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Law 2195 of 2022, enacted on January 18, which adopts measures regarding transparency, prevention and fight against corruption, introduced changes to several laws, including Law 1340 of 2009, which establishes rules for the protection of competition, and Decree 2153 of 1992, which restructures the Superintendency of Industry and Commerce -Colombian competition authority-, and establishes other provisions.
It is noteworthy that these amendments have been included in the final Chapter of Law 2195 of 2022 ("Chapter XI Other Provisions" article 66 et seq.), with a title that does not refer to the subject matter to be dealt with in the articles, but which in any case generates substantial changes in competition law rules, as summarized below:
Benefits for collaboration: Full confidentiality was established for the negotiation process, the identity of those who benefit from these programs and the evidence they provide, until the ruling that finishes the administrative investigation is issued. This without prejudice to the guarantees of due process and defence of those under investigation. Also, those who are exonerated from fines (partially or totally) as a result of the program of benefits for collaboration, will not be jointly and severally liable for the damages caused to third parties, except only in the proportion of their participation in causing such damages.
Fines for Offenders: Perhaps one of the most striking points regarding competition law is that Law 2195 of 2022 specifically states that fines may be imposed on any market agent (both natural and legal persons), up to a maximum of 100,000 legal monthly wages (COP 100,000,000,000,000, equivalent to approximately USD 26,624,068)
1
Exchange rate for March 24, 2022, of COP 3.756 per dollar.
, based on the following criteria:
A. Economic criteria, with respect to which the highest shall be applied:
o The operational income of the offender in the fiscal year immediately preceding the year in which the sanction is imposed. In this event, the sanction may not exceed twenty percent (20%) of such income.
o The assets of the offender in the fiscal year immediately preceding the year in which the sanction is imposed. In this event, the sanction may not exceed twenty percent (20%) of the value of its assets.
o An amount in current legal monthly minimum wages in charge of the offender. In this event, the penalty may not exceed one hundred thousand legal monthly minimum wages in force (100,000).
When it is possible to quantify the profits received by the offender derived from the conduct, the Superintendency of Industry and Commerce may impose as a sanction up to three hundred percent (300%) of the value of the profit, provided that such percentage is higher than the greater of the limits established in the previous criteria.
o The value of the state contract in cases of restrictive business practices that affect or may affect public procurement processes. In this case, the fine may not exceed thirty percent (30%) of the value of the contract.
B. Criteria for the fine’s imposition, which must be applicable to the specific case:
o The capability of the conduct to affect the market or the effect on such market.
o The nature of the good or service involved.
o The level of involvement.
o The duration of the conduct.
o The offender's marketshare in the market under investigation.
C. Aggravation criteria for sanction dosage:
o Be a leader, instigator or in any way promoter of the conduct.
o The continuation of the infringing conduct once the investigation has been initiated.
o Recurrence or existence of negative records in relation to infringements to the competition protection regime or non-compliance with commitments acquired with the Competition Authority, or with the orders issued by the latter.
o The procedural conduct of the infringer tending to obstruct or delay the process, including the filing of requests that are evidently improper.
o For each aggravating circumstance in which the offender incurs, an increase of up to ten percent (10%) of the amount of the fine to be imposed shall be applied, without exceeding in any case the sanctioning limits provided by law.
D. Mitigation criteria, which will apply in those cases in which the investigated person accepts the charges in those cases in which has not been recognized as a whistleblower. However, no specific percentage to be applied is established.
Fines for facilitators: Law 2195 of 2022 also specifically states that in the case of facilitators, fines may be imposed on natural or legal persons that collaborate, authorize, promote, encourage, execute or tolerate the violation of competition protection rules by a market agent, up to a maximum of 2,000 Legal Monthly Minimum Wages (COP 2,000,000,000,000 equivalent to USD 532,481 approx.)
2
Exchange rate for March 24, 2022, of COP 3.756 per dollar.
, based on the following criteria:
o The level of involvement.
o The recurrence or existence of negative records in relation to infringements of the competition protection regime or non-compliance with commitments acquired or orders from the competition authority;
o The facilitator's assets.
A. Aggravating Criteria:
o Continuing to facilitate the infringing conduct once the investigation has been initiated.
o The recurrence or existence of previous infringements to the competition protection regime, or non-compliance with commitments acquired with the Competition Authority, or with the orders issued by the latter.
o The procedural conduct of the facilitator tending to obstruct or delay the processing of the process, including the filing of requests that are evidently improper.
o For each aggravating circumstance in which the facilitator incurs, an increase of up to ten percent (10%) on the amount of the fine to be imposed shall be applicable, without exceeding in any case the sanctioning limits provided by law.
The law also states that the payments of fines imposed by the Superintendency of Industry and Commerce on facilitators may not be paid or insured, or in general guaranteed, directly or through an intermediary, by the market agent to which the facilitator was linked when he incurred in the conduct; nor by the parent company or its subordinate companies; nor by the companies that belong to the same business group or are subject to the same control of the facilitator and that the violation of this prohibition constitutes in itself a restrictive practice of competition.
It is also worth mentioning and highlighting the efforts made by the Colombian government to readjust the structure of the Superintendency of Industry and Commerce and create specialized units that allow for efficient, professional management in line with market needs.
Thus, through Decree 092 of 2022, the Compliance Directorate was created as part of the Office of the Superintendent Delegate for the Protection of Competition, which will be in charge of:
o Supervise of the guarantees accepted by the Superintendent of Industry and Commerce, within the investigations for violation of the rules on protection of competition and unfair competition.
o Supervise the conditions established by the Superintendent of Industry and Commerce with respect to requests for consolidation, integration, merger and obtaining control of supervised companies.
o To instruct the proceedings on the non-compliance of the obligations derived from the termination of an investigation due to the acceptance of guarantees.
o To instruct the proceedings on the non-compliance with the obligation to report a business integration or the obligation derived from its acceptance under conditions.
o To instruct the proceedings on the failure to duly comply with the requests for information, orders or instructions issued by the Superintendent Delegate for the Protection of Competition.
o To instruct the proceedings on the obstructions of the investigations that are carried out for violation of the norms on protection of competition and unfair administrative competition.
o Supervise the effective adoption of compliance programs established in the framework of guarantees accepted by the Superintendent of Industry and Commerce within investigations for violation of the rules on protection of competition and unfair administrative competition.
o Supervise the effective adoption of compliance programs established in the framework of the imposition of conditions by the Superintendent of Industry and Commerce, when hearing requests for consolidation, integration, merger and obtaining control of companies.
o Support the Office of Consumer Services and Business Support in the development of dissemination, promotion and training activities, related to the promotion and construction of a culture of compliance in matters of free economic competition.
o To report to the Deputy Superintendent for Competition the status of the affairs of its dependency and the degree of execution of its programs.
The establishment of objective criteria and the restructuring of the competition authority have undoubtedly contributed to the formation of a legal framework that offers guarantees to the persons involved. Nevertheless, these legislative innovations have generated multiple discussions, mainly regarding the amount of fines, which some positions consider excessive. It should not be lost from sight that the sanctions imposed by the competition authority have a dissuasive and not confiscatory purpose.
There is still a long way to go in competition law, so CMS will closely follow the practical scope of these measures. If you have any questions, please do not hesitate to contact us.
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