Is antitrust enforcement getting tougher in Colombia?
In recent years, the Santos administration has dedicated significant resources and devoted restructuring initiatives to enhance and intensify the competition law enforcement in Colombia. These efforts largely follow suggestions made by the OECD and the IDB in 2009, as well as additional notes in the Colombia Report of the OECD published in 2013 related to the enhancement of Colombia’s competition policy and its application.
In 2009, the Colombian Competition Regulator (SIC) celebrated the 50th anniversary of the enactment of the competition statute in Colombia.1 A Commission comprising the OECD and the IDB (the Commission), led by a former Argentinian regulator, presented a report on Colombian competition law and policy.2
Although the report recognised several strengths of the Colombian competition regime, the Commission made a number of recommendations to improve the existing framework. Many of the suggestions were directed at increasing enforcement and enhancing certain procedures to make the competition rules more efficient. Some of these had been already adopted by Law 1340 of 2009, enacted in July 2009.
However, the increased powers and functions assigned to the SIC by Law 1340 of 2009 prompted the need to devote significant resources to the agency’s competition division and to increase the number of staff dedicated to competition law enforcement. Echoing the Commission’s suggestions and the challenges arising from the new legal structure, the Colombian Development Plan for 2010–2014 of the Santos administration urged for the allocation of new funds for the SIC so that it could adequately undertake the additional functions assigned to it under the new Law as the Colombian Competition Regulator.3
A year later, the Ministry of Tourism, Industry and Commerce restructured the SIC.4 In addition to gaining new specific powers, the SIC received an important increase in its budget (almost triple that of 2011 to approximately US$64 million in 2014) and an expansion of its manpower. Since 2008, the competition staff has nearly doubled. The Law also invested the SIC with powers to impose fines 50 times higher than the cap allowed by the previous statute.
With these new powers, a larger budget and increased staff, the SIC was in the spotlight to show that it was ready to intensify the results in the civil prosecution of offenders of the competition rules.
Escalation on the level of fines
Since 2011, the value of the fines that the SIC has imposed for competition violations has escalated.
In 2013, the fine against the dominant telecom mobile carrier Claro added more than US$47 million. The company was found guilty of market foreclosure for impeding customers’ switch to rival networks through the sale of equipment with a locked frequency, and for refusing to unblock the frequencies in such equipment despite recent mandates from the communications regulator (CRC) on number portability. The SIC also found Claro guilty of facilitating and financing the practice by its dealers of purchasing SIM cards from other networks to alter the statistical CRC results on mobile phone activity in Colombia. The latter practice ultimately effected the decision of consumers and helped consolidate Claro’s dominant position.
In 2014, fines for the violation of competition rules in Colombia totalled 89 billion pesos. The biggest fine was levelled at Bogota water utility company EAAB (approximately US$32 million).
In 2015, the SIC is expected to impose fines on sugar cane mills for a new cartel investigation. In 2010, the SIC imposed fines for the maximum permitted under the old statute; the fines are expected to be for the maximum permitted under Law 1340.5
However, before the first quarter of 2015 had ended, the SIC publicly announced6 that the government is preparing a new bill to make fines for competition violations more severe. The bill should be presented to Congress during the second semester of 2015. According to Superintendent Robledo, his proposal is that the new statute allow the SIC to impose fines equivalent to 20 per cent or 30 per cent of the turnover of the companies found guilty.
Dawn raids and information seizure
The number of open investigations continues to rise. However, the mechanism that continues to create more surprises among investigated parties are the dawn raids and unannounced visits performed by the SIC to gather data and information prior or during an investigation.
These visits were scarcely used by competition officers prior to 2008. During the past couple of years, the SIC has made an average of more than one unannounced visit per day, each year. Despite strong reactions to these mechanisms, the SIC continues to perform them.
The norm currently allowing the SIC to undertake visits, request copies of documents and data and take on formal depositions from the officers of the parties is included in the Decree through which the SIC was restructured in 2011.7 There is no need for the SIC to warrant the visit with a judicial order. Notably, the faculties of the SIC to undertake these inspections are not limited to the competition division. Hence, other areas under the SIC’s control – such as data protection, consumer protection, technical standards, intellectual property and so on – can also adopt use this mechanism in the course of an investigation.
In practice, the SIC will undertake unannounced visits when it infers or suspects that a legal or natural person is performing acts contrary to free competition and the agency officers fear that there is a risk of losing information that may be useful and necessary for the investigating of anti-competitive practices, or that such information will be altered, tampered or hidden. The order to allow the SIC to perform the inspection visit is not appealable.
