imbalance between private and public enforcement in colombia webinar series - icn alfonso miranda...

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Imbalance between Private and Public Enforcement in Colombia

Webinar Series - ICN

Alfonso Miranda Londoño

December 15, 2015

Alfonso Miranda Londoño 2

Competition Law in Colombia

First Competition Law: Law 155/1959. Some of its articles are still applicable –e.g. the general prohibition against anticompetitive practices contained in article 1-.

Colombian Constitution of 1991: Included “Free Competition” as a constitutional principle and a collective right.

Main competition laws nowadays are Decree 2153/1992 and Law 1340/2009, which define the structure of anticompetitive practices, the procedure for investigating and sanctioning these conducts and the functions of the Superintendence of Industry and Commerce –Colombian Competition Agency-, among others.

Law 1340, 2009 introduced the leniency program as an important tool for the fight against cartels.

Pursuant to Article 27 of the Anti Corruption Statute, Law 1474, 2011, ∫is now both an antitrust and a criminal


Public Enforcement of Competition Laws

Pursuant to Law 1340, 2009, the Superintendence of Industry and Commerce – SIC, is the National Competition Authority in Colombia, with exclusive powers to conduct administrative investigations and impose fines for the infraction of Competition Laws in all economic sectors. In this cases the SIC acts as an administrative authority and cannot award damages.

The SIC also conducts administrative investigations and impose fines for the infraction of Unfair Trade and Consumer Protection. In this cases the SIC acts as an administrative authority and cannot award damages.

The SIC is the authority in charge of merger control in all economic sectors except for the Banking and Aeronautic Sectors. Mergers in these sectors are subject to review by the Financial and Aeronautic authorities.

The SIC has also been granted judicial powers to decide unfair trade and consumer protection cases. In these cases the SIC acts as a judge and can award damages


Public Enforcement of Competition Laws The final decision of the SIC is only subject to a reconsideration plea.

After that, the decision is firm and the fine must be paid. Sanctioned parties can seek the annulment of the decision before the administrative jurisdiction in a process that can take up to 5 years.

So far there has been an absolute imbalance between public and private enforcement of Competition Laws in Colombia, for most of the cases have been decided by the SIC.

The SIChas focused mainly in the investigation and sanction of horizontal agreements: specially price fixing and market distribution. There have also been investigations regarding vertical agreements, unilateral acts and abuse of dominance.

The SIC developed an important line of cases investigating industries for fixing the prices of the crops or affect their quantities, as happened with the sugar, chocolate, rice and onion cases.

The SIC has looked also at many other economic sectors, such as cement, retail, fuel, health services, beer, diapers, paper, notebooks, etc.


First Steps in Private Enforcement

Since SIC cannot award damages for the breach of Competition Laws, private parties have to obtain indemnification using other means. The law will allow the victims of the anti competitive conducts to obtain full compensation of the damages they can prove, but there are no punitive damages.

Other jurisdictions have developed this issue. For example, in Europe, the administrative sanction introduces a presumption of injury within the civil procedure that facilitates the task for claimants and partially relieves them from their burden of proof (Directive 2014/104/EU).

Settlement within the administrative investigation conducted by SIC: Law 640, 2001, orders a settlement hearing at the beginning of the investigation, between the persons that presented the accusation before the SIC and the investigated parties.

The is to reach a settlement of the private parties and their economic interests. This settlement in principle does not include the SIC, who will continue with its investigation, then there is no incentive to settle.



There are few cases in which there has been a settlement in this procedure and it has happened when the SIC accepted the settlement between the parties as a mechanism (called in Spanish Garantías) for the anticipated termination of the investigation. Only in those cases it has been possible to use the settlement. Otherwise there is no incentive.

Ordinary damages action before the civil jurisdiction. If the lawsuit heavily relies in the findings and arguments of the SIC, the judge may accept to suspend the case meanwhile the administrative jurisdiction decides on the annulment of the sanction (assuming that the sanctioned parties file an a lawsuit seeking the annulment of the decision).

Arbitration tribunal when the parties agree to it. There are decisions regarding the annulment of contractual clauses for the breach of competition laws mainly in the telecommunications sector.

Class actions. They started to be used when the first leniency cases appeared. Now there are multi million dollar lawsuits in those cases.



These cases heavily rely in the evidence gathered by the SIC and in the fact that there is already an administrative decision saying that the investigated parties are guilty,

However, the decisions of the SIC can be challenged before the administrative jurisdiction and if annulled this can damage the civil litigation case.

According to article 16 of Law 446/1998, compensation for victims has to be estimated according to the full compensation principle and equity.

Victims may present claims individually or as a group. Due to the nature of the injury that anti competitive practices may cause, it is more favorable for victims to present claims as a group –for example, it eases the burden of proving the injury-.

In Colombia, the “acción de grupo” is similar to the class action. It allows groups of 20 people or more to pursue compensation of injuries arising from the same cause.



Until now, no civil case related to anti competitive conducts has been decided. However, three cartel investigations are were brought to the civil jurisdiction in order to pursue the full compensation of victims –diapers, notebooks and tissue paper investigations-.

Unfair trade actions. Obtaining a substantial competitive advantage compared to competitors, through the breach of the law is considered unfair trade for “Violation of the Law”.

In these cases the burden of the plaintiff is high for he must prove not only the elements of unfair competition, but also the elements for the subjacent anti competitive practices.

Criminal actions. The Criminal Code contains several economic crimes, but there is no specific article sanctioning anti competitive conducts until article 27 of Law 1474, 2011included bid rigging in public contracts both as a crime and as an anti competitive conduct.

Plaintiffs may try to recover their damages within the criminal investigation.


Conclusions

Three current administrative investigations were as well brought to the civil jurisdiction in order to claim compensation for victims of anti competitive practices, but no decision has been rendered yet.

After the administrative decision within the investigation of the Sugar Cartel was issued, a private lawsuit was filed. Nevertheless, it was quickly withdrawn.

Therefore, Colombian antitrust law is still essentially focused on public enforcement.

In conclusion, the relationship between public and private enforcement of anti competitive law in Colombia is yet to be developed.


END OF THE PRESENTATION

This document will be available in our website:

www.centrocedec.org

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