Contributed By Baker McKenzie S.A.S.
The statutory bases for challenging cartel behaviour/effects in Colombia are:
• Article 333 of the Colombian Political Constitution;
• Law 1340 of 2009;
• Decree 4886 of 2011;
• Law 1474 of 2011;
• Decree 2153 of 1992; and
• Article 1 of Law 1959.
The public enforcement agencies, potential criminal or civil liability and the scope of criminal penalties or civil judgment awards are as follows:
• Competition Law Enforcement: Superintendence of Industry and Commerce (National Competition Authority);
• criminal enforcement only for bid-rigging : Fiscalía General de la Nación (Attorney General); and
• civil enforcement against legal entities for bid-rigging conducts: Superintendence of Companies.
With respect to private enforcement, a party damaged by a competition law violation may file a private civil suit seeking damages under ordinary tort principles. The Colombian Civil Code establishes a general cause of action in the ordinary jurisdiction for claimants seeking compensation for injuries; however, punitive damages are not available.
Damaged parties may also initiate a class action for damages, if a group of similar victims in the same situation is formed, pursuant to the requirements under Law 472 of 1998.
Cartel conduct is defined by statute.
Cartel conduct includes horizontal agreements between competitors including price-fixing, bid-rigging, output restrictions, agreements on product characteristics, agreements on other forms of competitive activity.
State-owned enterprises, trade associations, and any person or enterprise affecting free competition are fully subject to competition law.
There are monopolies created by law (such as water utility services) but no cartel activity is permitted.
The statute of limitations for the Superintendence of Industry and Commerce to impose fines and adopt the measures described expires five years after the parties end their performance of cartel activities.
Cartels that have an effect on the Colombian market can be subject to the scrutiny of the Competition Authority in Colombia. Enforcement against parties abroad can be difficult. The authority can, nonetheless, try to seize assets in a country to enforce and collect fines. However, there are still no precedents in this regard.
Colombia has agreed to co-operate with the United States of America (USA), the European Free Trade Association (EFTA) and the European Union (EU) existing Free Trade Agreements with those jurisdictions.
Within the Andean Community treaty, of which Colombia, Bolivia, Ecuador, and Peru are members, Colombia agreed to co-operate with competition law enforcement actions prosecuted by Community organs.
The initial investigatory steps taken by enforcement agencies are as follows:
Dawn raids are common. The firm has an obligation to co-operate and provide the information required by the SIC, any breach of which the authority can penalise with fines.
Pursuant to a recent decision of the Constitutional Court (Ruling C-165/19) no judicial order is required for the SIC to perform unannounced visits to gather information, if the collection of information is related to a specific investigation and facts.
During the dawn raids, the SIC can:
The SIC does not have police powers to force entry into the firm's premises, and can search the premises only if the occupant authorises a search.
Obstruction of the dawn raid could led to fines bearing the same maximum as other fines under the competition law.
Outside counsel can assist the firm on which the authority is conducting a dawn raid; however, the participation of external counsel can be limited.
Although the SIC has authority to request information in corporate tablets, computers and mobile phones, as well as in documents belonging to the firms that it is investigating, the Agency cannot intercept or seize the information without a judicial order.
Spoliation of potentially relevant information is considered as obstruction of the dawn raid; it would also be considered a felony and could lead to fines bearing the same maximum as other fines under the competition law.
Officers or employees could be required to respond to interviews/questions during the dawn raid or surprise visit. In a recent ruling, the Constitutional Court indicated that the presence of counsel is not mandatory.
Refusal to co-operate can lead to a fine bearing the same maximum as other fines under the competition law.
Companies/interviewees can obtain copies of documents furnished to the enforcement agency or other records reflecting what transpired during the dawn raid.
Confidential or privileged information can be excluded from the dawn raid. The parties can request that this privileged information be excluded from the evidence gathered during a special hearing.
Officers or employees have a right to counsel, although the SIC is not compelled to wait for counsel to undertake the interviews.
The company's counsel can also take on this role; however, counsel cannot participate actively in the interviews. Counsel cannot advise the interviewee during the interview, but it can participate in order to guarantee that the rights of the interviewee are not being violated.
Individuals are required to obtain separate counsel, when the authority formally opens the investigation.