Furthermore, parties opposing the visit or refusing to cooperate with the SIC may be subject to fines from the agency. In fact, in 2011, a subsidiary of Venezuelan state-owned fertilisers company Monomeros Colombo Venezolanos SA received a fine equivalent to US$724,000 for refusing to cooperate with the SIC during a visit. Monomeros challenged the fine, but in 2013 the Court confirmed the SIC’s decision. Although the SIC could impose fines of up to US$28 million at that time, the Constitutional Court has since established a criteria of proportionality and reasonability when calculating the value of the fines that the administrative agencies may impose.8
Legal privilege and confidentiality
The faculties of the SIC regarding dawn raids and administrative investigations cannot neglect the rights of parties to oppose the disclosure of privileged information and protect its confidential data.
In Colombia, legal privilege is an inviolable right that has been broadly developed by the Colombian Constitutional Court and legislation. The seizure of any document or correspondence subject to legal privilege is illegal and shall not be used in any judicial or administrative proceeding.
In general, the SIC applies such principle and is respectful of confidentiality rights and legal privilege. However, the SIC has indicated in certain forums that its position is that legal privilege should not apply to the in-house counsel of a company. The SIC considers that in-house counsel have limited independency given his or her close relationship to the client, which in this case is his or her employer.
The academic position of the SIC is debatable. On the one hand, the Colombian Disciplinary Code for the Legal Profession provides the obligation to all lawyers (with no distinction between external or in-house lawyers) not to reveal professional secrets even to governmental authorities except when the attorney has received consent from his or her client, or to prevent a crime. This obligation has not been limited by the Colombian Constitutional Court, and hence legal privilege applies to all type of communications with lawyers whether they are in-house or not.9
Despite its academic position, the SIC in general applies such principle and is respectful of confidentiality rights and legal privilege, following the ICN’s recommendation VI F.
A common discussion refers to the interception and disclosure of the contents of e-mails and files. In 2013, the Superior Tribunal of Bogotá issued conflicting decisions when EAAB challenged twice, through a constitutional action, the SIC’s ability to access information in the e-mails of its employees. In the first decision, the Tribunal concluded that the SIC could not access any of the information in the e-mails of the officers of the company without a judicial order. Any access would undermine the right to secrecy of communications and of correspondence.
In the second ruling, the Tribunal clarified that the SIC could in fact access the information in corporate e-mails without a Court order. The SIC can also access personal mail without a court order if the owner of the account grants voluntary consent.
In relation to this matter, the Supreme Court of Justice10 has established that e-mail addresses which belong to a company (ie, when the e-mail address has the domain termination ‘@company.com’) and which are assigned to the company’s employees or officers are considered a work tool that shall be used for the adequate fulfilment of their duties. Consequently, the correspondence included in corporate e-mails is deemed to be related to ordinary activities developed by the company, and hence not considered private communication. Therefore, information in such e-mails can be seized or captured during a dawn raid even if they include personal data. However, if such e-mails include personal matters, the Colombian Superintendence of Industry and Commerce will undertake a depuration process with the purpose of collecting only the relevant information for the matters under investigation or analysis. Conversely, access to e-mail addresses not belonging to the company but to individuals will be restricted and public officers will only be able to access to them if they have a warrant or if the individual provides its consent.11
The right to privacy is regulated in Colombia by the Colombia Constitution (article 15), Law 1581 and by International Treaties, such as the International Treaty of Civil and Political Rights and the American Convention of Human Rights. The right to privacy foresees the existence and enjoyment of a reserved space, which shall be exempted from arbitrary intervention by the Colombian state and individuals. However, the right to privacy is not absolute and may be subject to limitations based on reasons of public interest.
- Law 155 of 1959.
- Available at www.oecd.org/daf/competition/44110853.pdf.
- The document called Prosperity for all: 2010-2014 issued by the Colombian Department of Planning (2010) also proposed the creation of a group of economic studies, entering into cooperation agreements with foreign competition authorities, redesigning the regulations for a more efficient enforcement and implementing institutional changes that would give the SIC more autonomy and independence as well as a better interaction with other authorities. Most of these actions have been fulfilled. Available at https://colaboracion.dnp.gov.co/CDT/PND/PND2010-2014%20Tomo%20I%20CD.pdf (pgs. 99–104).
- In December 23, 2011 the Ministry of Tourism, Industry and Commerce enacted Decree 4668/11, to restructure the SIC. The Decree included provisions related to other areas of action of the agency such as consumer protection, data protection, intellectual property, technical standards, etc.
- During an academic forum in March 2015, the SIC announced new measures to increase the value of the fines for violation to competition laws in Colombia. www.sic.gov.co/drupal/noticias/segundo-congreso-internacional-del-derecho-de-los-mercados-dia1.
- Decree 4668/11, article 1, sections 62-64.
- Constitutional Court Ruling C-490.
- Colombian Constitutional Court. Ruling C 411 of 1993 and C-301 of 2012.
- Colombia Supreme Court of Justice. Sentence of 4 September 2007.
- Colombian Constitutional Court. Ruling of 15 April 2013.