immunity from criminal prosecution when collaborating with the SIC).
Furthermore, a recent decision by the Andean Community Tribunal, imposing fines on companies that had been granted immunity in Colombia for conduct allegedly carried out in Colombia but with effects in Ecuador has again raised questions about the protection of whistle-blowers and the future effectiveness of the leniency programme itself.