The principal initial steps that defence counsel should undertake during the initial phase of an enforcement effort are to ensure that the Authority respects due process rights, in addition to ensuring that all evidence is taken keeping the chain of custody and that parties are formally notified.
The SIC can obtain documentary evidence or testimony in the course of investigating alleged cartel behaviour by conducting dawn raids or by formally requiring such information or testimony to the investigated parties. Failure to co-operate can lead to fines against the parties under investigation.
The procedural and substantive requirements are contained in the law.
SIC can obtain other types of (eg, non-documentary) information in the course of investigating alleged cartel behaviour by conducting dawn raids or by formally requiring such information or testimony to the investigated parties.
There is no precedent for a company or individual located in Colombia to be obliged to produce documents or other evidence that is available to it or him or her, even if located in another jurisdiction.
Communications between outside counsel and in-house lawyers with the client are protected under the attorney-client privilege principle.
Colombian laws recognise the privilege against self-incrimination.
Individuals and firms usually co-operate and respond to initial requests for information.
The consequences of non-co-operation with the enforcement agency's requests or insistence on strict fulfilment of legal conditions precedent could led to a fine bearing the same maximum as other fines under the competition law.
The Authority should keep reserved or proprietary information as confidential. Targets of enforcement actions are able to protect confidential or proprietary information if they provide the SIC with the legal basis for such protection.
Please refer to 2.1 Initial Investigatory Steps.
The SIC has established a leniency programme, under which a qualifying participant in the conduct violating the competition law can obtain full or partial exemption from penalties by reporting the conduct and co-operating with the investigation carried out by the SIC.
The benefit for the first qualifying applicant is full immunity from administrative fines; the second qualifying applicant can obtain 30% to 50% reduction in the value of administrative fine; while the third and subsequent qualifying applicants can obtain up to 25% reduction in the value of administrative fines.
The leniency programme does not protect the applicant from private judicial actions aiming to recover damages.
The leniency programme is available after a dawn raid. The parties involved in the conduct can apply for leniency up and until the period for responding to the opening resolution has expired.
At present, there are three final decisions on cases involving leniency applications.
The SIC investigates companies and individuals, hence it can seek information directly from company employees if they have been investigated. The rules that the SIC should follow are the same ones for due process.
The SIC investigates companies and individuals, hence documentary information directly from the target company or others. The rules that the SIC should follow are the same ones for due process.
This practice is not common; however, due to enforceability, companies or individuals located outside the jurisdiction are not obliged to provide information.
The SIC can request from other governmental agencies information that it considers relevant to investigate cartel conduct and the Authorities are obliged by law to provide the information and co-operate with the investigation.
The SIC has several co-operation agreements with other antitrust agencies. These agreements are not made public.
The steps taken to file a complaint depend on the type of complaint raised. In declarative claims, plaintiffs must previously exhaust an extra-judicial settlement stage before they file any claim. However, if the plaintiff seeks interim relief, or ignores the defendant's domicile, the plaintiff is not required to exhaust the prejudicial settlement stage. In this event, the plaintiff may file the complaint directly.
In contrast, in collection proceedings plaintiffs are not required to exhaust any prejudicial settlement stage.
Civil claims are litigated before Civil Courts, or before an administrative authority, when provided by law. For instance, unfair competition claims may be brought before Civil Courts, or before the Superintendence of Industry and Commerce. Similarly, shareholder disputes may be brought before a special division of the Superintendence of Companies of Civil Courts.
The evidence must be presented before the court or before the administrative authority and it will only be admitted; it is filed in the opportunities provided by the law.
According to Colombian Constitution, individuals have the right to request information from public agencies. The public agencies may only oppose any such petition if the documents requested are privileged, contain confidential information of third parties and/or relate to a matter of national security.
When investigating a cartel, all parties allegedly involve are investigated by Authority under a single administrative procedure. However, this does not mean that the results of the investigation will be the same for all the parties; each of them acts independently during the process, requests and presents its own evidence, the authority serves them independently and the legal terms also run independently, and the filing of remedies or actions is made individually.
In Colombia, the burden of proof is on the Public Entity. Within the administrative sanctioning procedures (such as the one carried out by the Antitrust Authority), the administrative authorities have to prove the existence of the cartel and the identification of its participants.
In the case of civil proceedings, the burden of proof lies with the claimant. The party who claims to have suffered damage must prove it. Only in very specific cases will the burden of proof be reversed, mainly when one of the parties is the only one that can provide the proof of something, or when because of the technicity of the fact, this must be demonstrated by that technical party.
