Cartels 2020

Last Updated June 12, 2020

Peru

Law and Practice

Authors



Bullard Falla Ezcurra+ is a leading Peruvian boutique law firm with more than 19 years’ experience in antitrust/competition law and regulatory matters. Its team of more than ten professionals has advised clients on key antitrust cases in Peru, providing counsel to high-profile national and multinational companies in main economic sectors. The firm stands out in particular for its experience of abuse of dominant position and cartel investigations, having advised several clients on the implementation of leniency and competition compliance programmes. The firm and its partners have participated in the most relevant merger notifications of electric companies, which is the only economic sector currently covered by merger control. The firm also has broad experience of regulation of network industries, including energy, transport infrastructure, telecommunications and other regulated activities.

The main legislation prohibiting cartel conduct in Peru is Legislative Decree 1034, the Repression of Anti-Competitive Conduct Act (hereinafter referred to by its Spanish initialism, LRCA).

The Institute for the Defence of Competition and Protection of Intellectual Property (INDECOPI) is the statutory authority in charge of enforcing competition law in Peru across all sectors except for telecommunications, in respect of which the sector regulator, the Supervisory Agency for Private Investment in Telecommunications (OSIPTEL), is in charge.

INDECOPI’s Commission for the Defence of Free Competition (hereinafter referred to as the Commission) is the decision-making body of the Authority and is responsible for sanctioning anti-competitive practices at first instance. The Commission’s Technical Secretariat (hereinafter the Technical Secretariat) is the prosecutor in charge of initiating and conducting administrative sanctioning proceedings.

Decisions issued by the Commission are subject to appeal before INDECOPI’s Tribunal, which serves as a second and last administrative instance in antitrust proceedings. Decisions taken by the Tribunal can be appealed before the courts.

The scope of penalties for cartel infringement includes fines and disqualification from participating in public procurement. Civil liability is admitted only for damage claims filed by firms and individuals who have allegedly suffered economic loss caused by cartel behaviour. In addition, INDECOPI can impose remedial measures that amount to harm compensation. Finally, there are no statutory provisions within the Peruvian antitrust or criminal systems for the imposition of criminal sanctions for cartel infringements.

The sanction proceeding conducted by the Commission and its Technical Secretariat is administrative in nature, and the Technical Secretariat is the sole body given standing to challenge cartel behaviour directly. Nonetheless, a cartel investigation by the Technical Secretariat may be initiated because of a third-party complaint.

Regarding antitrust damages, under Section 52 of the LRCA any person that has suffered economic loss caused by cartel conduct is entitled to file a claim for civil damages against companies that have participated in cartels once the administrative ruling is settled. For the compensatory action to proceed, the claimant must prove the linkage between the anti-competitive conduct and its resulting economic loss.

Section 11.2 of the LRCA prohibits all forms of agreements, decisions, recommendations or concerted practices that are aimed at or may have the effect of restricting, preventing or distorting competition. Following the European model, Section 11.2 deems price-fixing, output restriction, market allocation and bid-rigging inter-brand agreements to be absolute prohibitions (and therefore anti-competitive per se), provided that these agreements are not ancillary or complementary to lawful agreements.

Agreements not included in the four types listed above are subject to the rule of reason. In these cases, for the economic agents to be held responsible, the Authority must prove both the existence of the conduct and that the anti-competitive effects of the conduct exceed the efficiency gains in the market. In determining an agreement's anti-competitive effect, the authority will evaluate the justifications for such behaviours. The justifications that are usually admitted by the authority are based on criteria that are objective (non-subjective), reasonable (legal, commercial and economically acceptable) and sustainable before the Authority (ie, measurable, comparable, quantifiable and observable).

Non-exhaustive examples of these types of agreements are provided in the LRCA, and include practices such as concerted refusal to deal, co-ordinated and unjustified obstruction of a competitor’s entry or stay in the market, agreements to set quality for products (different from national or international technical standards), boycott, or any other agreement, decision, recommendation or concerted practice that seeks benefits in ways that are contrary to economic efficiency.

The LRCA has a general clause excluding from its scope of application anti-competitive conduct that is a consequence of a legal provision. However, no statutory provision has established an explicit exception for the antitrust analysis.

