Colombia’s Government declared on March 17 a State of Economic, Social and Ecological Emergency for thirty (30) days. A few days later, alongside said measure, instructed a mandatory preventive isolation for everyone in Colombia as of March 25 until April 13, and as a result, the free movement of people and vehicles is restricted. Thirty-four (34) exceptions were issued aimed to ensure the fundamental rights of life, health and survival.
Considering the State of Emergency and other Government policies, all Colombian sectors have been affected, therefore, specific measures have been released by different authorities to engage with the current Coronavirus context.
The Competition Authority (Superintendence of Industry and Commerce- “SIC”) has not been exempt from taking action regarding the ongoing crisis, therefore, as a procedural measure, it has suspended all deadlines on administrative procedures that were being held at the SIC as of March 17, 2020, until April 30th, 2020. The suspension includes also deadlines on jurisdictional procedures regarding Antitrust, among others, such as Consumer Protection and intellectual property proceedings.
Unlike some countries, such as Germany and Poland, that have stated a possible “flexibility” when applying the current regulation on Competition matters, Colombia’s Competition Authority has expressed that the application of the Antitrust laws will continue to operate fully during the State of Emergency. Specifically, they’ve declared that: “The priority is to protect the lives of Colombian people. And protecting the lives of Colombian people also means working for the supply of basic goods and services”.
Due to the ongoing crisis, excessive purchases of certain products and the unscrupulous and illegal behavior of some producers and marketers of goods and services has taken place. Reason why, SIC has issued a series of measures aimed at maintaining free competition in Colombia, regarding mostly those markets that are directly related with essential goods and/or services. For instance, SIC urged the municipal mayors to perform within their jurisdiction, inspection and surveillance actions regarding the activities carried out by producers and suppliers, to determine potential violations in the rights of consumers, with antitrust behaviors such as: hoarding products, tied sales, misleading advertising and misleading information.
On the other hand, the SIC issued a letter addressed to Colombia’s productive sector, to ensure that from the main economic guilds the rights of consumers and the conditions of free competition in the markets are protected. The letter established that the business sector must avoid incurring in proceedings and systems that tend to limit free competition; the sector must respect free competition regulation as it is during the emergency context. SIC asserts that behaviors that seek to distort competition and the proper functioning of the markets will not be tolerated during the crisis.
The Government has presented a Decree to deal severely with speculation and the hoarding of essential goods and services (already classified as crimes in the Penal Code) during the time in which the causes that motivated the declaration of the State of Economic, Social and Ecological Emergency persist. Its purpose and objective are to protect household access to basic and first necessity goods and services.
The Decree gives out clear guidelines so that SIC can face efficiently the hoarding and price speculation, hand in hand with other Authorities. The Government is proposing the publication of price lists for basic/essential goods and services (such as medicine, surgical masks, and others) supported by the information given out by the National Administrative Department of Statistics (DANE). This last authority will perform a periodical review of the products and/or services from the published list to update them if it is necessary. Finally, the Competition Authority will verify if there are exaggerated increases regarding prices in order to take the necessary regulatory measures.
According to the Decree, SIC would be also acting as Judicial Police collecting information for the Attorney General's Office concerning the crimes of hoarding and price speculation.
As a tool for people to properly report any infringements against free competition, the Competition Authority released a cellphone App (PQRFS) in which consumers are able to report violations and infringements in real time without having to go to SIC´s physical offices venue considering the mandatory isolation measure. The App is now available for Android and iOS operating systems. The Authority is encouraging the use of electronic means at the disposal of citizens in order to denounce such practices. The Authority has insisted in the use of these tools regarding the need for a proper report in order for the Authority to take measures against anyone who commits the alleged offense.
Although reports are being received by the Authority, they have been carrying out inspection visits to commercial establishments all around the Country in order to guarantee the rights of consumers and free competition during this State of Emergency. This way, the process in which measures are taken against the offender could be initiated ex officio.
3. Abuse of market power
Colombia’s current Competition regulation does not frown upon companies and enterprises having a dominant position in the market as a result of healthy competition among competitors. However, the abusive practices performed by those established as dominant among others, constitutes a violation of the laws and may impair the free market conditions.
SIC has yet to issue a specific statement or regulation about abusive practices carried out by subjects with a dominant position on their specific market. Is understood, therefore, that the regulation on this matter continues to be fully applied by the Authority during the ongoing crisis and State of Emergency. Sectors and guilds that supply first necessities goods and services are being closely monitored by the Competition Authority.
4. Merger control
The deadlines for the prior control regarding Mergers, that SIC is in charge of, are also suspended throughout the term in which the State of Economic, Social and Ecological Emergency, declared by the President of the Republic, is in force. However, Merger & Control proceedings that are currently in progress, in which all the necessary information has been collected so that the Authority can adopt the corresponding final decision, are excepted from the general deadline suspension.
For more information on competition regulation in Colombia, contact your regular CMS advisor or local CMS experts Lorenzo Villegas-Carrasquilla ([email protected]) and María Camila Piedrahita Tovar ([email protected]).