In civil claims, the finders of facts are the parties to the proceeding, meaning that parties must submit evidence and request the production of evidence before the court. Although the court may order that evidence should be produced, the burden of proof lies within the parties asserting the specific claims or defences. Therefore, parties find the facts, while the court applies the law to those facts.
The Competition Authority in Colombia investigates and decides on the administrative liability of the people involve in cartels. Within the Authority, the Deputy for the Protection of Competition is responsible for investigating and accusing a person under investigation before the Superintendent of Industry and Commerce, and the Superintendent, who analyses the accusation of the Deputy and the arguments of the persons under investigation, decides on the administrative liability of these.
Evidence obtained in one proceeding may be used in other proceedings. However, the authority must grant certain guarantees to the investigated parties and follow established procedures. The opposing party has the right to challenge that such evidence from the previous proceeding can be used in a new file when there are arguments on the irrelevance of the evidence.
Evidence provided in a leniency application should not be used out of the scope of the leniency application.
In addition, the evidence taken abroad should be legalised via apostille (or a similar proceeding - ie, authentication before a Colombian consulate) in order to be considered valid evidence under Colombian law. If foreign documents are not in Spanish, they must be filed together with an official translation in Spanish to be considered valid evidence under Colombian law.
In administrative cartels investigations, the Authority may accept as valid the evidence from other entities or from other processes within the same Authority. However, some procedures must be followed to ensure the validity of such evidence. For example, respect the procedures to guarantee the chain of custody, request official copies of the documents, allow the defendants to defend themselves from that evidence.
In civil proceedings, courts are free in their appraisal of evidence. Courts must analyse all evidence as a whole, and motivate properly the merits granted to each piece of evidence.
As a general rule, the burden of proof rests on the party asserting the specific claim of defence. Nonetheless, in some instances the burden of proof may shift; for example, when the law provides factual presumption.
In administrative cartels investigations, the free appraisal of evidence by the Authority is the general rule. However, all administrative acts (such as the ones in which the Authority decides to sanction and fine) must be fully motivated in facts (evidence) and rules (law). This imposes a high standard of proof on the Authority, which has to demonstrate the responsibility of those under investigation, especially given that any decision could be challenged before the administrative judges through an Annulment Action.
The intervention of experts, especially forensic analysts and economists, is very relevant for administrative cartels investigations, as they are dealing with evidence or legal-economic issues. However, given the technical nature of the Authority, this entity may, exceptionally, invite external experts to be part of its investigations. The people under investigation may present their own arguments and relevant studies to demonstrate, from an economic point of view, that they are not responsible.
Normally, when the Authority is dealing with a case on which it is not an expert in that market, it will invite experts to explain the dynamics of that market and its concept of the possible effects of the behaviours therein.
Information relevant to a case, exchanged with in-house counsel and external counsel is privileged and should not be accessed by the authority. Legal privilege does not provide immunity for statements made in the scenario of an ongoing litigation.
The SIC has the authority to notify another authority, a court or judge of any wrongdoings that come to its attention but fall out of its authority.
Generally, the same facts should be analysed together in a single process.
However, the same facts can be analysed by different authorities from the perspective of different statutes. It is possible to have multiple or simultaneous enforcement proceedings involving the same or related facts, when these facts are relevant to different authorities (eg, criminal and administrative proceedings).
The Colombian Antitrust Authority can impose fines upon legal entities of up to 100,000 times the minimum monthly wages (for 2019, equivalent to COP82,811,600,000 orUSD25,100,000 at rates effective on publication date), or up to 150% of the benefit obtained from the anti-competitive behaviour. The latter is hard to demonstrate and therefore there are no precedents of fines based on the value of the benefit obtained.
In practice, and in accordance with the doctrine of the SIC, the value of the fine should not exceed the equivalent of 10% of the equity of the parties sanctioned.
The Authority can also fine any individual who collaborates, facilitates, authorises, executes or tolerates anti-competitive behaviour with fines of up to 2,000 times the minimum monthly wages (for 2019, equivalent to COP1,656,232,000 or USD500,000 at rates effective on publication date).