Infringements of the LRCA are subject to a limitation period of five years from the end of the infringement action, as provided by Section 45 of the LRCA. Any action taken by the Technical Secretariat that is related to the investigation and communicated to the alleged perpetrator of the conduct causes an interruption of the limitation period. In cases of continuing cartel behaviour, the limitation period may be extended up to the duration of the conduct.

The Commission’s ability to sanction a cartel under the LRCA extends to all conduct that produces or may produce anticompetitive effects in all or part of the Peruvian territory, even if said conduct takes place outside the country, as provided by Section 4 of the LRCA.

The LRCA does not make any provision regarding principles of comity.

The Technical Secretariat can initiate investigatory steps as a result of routine monitoring carried out in certain sectors of the economy, the collaboration of an undertaking within the framework of a leniency programme, the collaboration of an individual acting as a whistle blower within the framework of the rewards programme, or a third-party complaint (usually the one affected by the conduct). Once it obtains public information from the market, the Technical Secretariat will define the next steps of the investigation. Usually, the first course of action is the execution of unannounced dawn raids, followed by interviews of key executives of investigated companies.

The information gathered in these proceedings is analysed to determine possible cartel behaviour. During this analysis, the Technical Secretariat will communicate information requirements to the investigated undertakings.

After completing this pre-investigation and deeming the existence of the cartel possible, the Technical Secretariat issues a Statement of Objections against the alleged perpetrators of the cartel conduct, thus beginning the sanctioning procedure.

The Technical Secretariat has recently published the Draft Guidelines on Dawn Raids. The goal of these guidelines is to give more transparency and predictability to the use of investigative powers of the authority. Although the final version of these guidelines has not yet been approved, the document reflects the practice of the Technical Secretariat over the past few years in conducting investigations and is therefore a useful reference document.

Section 15.3 of the LRCA gives the Technical Secretariat the power to conduct on-site inspections or 'dawn raids' at the undertaking’s facilities. These may or not be announced in advance. As established in the Draft Guidelines on Dawn Raids, the Technical Secretariat usually carries out these dawn raids once it has reasonable grounds for suspecting an infringement.

During a dawn raid, the Technical Secretariat may examine the books, records, documentation and assets of the undertaking, such as computers. It can also make copies of the physical and electronic files that it deems relevant to the alleged conduct. In addition, it may take photographs and film the inspection, if needed. In practice, the Technical Secretariat has conducted dawn raids in almost every cartel case it has investigated. Also, the Technical Secretariat has been using forensic tools for the extraction of information for a number of years. Any refusal, obstruction or avoidance of the inspection is subject to administrative fines not exceeding 1,000 tax reference units (hereinafter referred to by their Spanish acronym, UIT) – approximately USD1,253,731 – under Section 46.7 of the LRCA. It must be noted that if the undertaking refuses access to the officers in charge of the inspection, the Technical Secretariat may have to force access to its facilities following the procedure further explained in 2.3 Restrictions on Dawn Raids.

An attorney, who can be a corporate lawyer and/or outside counsel, can be present during dawn raids in order to supervise the inspection. However, the Technical Secretariat’s officers in charge of conducting the dawn raid are not required to wait for the undertaking’s counsel to be present for the inspection to begin.

As indicated in 2.2 Dawn Raids,the Technical Secretariat can break open the undertaking’s facilities if access is refused to the officers in charge of the inspection. To ensure that this power is not exercised arbitrarily, the Technical Secretariat must obtain a judicial warrant before conducting a dawn raid, for which it must prove to the court that there are reasonable indications of an antitrust infringement, as provided by Section 15.3.c) of the LRCA. If granted, the judicial warrant defines the scope of the authorisation. Similarly, the Technical Secretariat is required to have a judicial warrant in order to access private correspondence of the undertaking’s employees, as provided by Section 15.3.d) of the LRCA.

Alteration, suppression or destruction of information required by the Authority or of other potentially relevant information constitutes an act of obstruction, sanctionable with an administrative fine not exceeding 1,000 UIT – approximately USD1,253,731 under Section 46.7 of the LRCA, notwithstanding criminal liability.

