Colombia: Understanding The Scope Of The Superintendence Of Industry And Commerce Regarding Actions That Affect Free Competition

Last Updated: 9 November 2016
Article by Enrique Álvarez

2015 will be remembered, among other things, as one of the years that free competition was most defended, at least in regards to investigations. According to the Superintendence of Industry and Commerce (SIC), in November of 2015, there were more than 500 market agents being investigated by the SIC for possible collusion. Among these, 358 were public contract disputes. This was the year that several important measures were taken against "cartelización" (monopolistic competition) in various sectors of the Colombian economy.

The best-known recent example was that of sugar. In this probe, after a five year SIC investigation, it was uncovered that the national sugar producers had reached an agreement to prevent other brands from entering the country, an act known as an exclusionary agreement. This entails the involved parties establishing their own rules and preventing other entities from competing under equal conditions. This practice, directly against free competition, led to the SIC imposing one of the highest fines in the history of Colombia.

Free competition has, indeed, been regulated for several years in our country. The 1991 Constitution, however, secured and strengthened market regulation with Law 1480, passed in 2011. In recent times, the Superintendence of Industry and Commerce has been in charge of ensuring that free competition becomes a more and more transparent practice.

The SIC has played a fundamental role in guaranteeing that free competition in Colombia remains free from manipulation, as in the aforementioned examples. Their work as a regulatory entity has led to a situation in which companies are playing fairly in the national market.

Despite these advances, companies are far from free of manipulative actions that employees, executives, and people within their organizations may take against free competition. For this reason, law firms with expertise in this area, like Lloreda Camacho, recommend that companies know the scope of the SIC and how to protect themselves from these situations which may affect them.

What the SIC Can and Cannot Do

Since Law 1480 was passed in 2011, the SIC has possessed new tools to defend the right to free competition. One example is the increase in fines to companies or individuals that do not obey this law. The SIC is now able to impose fines of up to 100,000 minimum salaries (approximately 68.9 billion pesos) for companies and up to 2,000 minimum salaries (approximately 1.379 billion pesos) for individuals, enough to potentially cause bankruptcy for either entity.

The SIC does not play the role of judge in these cases; but they can initiate an investigation that could lead to fines. They have a wide range of tools in these instances including information gathering from all of the employees, searching all of the company computers, gaining access to the company server, and receiving testimony from any third party that may have knowledge of suspicious acts. Based upon the information collected, they can begin to construct a body of evidence, which will determine if the sanction will be imposed.

The SIC has another tool at its disposal: a program in which people who wish to incriminate or report unusual or suspicious acts have the opportunity to acquire personal benefits, including the reduction or annulment of the fine. This all depends upon the information supplied and its relevance to the case in question. These capabilities have strengthened the SIC's ability to regulate the Colombian market and promote free competition.

In addition to understanding the scope of the SIC, Lloreda Camacho recommends that companies develop the capacity to manage fulfillment and auditing programs related to competition. The aim of said programs would be to reduce the possibility of the company committing acts that impede free competition.

These programs are successful worldwide for various reasons. First, the company is demonstrating its diligence in monitoring itself to prevent these kinds of actions. Second, if the company eventually does come under investigation for said acts, the best way to prove that the company is complying with the law is proving that it has a well-established monitoring program. In this way, the company will have solid defense mechanisms and could implement a faster and more efficient denouncement process in the presence of the SIC that would be favorable to the company.

The programs require a high level of training that will help the businessman make crucial decisions in the best interest of the company. These decisions may relate to price setting, promotions, and/or follow-up on fulfillment of the aforementioned protocols. In case something suspicious does arise, the necessary alarms would sound, and they can regain control to avoid succumbing to illegal situations.

Understanding the scope of the SIC regarding this topic and knowing that there are mechanisms to prevent sanctions, it is time for companies to take matters into their own hands, seek advice, and continue to strengthen free competition in Colombia.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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