When calculating the value of the fines, the Authority should rely on the principle of proportionality and (i) the benefit that the antitrust violation represented for the sanctioned party; (ii) the level of participation of the sanctioned party; (iii) the co-operation of the sanctioned party in the investigation of the SIC; (iv) the market share that the sanctioned party had at the time of the antitrust violation; (v) the impact of the antitrust violation in the market; and (vii) the equity of the sanctioned party.
The investigated parties can offer mechanisms or guarantees to the Authority so that it will close the investigation. If the Authority accepts them, it can establish a monitoring system, and any non-compliance with these guarantees will qualify as anti-competitive behaviour.
Normally, the parties offer a series of commitments to the Authority for it to close the investigation. In practice, the attitude of the superintendent on duty defines whether it is possible for the authority to accept this type of offer. There is no legal standard for this, and this is why the way in which the Superintendent sees the commitments, and their capacity to eliminate the competition concerns, is definitive for its acceptance. The SIC has not accepted plea bargains or to enter into settlements in the last years.
When an entity is found responsible for anti-competitive behaviour, the decision of the Authority can be used as an input for other litigation or investigations; however, any such litigations or investigations must follow separate procedures. For example, an entity sanctioned by the Authority for bid-rigging can be investigated by the State's prosecutor for the crime of entering into anti-competitive agreements in the context of public procurement. Likewise, although a declaration of responsibility on a cartel can be used as a basis for a civil action, the elements of civil responsibility must be equally proven, including the link between the conduct and the damage suffered by the victim.
Bid-rigging also amounts to a criminal offence. In these cases, parties charged with bid-rigging may be imprisoned for six to 12 years and subject to a fine that can range from 200 minimum legal monthly salaries (for 2019, equivalent to COP165,623,200 or USD50,000 at current rates) and 1,000 minimum legal monthly salaries (for 2019, equivalent to COP828,116,000 or USD250,100 at current rates). Parties responsible will be debarred from participating in public tenders for up to eight years.
In civil proceedings, there are two main types of sanctions: (i) those imposed on the losing party and (ii) those imposed on the party who has unreasonably estimated the value of its claims.
Regarding sanctions imposed on the losing party, the court, depending on the success or failure of the claims, imposes sanctions on one, or both of the parties. Such sanctions are meant to cover the costs of the proceedings and counsel fees. However, in practice such sanctions are far lower than counsel fees.
In respect of sanctions imposed on parties for unreasonably estimating the value of their, Colombian law provides two types of sanctions. Firstly, when the estimated value of a claim is 50% higher than the real value of the claim, the court may impose a sanction up to 10% of the value of the difference between the estimated value and the real value of the claim. Secondly, when a party has not proved the damages claimed in the proceeding, the court may impose a sanction equal to 5% of the claim's value.
Sanctions on parties for unreasonably estimating the value of their claims are subject to two limitations. First, they can only be imposed in certain types of proceedings, ie, mainly declarative proceedings. Second, case law has established that such sanctions may only be imposed when the party has acted negligently. However, the case law is not consistent in this regard.
The administrative body of the judiciary has established the following criteria for calculating such sanctions:
Criteria to determine sanctions within declarative proceedings:
• In proceedings of sole instance, fines will range between five and 15% of the value of the claim; or between one and eight minimum legal monthly wages, when claims cannot be valued.
• First-instance fines will range between five and 15% of the value of the claim; or between one (approximately USD284 at current rates) and eight minimum legal monthly wages (approximately USD2,270 at current rates), when claims cannot be valued. When claims have an intermediate value (up to approximately USD33,000), the value of the fines will range between 4% and 10% of the claim value. When the claim value exceeds this value fines can be between 3% and 7.5% of the claim value. Value of fines imposed can be between one (approximately USD284 at current rates) and ten minimum legal monthly wages (approximately USD2,840 at current rates), when the value of the claims cannot be determined.
Currently, Colombian Competition Law does not set forth that compliance programmes constitutes a graduation criterion of the fines imposed by the Authority. Currently there is no legal basis for the SIC to apply a reduction of the fine to companies that have a compliance programme. However, the Authority has stated openly that it is studying regulation to this effect.
Sanctions in the governmental proceeding cannot extend to mandatory consumer redress. In addition, the fines that are imposed go to the public treasury, and not to compensate any person.
The decisions of the Authority have the reconsideration remedy (filed before the same official who made the decision - the Superintendent of Industry and Commerce) and annulment action that can be filed before the administrative judges.