Due to the use of these forensic tools, the Technical Secretariat usually copies emails and electronic files during dawn raids. At INDECOPI's premises, the Technical Secretariat filters and identifies the relevant information, returning or destroying, at the request of the parties, information that is not considered relevant to the investigation. Undertakings can obtain access to the information copied or taken by the Technical Secretariat from their facilities.

The Technical Secretariat’s officers may request interviews with the undertaking’s employees. The recordings of these interviews can be obtained by the undertaking and the employees interviewed.

During the preliminary investigation stage, parties can only access information related to them. Other parties’ information may be obtained once the administrative procedure has officially begun, as long as the information has been declared not confidential and has been transferred to the case file of the sanctioning proceeding.

Refusal to co-operate with the investigation constitutes an act of obstruction sanctionable with an administrative fine not exceeding 1,000 UIT – approximately USD1,253,731 – under Section 46.7 of the LRCA, similarly to acts of spoliation of information (as described in 2.4 Spoliation of Information).

The undertaking and its employees have a legal right to be assisted by legal counsel. As part of the protocol, the officers in charge of conducting interviews inform the interviewee’s counsel that the counsel is not allowed to answer questions on the interviewees’ behalf. Nevertheless, the counsel can advise the interviewee during the interview on whether or not to respond to certain questions and take measures to ensure the interviewee’s rights.

Peruvian law does not prevent counsel from representing both the investigated corporation and its employees, if there is no conflict of interest.

If the party is not collaborating with the Authority under a leniency programme, the notification of the investigation is made with an unannounced dawn raid at the undertaking’s facilities, in which the officers in charge will seek to gather information and evidence from the undertaking, as explained in 2.2 Dawn Raids.

Hence, the first step of the defence counsel is to advise the undertaking to ease the completion of the procedure. However, collaboration should be limited to the sectors and type of conduct that are under investigation by the Authority according to the down raid notification, avoiding the provision of information that is not relevant or is protected by client-attorney privilege.

Once the procedure is completed, meetings should be scheduled with the undertaking in order to identify the possible risk scenarios that the Authority may be investigating. This could serve to limit the scope of the document review that should be carried out to assess the possible contingencies. Depending on the outcome of this evaluation, the defence counsel may propose different courses of action, such as the adoption of a settlement, the application for a leniency programme (given that, after a dawn raid, it is still possible to seek an exemption from sanctions) or the preparation of the defence in legal and economic terms.

For the purpose of the investigation, the Technical Secretariat is vested with broad powers relating to:

  • requiring the production of documents, such as accounting records and corporate books, payment vouchers, internal or external correspondence and electronic records, as well as information concerning the organisation and shareholding of the undertaking;
  • summoning and interrogating parties subject to the investigation, their representatives, employees, counsel and third parties;
  • requesting the lifting of privacy of communications, as noted in 2.3 Restrictions on Dawn Raids; and
  • copying and seizing information and evidence during dawn raids.

As stated in 3.9 Burden of Proof, the Technical Secretariat examines economic information while carrying out cartel inquiries into matters such as market characteristics, parallel movement in prices, trends in production and dispatch, and capacity utilisation. The Technical Secretariat may obtain this information through requests of information made to the parties and other legal entities.

The Technical Secretariat also relies on conduct-based evidence, including evidence of meetings between competitors, membership of trade associations and information exchange practices.

Pursuant to Section 32.1 of the LRCA, the Technical Secretariat has the power to collect all the information, documents or objects that are potentially relevant to determine the existence or non-existence of the alleged infringement. Given that the law makes no distinction based on the location of the information, it can be interpreted that the request for information could cover electronic information stored in another jurisdiction. However, there have not yet been any cases dealing with this situation.

The LRCA does not provide regulations on information protected by attorney-client privilege. Nonetheless, in Peru, professional communications between attorneys and clients are deemed to fall under the umbrella of professional secrecy regulations of the Lima Bar Association’s Ethics Code and are thus subject to attorney-client privilege. This privilege requires attorneys to refrain from disclosing any information in the course of, and for the purpose of, his/her professional employment with the client. On this, Section 32 of the Ethics Code establishes the right and duty of the attorney to object to the disclosure of information protected by attorney-client privilege in response to requests made by the Authority. Furthermore, a constitutional right of professional secrecy is established by Section 2.18 of the Peruvian Constitution.

