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Investigations

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.

Investigative powers

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;
  • interrogations;
  • 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. 

International cooperation

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.

Decisions

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 2.2.2.29.2.3 (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.

Appeal process

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

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?

No.

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?

No.

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.

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