Through the reconsideration and appeal parties can request that the SIC revoke its decision or reduce the value of the fine. The SIC will rarely revoke. In some cases the SIC has reduced the value of the fines. The annulment action is a judicial remedy and parties usually support it on procedural shortcomings. Administrative judges tend to annul a decision that clearly violated procedural requirements.
Anyone in Colombia who has suffered damage attributable to a third party has the possibility to file a private civil action before civil judges. This action can be filed within the next five years from when the damage was suffered. Likewise, when those affected are a group of people, it is possible to file a group action (class action).
The administrative process that the Competition Protection Authority carries out protects the market and those who interact in it as a whole. Consequently, the result of these actions involves both the imposition of fines (in favour of the State) and the issuance of orders to correct any effect on competition, but does not benefit individuals directly.
Private firms and/or individuals may have a private right action against an alleged cartel, as long as the plaintiff proves that they have suffered damages, and that those damages were directly caused by an illegal conduct.
Such actions may be filed as class actions, as long as they comply with the requirements to be a class action - ie, at least 20 plaintiffs and that the damages suffered by the plaintiffs all stem from the same illegal conduct.
Consumer associations or public interest groups will have standing, as long as they show that they have suffered damages directly.
The passing-on defence argument was used by the antitrust Authority in a case of excessive pricing. In that case, the authority set forth that, in vertical relationships, the pass-through of a fee charge by the upstream party to the downstream party could logically be charged to the customers of the downstream party as it is part of the party’s costs. In that case, the excessive pricing conduct was fined only to the upstream party.
Having said that, it could be possible to argue the same defence before civil judges in those cases in which alleged antitrust vertical agreements could harm third parties empowered to file a suit for civil liability (special civil liability caused by unfair competition or any other standard civil liability for causing any harm as a result of the misbehaviour). No such cases have been seen in civil courts.
Like any other civil case, this type of argument must be alleged in the answer to the complaint, and must be duly proven during the process so that it is taken into account by the judges.
Evidence from governmental investigations or proceedings is admissible.
We are not aware of any civil judgment by cartels in Colombia. However, it is important to mention that, based on the fact that the person alleging harm must prove it, it is not enough for the decision of the competition authority to be to obtain a judgment from a civil judge recognising the payment of damages to third parties, since they must demonstrate the causal link between that conduct and the harm suffered. Likewise, in cases of unfair competition, it must also be demonstrated that the conduct produced a significant competitive advantage in favour of the offender.
Counsel compensation depends on the fee arrangement with the client.
See 4.5 Sanctions and Penalties Available in Civil Proceedings.
The parties may appeal first-instance decisions by courts. Furthermore, judicial decisions may be subject to extraordinary judicial review, such as a tutela claim or an extraordinary motion to appeal (casación).
Regarding tutela claims, these are constitutional actions seeking the protection of fundamental rights. Tutela claims may be filed against a judicial decision, provided that they meet certain requirements.
First, the tutela must comply with general requirements:
Second, the tutela must meet specific requirements that mainly pertain to gross procedural flaws when issuing the challenged ruling - ie, disregarding evidence, or procedural stages.
Finally, the cassation motion is reserved for civil claims with values greater than approximately USD252,000. As with the tutela claim, the cassation motion does not review the merits of the judicial decision but, rather, its procedural flaws.
There are no other items of information that are pertinent to an understanding of the process, scope and adjudication of claims involving alleged cartel conduct in Colombia.
Guidelines on the application of competition rules to collaboration agreements between competitors (in Spanish): http://www.sic.gov.co/sites/default/files/files/CARTILLA_ACUERDOS%2019-03-2015.pdf
Guidelines on the application of competition rules to associations of companies and associations or professional associations (in Spanish): http://www.sic.gov.co/recursos_user/documentos/CARTILLA_GREMIOS.pdf
Good practices in contracting goods and services in the hydrocarbons sector (in Spanish): http://www.sic.gov.co/sites/default/files/files/Proteccion_Competencia/Buenas-practicas-para-la-contratacion-bienes-y-servicios.pdf
Guidelines to fight against collusion in public procurements (bid-rigging) (in Spanish): http://www.sic.gov.co/recursos_user/documentos/articulos/2010/Guia_Contratacion.pdf