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Colombia: Competition authority recognizes antitrust compliance programs may be a mitigating factor in assessing sanctions for anti-competitive practices

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In brief

In one of its latest decisions1, the Superintendence of Industry and Commerce (SIC) recognized that the implementation of compliance programs in competition matters might be considered a mitigation factor in the graduation of an eventual sanction.

It should be recalled that Decree 092 of 2022 created the Compliance Directorate, which is part of the Office for the Protection of Competition within the SIC which, among other functions, is responsible for monitoring the effective adoption of compliance programs.

Recently, the SIC has pronounced the importance of these programs, imposing them as behavioral remedies in merger control procedures, as well as in decisions regarding anti-competitive practices.

Specifically, in Resolution 22645 of 2022, the SIC imposed remedies to the transaction between two companies, imposing as a behavioral obligation within the companies the implementation of an Antitrust compliance program.

In addition, with respect to anti-competitive practices, the Authority has referred to these programs through Resolution 27906 of 2011, in which it sanctioned a company and, as part of its sanction, ordered it to implement a competition compliance program.

Recognition of the importance of compliance programs by the SIC

I. The SIC accepts that compliance programs are grounds for mitigation in the event of an eventual sanction

  • By means of Resolution 44516 of 2022, the SIC indicated that the agile and effective adoption and implementation of a compliance program in matters of free competition might be favorably taken into account in the graduation of an eventual sanction.
  • For this purpose, the adoption and implementation of the compliance program will be based on the technical standard NTC 6378:2020 “Requirements for the establishment of good practices for the protection of free competition”.
  • The program must include (i) its scope; (ii) its importance and benefits; and (iii) the commitment acquired by all persons directly or indirectly linked to the company to guarantee and promote free competition.

II. Competition protection compliance programs have gained strength since the creation of the Compliance Directorate

  • By means of Decree 092 of 2022, the Colombian President modified the structure of the SIC and assigned functions to its different offices considering the new structure.
  • It created the Compliance Direction, which is part of the Deputy of Competition Protection, and which functions are, among others:
    1. Following up the compliance of (i) the guarantees accepted during administrative investigations related to breaches to the competition protection and unlawful competition regulation and (ii) the conditionings set in regards to requests of merger control clearances.
    2. Initiate administrative investigations regarding:
      • – Breaches to the abovementioned guarantees and conditionings.
      • – Omissions of orders, instructions and requests of information issued by the Deputy of Competition Protection of the SIC.
      • – Obstructions to investigations related to breaches the competition protection and unlawful competition regulation.
      • – Omission to undertake merger control procedures.
    3. Surveillance the establishment of compliance programs for the implementation of the above mentioned guarantees and conditionings.

For more information on the changes introduced by Decree 092 of 2022 click here.

  • ​​​​​​​In this way, the SIC’s interest in the implementation of compliance programs and its constant surveillance in order to guarantee the protection of free competition is clear.

III. The SIC has started to use the functions assigned to the Compliance Direction, including obligations of compliance programs implementation as a remedy in merger control procedures and anti-competitive practice regime

Merger control procedure

  • Through Resolution 22645 of 27 April 2022, the SIC analyzed the transaction presented by two companies for the implementation of joint products.
  • In this transaction, the SIC determined that there could be possible effects in the relevant markets defined by the parties and, therefore, determined to condition it in structural and behavioral terms.
  • Among the different remedies imposed, the SIC established the obligation for the parties to implement an Antitrust compliance program that meets the conditions set forth in NTC 6378:2020.
  • Likewise, it was imposed the obligation that such program is sent by the parties to the Compliance Direction within the following six months and to execute and implement it in a term no longer than one year.
  • The Compliance Direction is in charge of verifying the above conditions.

Sanction for anti-competitive practices

  • The SIC has also recognized the importance of implementing compliance programs when dealing with anti-competitive practices. Recently, the investigated companies have been obliged to implement and execute these programs as disciplinary and preventive measures for this type of conduct.
  • Resolution 27906 of 11 May 2022:
    1. Under this Resolution, the SIC sanctioned a company for having incurred in the general prohibition by limiting the entry of other competitors to an abbreviated selection process by reverse auction.
    2. In this decision, the SIC recognizes the importance of designing and implementing Antitrust compliance programs. Specifically, it recognizes that these programs achieve objectives within companies such as: (i) ratifying the commitment of senior management to protect free competition; (ii) guaranteeing the correct management of risks; (iii) strengthening the confidence of stakeholders; (iv) preventing and detecting early conduct that threatens free competition; and (v) contributing to the effective management and development of all the company’s processes.
    3. Given the above reasons, the SIC obliged the investigated company to design and implement an Antitrust compliance program. Likewise, it imposed a follow-up regime in charge of the Compliance Direction, consisting of:
      • – Follow-up by the Compliance Department for two years.
      • – Report to the Compliance Director any amendments or updates made to the program within 15 days following the formalization of such act.
      • – Submit an annual report of the activities carried out in compliance with the program, including risks detected, actions taken, the materialization of risks, and copy of commitments, among others.
      • – Accreditation by the SIC of the training included in the manual, two per year.

Opening for anti-competitive practices

  • Resolution 44516 of 11 July 2022
    1. In this Resolution, the SIC opens a formal investigation against a company for limiting competition in the Port of Buenaventura through conducts that hindered the provision of port operation services by independent port operators.
    2. As this is an opening Resolution, the SIC indicated that the implementation of compliance programs by the investigated companies in accordance with the technical standard NTC 6378:2020 may be favorably taken into account for the graduation of the sanction.

To access the Spanish version click here.

1 Superintendence of Industry and Commerce, Deputy of the Protection of Competition (2022). Resolution 44516 of 2022.

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Author

Carolina Pardo joined Baker McKenzie in 1994 and is a Partner of the Firm since 2008. She is currently a member of the Global Steering Committee for the Firm’s TMT industry group and of the Global Steering Committee for the Firm’s Investigation, Compliance and Ethics Group. She was a member of the Global Steering Committee for the Firm’s Global Antitrust and Competition from 2016 and until 2020 and is currently a member of the Latam's Antitrust Steering Committee.
She graduated as a lawyer and a specialist in International Contracts Law from Universidad de los Andes in Bogotá. She obtained a LL.M. with emphasis in International Private Law and Competition Law from the London School of Economics and Political Science.
Over 25 years, she has advised major national and international clients on matters related to compliance with data protection, competition and consumer law rules. She has represented clients in investigations and submissions related to data protection and competition matters in Colombia and has successfully coordinated and prepared white paper proposals to national authorities on behalf of major industrial groups in Colombia.
In 2016 Global Competition Review selected her as one of the 100 most influential women in antitrust. The last two Superintendents of Industry and Commerce have selected Carolina as a Non-Governmental Advisor to the Colombian Antitrust Regulator.

Author

Luis Alberto Castell is a Lawyer from the Pontificia Universidad Javeriana in Bogotá, with a specialization in Competition and Free Trade Law from the same university and a Master of Laws (LLM) in International Business from Queen Mary University of London.
Luis has more than 10 years of experience. He began his professional practice in the financial sector and has been specializing in the fields of competition law and corporate compliance. He was an advisor to the Superintendent of Industry and Commerce on matters related to antitrust and mergers and was part of the specialized group for the protection of competition in public procurement processes (Bid Rigging) of said entity. He was also part of Shop IV on Mergers of the Federal Trade Commission (FTC) of the United States of America as an International Fellow.
For more than three years he has been part of the Corporate Compliance team at Baker McKenzie, handling matters related to personal data protection, corporate compliance (prevention of corruption and prevention of money laundering and terrorist financing) and competition.

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