Aside from the attorney-client privilege, the privilege against self-incrimination is applicable to administrative proceedings in general. This is a privilege recognised by the Constitution, as declared by the Constitutional Court of Peru.

It is unusual for individuals and firms to refuse to comply with the initial requests for information made by the Authority, as any unjustified failure to provide information requested by the Authority is subject to an administrative fine not exceeding 1,000 UIT – approximately USD1,253,731 – under Section 46.7 of the LRCA.

Section 35 of the LRCA provides the general rules for the protection of sensitive information. If a party or an entitled third party considers it necessary, it may submit a request for confidentiality to the Authority, clearly identifying the information deemed sensitive and explaining the reasons that justify the protection of this information.

The Authority will declare the information confidential only if it comprises trade or industrial secrets or personal data, or if its public disclosure could reasonably be expected to cause serious damage to the party submitting the information. The Authority will take into consideration factors such as the extent to which the information is public, the measures taken to guard its secrecy, and its current or potential commercial value. The Authority may also declare the confidentiality of personal data ex officio. In this connection, the Guidelines on Confidentiality issued by the Commission foresee typical confidential information scenarios, so that the evaluation of the requests for confidentiality is simplified.

It must be noted that the information and documents that are essential to prove the infringement cannot be declared or kept confidential from the accused. It is incumbent on the Technical Secretariat to qualify this information as essential.

The accused are granted 30 working days from the notification of the Statement of Objections described in 2.1 Initial Investigatory Steps to submit their written defence. Additional pleadings regarding the factual, economic and legal basis for an enforcement action may be submitted by the defence counsel during the evidentiary stage of the proceeding for up to seven months from its commencement. In practice, the accused usually submit new documentary information to challenge the Technical Secretariat’s hypothesis of collusion. Economic reports are also submitted to challenge the alleged implementation of the cartel conduct and price series used by the Technical Secretariat.

Once this stage is completed, the Technical Secretariat has 30 working days to issue a Technical Report which must determine whether or not the accused are liable. The defence counsel can make pleadings against this decision, questioning the alleged proven facts, the determination of the infraction, the identification of the responsible agents and the proposal of sanctions and corrective measures. Both the Technical Report and the pleadings are submitted to the Commission to decide on the accused’s responsibility. Prior to the issuance of the ruling, the Commission may give the defence counsel the opportunity to present arguments at an oral hearing.

Individuals and legal entities may pursue the application of a leniency programme under Section 26 of the LRCA. Thus, the Technical Secretariat may grant exemption from, or reduction of, administrative fines to the perpetrators of the cartel conduct in exchange for evidence that aids in the detection and sanctioning of cartels. The only scenario where an economic agent is precluded from access to leniency benefits is when said agent has carried out acts of coercion on other participants for the implementation of the cartel. Thus, a party that is deemed 'ringleader' of the conduct may still be eligible for benefit application.

The parties may submit their written request for leniency prior to the beginning of the procedure described in 2.1 Initial Investigatory Steps. Once the request is made, the Technical Secretariat will use a marker system to indicate the priority order with respect of the leniency applications. The benefits have been classified according to the timeliness of the submission of the application and the evidence provided.

  • Type A – if the application is lodged before the Technical Secretariat has indications of the existence of the cartel, or conducts an inspection or other procedures for this purpose, then the first applicant will automatically obtain the conditional benefit of full exemption from the penalty. Furthermore, the non-imposition of corrective restitution measures (defined as "mandates aimed at reversing the harmful effects of the infringing conduct") is included as part of the sanction exemption benefit. In order to reap this benefit, the applicant must relinquish the confidentiality of his identity as a collaborator at the beginning of the administrative sanctioning proceeding.
  • Type B – if the application is lodged after the Technical Secretariat obtains evidence or indications of the existence of the cartel or conducts an inspection or other procedures for this purpose, then the first applicant will be able to access a conditional benefit of 50-100% of the applicable fine, provided that the collaborator is able to provide information that is relevant to the investigation.
  • Type C – if there is a first applicant whose request has been admitted or there is a pending administrative sanctioning proceeding, they will receive a conditional benefit consisting of a reduction of up to 50% of the appropriate fine for the infringement, provided that the applicant contributes additional information with significant added value; for example, information that certifies the commission of the infringement or reaffirms the initial charge. Second, third and subsequent applicants may benefit from a reduction of up to 30% and 20% of the fine, respectively, if they meet the condition stated above.

