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Print articleColombian Congress Approved Law 1340 on Antitrus
August, 2009 -
On July 24, 2009 the Colombian Congress approved the bill "by virtue of which new regulations are issued for the protection of competition". Some of the relevant provisions incorporated in the bill are the following:
Single Antitrust Authority.The Superintendence of Industry and Commerce (“SIC”) is appointed as the only Antitrust Authority in Colombia. Nonetheless, the Superintendence of Finance and the Civil Aeronautics Administration retain jurisdiction to approve mergers or integrations were there is a company under their surveillance.
Increase of fines to legal entities and individuals.
Legal entities that infringe competition regulations could be fined for up to 100.000 minimum wages (COP$49.690.000.000, approximately USD$24,086,282) or up to 150% of the revenues derived from the conduct of the offender. Additionally, individuals who facilitate, authorize, perform or tolerate practices contrary to competition regulations could be also subject to fines of up to 2.000 (COP$ 993.800.000, approximately USD$ 481,725).
Total or partial release of fines to legal entities or individuals that cooperate with the SIC.
Offenders could be totally or partially released from paying fines if they cooperate with the SIC by providing evidence or information related to the relevant infringement under investigation.
Time extension in proceedings to authorize mergers.
Law sets forth an initial evaluation stage of 30 working days which term could be extended for up to 5 months if the SIC deems it necessary. Under the previous law, competition regulations provides for a term of 30 working days.
Reversion of mergers.
The SIC could reverse a merger when: i) it was not dully informed or it was performed prior to obtaining the clearance; and ii) the companies involved do not comply with the remedies imposed by the SIC.
Automatic authorization of the merger if the relevant firms have less that 20% of the relevant market.
Pursuant to new law, if the parties to a relevant market have together a market share of less than 20%, the integration will be deemed to be authorized by the SIC. However, the parties will nevertheless need to submit a report to the SIC with a description of the transaction and the SIC will have the authority to request additional information. Please be advised that as of today, the SIC has not indicated what kind of information it will require from the parties when their combined market share is less than 20% of the relevant share.
Authorization of integrations were the relevant firms have more that 20% of the relevant market. The following is a brief summary of procedure that will need to be followed if the parties to the transaction hold more than 20% of the relevant markets:
The parties to the transaction will need to submit to the SIC an application for preevaluation, accompanied by a brief report in which the parties express their intention to carry out the transaction, together with a description of the basic conditions of the transaction. For that purpose, the new law provides that the pre-evaluation filing will need to follow the guidelines to be issued by the SIC. Within 3 days following the above said report and unless the SIC has sufficient evidence to establish that there is no obligation to report the transaction, the SIC must order the publication in a newspaper of wide national circulation, so that within 10 days following the publication, interested third parties (such as competitors) will be able to provide to the SIC information concerning useful elements for the analysis of the proposed transaction. However, the SIC will not order the publication of the notice to the extent that it has sufficient evidence to establish that there is need to report the transaction to the SIC, or when the parties involved, for reasons of public policy, and in writing, request that the information remain confidential, and such request is accepted by the SIC.
Within 30 days following the filing of the pre-evaluation report, the SIC will determine whether to continue with the process or, if it finds that there are no substantial risks to competition that may arise from the transaction, to terminate the process and allow the transaction to proceed to completion.
If the process continues, the SIC must notify the proposed integration to other authorities in order to obtain their opinion. In addition, the SIC will request additional information from the parties to the transaction, that has to be submitted in a complete and reliable anner within 15 days of the request by the SIC. The SIC may require the parties to complement, clarify, or explain the information so collected. Also, the parties to the transaction may propose conditions, actions or conducts to neutralize any possible anticompetitive effects of the transaction in the market.
The interested parties will have the right to request that the SIC discloses any information provided by third parties, and may contest such information. If the transaction has not been objected within 3 months from the moment in which the parties to the transaction have submitted the required information with the SIC, the transaction will be deemed authorized. On an informal meeting held with the SIC, we were informed that the SIC estimates at this stage that the entire process will take more or less 5 months from the date in which the parties to the transaction file the information.
Ministry of Agriculture is empowered to authorize agreements aiming to stabilize the agricultural sector.
Law 1340 considers the agricultural sector as a core sector of interest to the general economy in Colombia. As such, the Ministry of Agriculture and Rural Development shall issue a preliminary opinion, which will be binding and justified, in connection with the approval of agreements and covenants aimed at stabilizing that sector of the economy.
