An extract from The Public Competition Enforcement Review, 12th Edition

Cartels

Cartels have been considered an antitrust offence since Law 159 of 1959 came into force; however, this regulation did not explicitly mention cartels, but 'agreements with the purpose of, directly or indirectly, restricting the supply, distribution or consumption of raw materials, products, goods or services'. This regulation was modernised in 1992, when anticompetitive agreements were legally defined. Finally, in 2009, Law 1,340 was enacted (the Competition Law), stating that SIC is the only competition enforcement authority in Colombia (with the exceptions mentioned above), increasing fines on entities and the directors that participate in the conduct, and introducing a leniency programme that allows members of a cartel to blow the whistle in exchange for benefits during the investigation.

The following agreements between competitors are considered anticompetitive per se, when they have the purpose or effect of:

  1. directly or indirectly fixing prices;
  2. fixing discriminatory conditions in commercialisation against third parties;
  3. market allocation among producers or distributors;
  4. allocating production or supplying quotas;
  5. allocating or limiting the supply of production inputs;
  6. limiting technical developments;
  7. mandatory bundling sales;
  8. refraining from producing a good or service, or affecting its production levels;
  9. bid-rigging or having the effect of distributing contract awards of competitions, or setting terms of the request for proposals (RFP) for both public and private processes; and
  10. preventing third parties from accessing markets or marketing channels.

Furthermore, Article 410a of the Colombian Criminal Code 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$65,000 to US$330,000 and disqualification from entering into contracts with state entities for eight years.

These provisions correlate with Article 101 of the Treaty on the Functioning of the European Union (TFEU), as it also enumerates the prohibited agreements that are considered in violation of free competition; however, Colombian law not only regulates restrictive agreements, it also regulates unilateral conducts as discussed in the next section.

i Significant cases

Since 2016, SIC has issued several major decisions against cartels in the toilet paper, baby nappies and sugar markets. The decisions involving toilet paper and baby nappies producers are significant, as the investigations began through the leniency programme and mark the first time fines have been waived due to the collaboration received during the investigation proceedings.

In the Toilet Paper case, in which SIC found evidence of a price-fixing scheme, the agency levied fines against four companies and 21 individuals for a total of 185 billion Colombian pesos, while the fines against 12 sugar mills and 12 individuals that were found to have engaged in a scheme to allocate production quotas reached 260 billion Colombian pesos.

ii Trends, developments and strategies

Since 1991, SIC has evolved significantly. During its early years, it generated its doctrine on cartels with the initial investigations, using EU and US jurisprudence as its main points of reference. Lately, SIC's investigation abilities and techniques have evolved; it has developed its own doctrine in some cases, and is trying to profit from international best practices in others. With the enactment of the Competition Law, the leniency programmes were adopted, and Decree 2,896 was issued regulating leniency agreements in 2010. In 2014 and 2015, SIC announced that several investigations had begun after receiving evidence from leniency applicants. Based on the experience with the application of the leniency rules, the government issued in July 2015 a new comprehensive regulation of the leniency programme (Decree 1523).

The Competition Law provides for possible early termination of an investigation if the offender offers sufficient guarantees (structural or behavioural) to no longer harm its competitors or consumers. This alternative has proven to be very effective for the early termination of anticompetitive conduct investigations, and SIC has developed specific provisions to be included in the guarantees in order to allow a close follow-up of the offender's conduct. However, the trend in the use of guarantees is that they have been decreasing to a point at which they are an exceptional mechanism. Indeed, in recent cases SIC has stated that, as a matter of public policy, guarantees will only be admitted in cases involving unilateral conducts.

Under the powers granted to SIC by the Competition Law, SIC may also initiate investigations and impose sanctions on companies that do not follow its instructions, or that obstruct investigations by not allowing inspections or not furnishing the required information.

iii Outlook

After using, for the first time, the leniency programme to prosecute cartels, SIC determined that it was necessary to refine the rules governing leniency. Hence, in July 2015 the new set of rules for leniency were enacted. Although some issues that limited the application of the leniency programme were addressed, others – such as the elimination of the criminal prosecution when collaborating with SIC – would require the amendment of Law 1,340. Of particular interest is the presumption included in the Leniency Decree by which, unless evidence to the contrary exists, every applicant is deemed not to be the instigator of the cartel, as instigators are not eligible for the leniency benefits. In 2016, SIC announced the creation of a task force to investigate and prosecute bid-rigging activity that will work closely with criminal prosecutors. Since its inception, this new task force has been involved in high-profile investigations, such as the Odebrecht case, and it has also uncovered collusive practices affecting public procurement at the national and local levels.