According to the guidelines approved by the Authority the deadline for submitting a request for sanction reduction will expire 30 working days from the date of notification of the decision to initiate the administrative sanction proceeding.

It must be noted that the benefits of exemption or reduction of sanction neither prevent the imposition of corrective measures to restore the competitive process, nor limit the civil liability of economic agents for the damages resulting from the activity committed.

Based on public records, from 2012 to 2019 there were a total of 23 leniency applications. Three of those applications were made by individuals, while the rest were made by 13 national companies and seven international companies. In relation to the markers given by the Technical Secretariat, 13 belong to first applications, six to second applications, three to third applications and there has been only one for fourth applications.

During dawn raids, the Technical Secretariat gathers information and evidence from employees’ computers, sometimes using specific forensic tools to extract information. The Technical Secretariat performs such acts under the assumption that this information belongs to the undertaking, as electronic devices provided in the workplace are considered working tools.

As explained in 2.11 Obligation to Produce Documents/Evidence Located in Other Jurisdictions, the Technical Secretariat, as the investigating authority, is entitled to seek and obtain any relevant information and documents related to the alleged cartel conduct from the target company and third parties wantonly. This is achieved through the issuance of information requests to the firm or the individuals that must be furnished within a stipulated timeframe.

Under the Third Final Complementary Provision of the LRCA, the Commission and the Technical Secretariat are able to notify information requirements to companies and individuals located outside the jurisdiction through the appropriate Peruvian consular office.

The Fifth Final Complementary Provision of the LRCA states that other statutory authorities are required to provide all the information requested by the Technical Secretariat in the course of its investigations. This provision also comprises the administrative agencies’ obligation to provide confidential information, which will be given the same treatment by the Technical Secretariat.

It is also usual for the Technical Secretariat to receive information from other statutory authorities voluntarily in the event of suspected cartel behaviour within their relevant areas of competence. This is particularly important for the statutory authorities that supervise public procurement, as the Second Final Complementary Provision of the LRCA establishes that the Public Procurement Tribunal is under the obligation to inform INDECOPI of the existence of conduct that may indicate that bid rigging is taking place.

The Third Final Complementary Provision of the LRCA establishes that the Technical Secretariat is authorised to investigate anti-competitive conduct carried out in Peruvian territory and having an impact on other countries, provided that an international co-operation agreement has been signed with these countries.

Similarly, the Technical Secretariat may exchange information, including information deemed confidential, with the competition agencies of the countries that are parties to an international co-operation agreement, notwithstanding the duty of secrecy applicable to the processing of requests for leniency.

As established in 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards, there are no statutory provisions within the Peruvian antitrust or criminal systems for the imposition of criminal sanctions for cartel infringements.

Nonetheless, it is worth mentioning that initiatives for a system of criminal sanctions in cartel cases have been filed with Congress in recent years.

As pointed out in 1.3 Private Challenges of Cartel Behaviour/Effects, sanction proceedings conducted by the Commission and its Technical Secretariat are administrative in nature. Civil procedures before a court are only admitted for damage claims under Section 52 of the LRCA and tort law regulated in the Peruvian Civil Code, as further explained in 5.1 Private Right of Action and 5.2 Collective Action. In order to present a civil procedure for damages, Section 52 of the LRCA requires that the administrative proceedings must be concluded, and the final decision issued by the Commission or Tribunal should not be appealed.

As an enforcement agency, the Commission is entitled to take actions against multiple parties in a single proceeding. In practice, the Commission has always opted for this method to gain procedural efficiency and to safeguard the accused’s right of access to evidence.

In cartel cases, the burden of proof rests with the Competition Authority. The Authority is responsible for identifying all documentary evidence or indications that prove the cartel’s existence. Following this, it will determine whether or not the agreements (even if they are defined as episodes) have been executed, using economic evidence (price series or other evidence pertaining to the alleged cartel conduct).

For an undertaking to be responsible for conduct different from cartel conduct (non-per se infraction), the Authority must also probe the anticompetitive effect in the market, as stated in 1.4. Definition of "Cartel Conduct".

In the administrative proceeding, the Technical Secretariat is the investigative body in charge of gathering evidence of cartel conduct. Proceedings relating to competition law infringements are only initiated ex officio by the Authority.

It is possible for the Authority to use information obtained in other proceedings, as long as these proceedings are complete and the information is deemed public. Information provided under a leniency programme is usually replicated to prevent the collaborator’s identity from being ascertained. The leniency file is kept confidential even after a proceeding is complete. If the information was obtained within the leniency programme by a foreign enforcement agency, no legal provision prevents the Technical Secretariat from using it, provided that the leniency applicant authorises the information exchange between the competition agencies.

The Technical Secretariat is the authority responsible for determining the admissibility of information and evidence submitted by the complainants, the accused or third parties. Thus, evidence deemed irrelevant or unnecessary is to be declared inadmissible under Section 31 of the LRCA.

In practice, all of the information and evidence submitted by the parties is admitted by the Technical Secretariat. In view of this, in its final ruling, the Commission usually evaluates all the information provided either by the parties or by the Technical Secretariat.

As mentioned in 3.9 Burden of Proof, economic evidence is usually taken into consideration for determining the accused’s responsibility. Hence, as noted in 2.16 Procedure for Defence Counsel to Raise Arguments Against Enforcement, parties will usually submit expert reports that aid their pleadings, mainly in the field of economics.

Both the Commission and the Technical Secretariat have several economists among their members, who analyse the economic data gathered.

Aside from the attorney-client privilege, no other privilege is recognised during a cartel investigation.

The Commission typically collects together similar complaints received against alleged cartel conduct perpetrators and examines such cases in a single administrative proceeding, unless there is a difference in the nature of the allegations or the timeframe of the alleged infringements.

The Commission, not the Technical Secretariat, is responsible for sanctioning anti-competitive practices at first instance, so it has the authority to impose administrative fines directly under Section 46 of the LRCA. Decisions issued by the Commission are subject to appeal before INDECOPI’s Tribunal, which serves as a second and last administrative instance in antitrust proceedings.

The maximum amount of the applicable fines varies depending on the qualification of the infringement, as follows.

  • If the infringement is deemed minor, it is subject to an administrative fine of up to 500 UIT – approximately USD626,865 – provided that the fine does not exceed 8% of the gross income received by the perpetrator or its economic group in relation to all of its economic activities pertaining to the immediately preceding financial year.
  • If the infringement is deemed severe, it is subject to an administrative fine of up to 1,000 UIT – approximately USD1,253,731 – provided that the fine does not exceed 10% of the gross income received by the perpetrator or its economic group in relation to all of its economic activities pertaining to the immediately preceding financial year.
  • If the infringement is deemed very severe, it is subject to an administrative fine of more than 1,000 UIT provided that the fine does not exceed 12% of the gross income received by the perpetrator or its economic group in relation to all of its economic activities pertaining to the immediately preceding financial year.

In January 2019, the Commission published a decision by which it sanctioned 63 companies in the market for selling natural gas vehicles for a price-fixing agreement during 2011 and 2015. For this infringement, the Commission imposed a total fine of USD131 million, the highest fine ever imposed.

Also, in February 2020, the Technical Secretariat initiated an administrative proceeding against what is possibly the largest cartel ever investigated by the authority. According to the press release, the proceeding was initiated against 35 companies for alleged bid rigging on highway construction tenders issued by the Ministry of Transport during 2002 and 2016. The agreement would have involved 112 bids worth approximately USD3.8 billion.

Within a term not exceeding 45 working days from the notification of the commencement of the proceeding, the accused may offer the Technical Secretariat a commitment to implement effective corrective measures to counteract the effects of the alleged infringement in exchange for the settlement and early termination of litigation under Section 25 of the LRCA.

The Technical Secretariat reserves the discretion to declare the commitment appropriate, for which it will take into consideration the corrective measures that the applicants offer to undertake to ensure the restoration of the competitive process, as well as to reverse the harmful effects of the infringing conduct. Additionally, applicants may offer to undertake accompanying measures that reveal their purpose of amendment and that contribute to the study, promotion and defence of competition, including the support or financing of such activities. In practice, the Technical Secretariat requests undertakings to recognise their involvement in the cartel-related infringement and to pay as a remedial measure a portion of the fine that would otherwise have been imposed.

If the Technical Secretariat deems the commitment appropriate, it issues a ruling declaring the anticipated termination of the proceeding. It must be noted that the approval of the commitment does not relieve the perpetrators from the civil liability arising from the cartel conduct for damage claims purposes.

Failure to comply with the commitment constitutes a severe infringement of the LRCA. Once this infringement is confirmed by the Commission, the infringer is subject to an administrative fine of up to 1,000 UIT – approximately USD1,253,731 – provided that the fine does not exceed 10% of the gross income received by the perpetrator or its economic group in relation to all of its economic activities pertaining to the immediately preceding financial year.

Evidence used in the administrative proceeding can also be used for the damage claim, as the information in the administrative file is public once the final administrative ruling is settled, provided that it has not been declared confidential.

Also, pursuant to Second Final Complementary Provision of the LRCA, the Public Procurement Supervisory Agency (OSCE) can register competition law offenders in a Register of Disqualified Companies for Public Procurement once the Authority’s decision is settled, thus banning them from participating in future government bidding procedures for one year.

As established in 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards, there are no statutory provisions within the Peruvian antitrust or criminal systems for the imposition of criminal sanctions for cartel infringements.

As established in 3.7 Procedure for Issuing Complaints/Indictments in Civil Cases, civil proceedings before a court are only admitted for damage claims under Section 52 of the LRCA once the final administrative ruling is settled. Thus, civil courts are not able to sanction the perpetrators of the cartel conduct directly, so a definitive decision related to the existence of the cartel is required, which includes the judicial review of the administrative decisions.

The implementation of an "effective compliance programme" is not expressly considered as a factor to determine the severity of the infringement or the adjustment of the fine under Section 47 of the LRCA. However, in the recently approved Compliance Guidelines, the Commission established that a reduction in the fine (between 5% and 10%) might be granted if a compliance programme was in place before the offence occurred, provided that the following requirements were met:

  • the compliance programme met with the essential components set forth in the Compliance Guidelines;
  • the breach committed was an isolated event, in which senior management did not participate; and
  • timely action was taken against the breach, in which case it must be determined whether the conduct was reported to the Technical Secretariat prior to the initiation of an investigation.

The Commission does not have the authority to order mandatory consumer redress as a part of its ruling, although this may be considered as a corrective measure of restitution. As is further explained in 5.2 Collective Action, in order to obtain consumer redress for those that have suffered economic loss caused by the cartel, the Commission must file a damage complaint with a civil court.

The Commission’s decision may be appealed to the Competition Tribunal by the claimant, the accused and entitled third parties. The Technical Secretariat may also file an appeal against an exculpatory decision and the fines calculated by the Commission.

The Tribunal’s decision is further subject to judicial review under Law 27584 on Contentious Administrative Proceedings (Spanish acronym LPCA). It should be noted that judicial review does not prevent the enforcement of the Authority’s ruling, unless the judge orders an interim measure to do so.

As stated in 1.3 Private Challenges of Cartel Behaviour/Effects, the sanctioning proceeding conducted by the Commission and its Technical Secretariat is administrative in nature, and the Technical Secretariat is the sole body given standing to challenge cartel behaviour directly. Thus, there is no private right of action for firms and/or individuals for challenging cartel behaviour.

Nonetheless, any person (private firm or individual) that has suffered damage caused by the cartel conduct is entitled to file a damage claim against companies that have participated in cartels. For the compensatory action to proceed, the claimant must prove the linkage between the anti-competitive conduct and its resulting economic loss.

Section 52 of the LRCA gives standing to the Commission to file a civil damages claim for consumer redress in defence of diffuse and collective interests of consumers. The LRCA does not contain a specific provision that gives consumer associations and public interest groups standing for collective action.

Indirect purchaser claims or "passing-on" defences have not yet been tested in Peruvian courts.

As stated in 4.3 Collateral Effects of Establishing Liability/Responsibility, evidence used in the administrative proceeding can also be used for the damage claim, as the information in the administrative file is public once the final administrative ruling is settled, provided that it has not been declared confidential.

In 2018, the first civil damages claim was presented by INDECOPI against various drugstore chains for their involvement in a price-fixing agreement. This is an ongoing process and the court of first instance has not yet made a ruling.

There has only been one civil litigation between undertakings related to damages due to anti-competitive behaviour since the enactment of the LRCA. This civil litigation began in 2012 and a final decision is still pending.

In Peru, there is no law to regulate attorneys’ fees, including success fees, so the amount of attorneys’ fees is determined by an agreement between attorneys and their clients.

The Competition Authority does not rule on the costs of these types of proceedings.

At present, there are no rulings or closed damage claim proceedings in Peru that can be used as baseline to determine the compensation of legal representatives in civil proceedings, although, in theory, Peruvian Code of Civil Procedure criteria is applicable.

Given that the Technical Secretariat is given sole standing to initiate sanctioning proceedings, the LRCA does not provide for the payment of defence costs by unsuccessful claimants. Related to civil litigation for damages, Section 412 of Code of Civil Procedure establishes that cost and attorneys' fees must be provided by the defeated party, unless a court's decision has stated otherwise.

As established in 4.8 Available Forms of Judicial Review or Appeal, the decision issued by INDECOPI’s Tribunal is subject to judicial review under the LPCA by a commercial court. This judicial decision can be appealed twice and ultimately reviewed in cassation by the Supreme Court.

In February 2020, the Commission published the Antitrust Rewards Programme Guidelines. The aim of the guidelines is to incentivise the reporting of cartel activities by individuals who have not participated in the conduct and who may have some knowledge of it. In exchange for delivering such information, an individual can receive a reward of up to USD117,000. More information about these guidelines can be found by following the links in 6.2 Guides Published by Governmental Authorities.

The recent health emergency due to the spread of COVID-19 has led the government to adopt different measures. Firstly, it declared a State of Emergency and mandatory quarantine. As a result, the INDECOPI offices are closed. The government also suspended all administrative procedures, including those handled by INDECOPI and relating to cartels, for a 30-day period; this was extended for a further 15 days.

For this reason, in practice it has not been possible to carry out inspection visits, which is the main tool of the Technical Secretariat when investigating of cartels. However, the Technical Secretariat can continue to carry out its investigative work in cases where it already has information, as well as execute ongoing administrative procedures.

In April 2020, the Technical Secretariat issued a statement declaring that some collaboration agreements between competitors are considered lawful. It specified that during the emergency, companies can reach agreements to ensure the public's access to essential products; for example, joint efforts to increase the production of healthcare supplies or to establish distribution systems that reach as many regions and people as possible are legitimate.

Bullard Falla Ezcurra+

Las Palmeras 310
San Isidro
Lima
Peru

+511 621 1515

+511 621 1515

snoltenius@bullardabogados.pe www.bullardabogados.pe
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Law and Practice

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Bullard Falla Ezcurra+ is a leading Peruvian boutique law firm with more than 19 years’ experience in antitrust/competition law and regulatory matters. Its team of more than ten professionals has advised clients on key antitrust cases in Peru, providing counsel to high-profile national and multinational companies in main economic sectors. The firm stands out in particular for its experience of abuse of dominant position and cartel investigations, having advised several clients on the implementation of leniency and competition compliance programmes. The firm and its partners have participated in the most relevant merger notifications of electric companies, which is the only economic sector currently covered by merger control. The firm also has broad experience of regulation of network industries, including energy, transport infrastructure, telecommunications and other regulated activities.

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