You are here
The SIC Sets Criteria For Compliance With The Regime Of Protection Of Free Economic Competition In The Context Of The Current Economic Emergency
On May 11, 2020, the Superintendence of Industry and Commerce, the regulatory body for competition in Colombia, issued resolution No. 20490, with the purpose of determining the criteria that facilitate compliance with the regulations on protection of free competition. economic, limited to the current economic and social emergency that the country is going through.
It begins by pointing out the administrative act to the general aspects that the competition protection regime provides, regarding collaboration agreements between competitors.
In the first place, there is the prohibition of restrictive agreements on competition, that is, those that have as their object or effect the generation of distortions in the dynamics of competition in the market ”
The resolution indicates that the agreements that have as their purpose "the fixing of prices, limitation of production, collusion in public procurement processes and market distribution" are part of said definition.
Along the same lines, quoting the OECD now, it specifies that "such behaviors constitute the most serious form of violation of the rules of protection of competition, since they normally generate price increases that impede or hinder consumers' access to products and services"
Secondly, there is the authorization of collaboration agreements between competitors that do not create restrictions on competition.
For the entity has arranged, the agreements between competitors are legitimate when they are framed in any of the following hypotheses:
The agreements should not only not be factors that generate any kind of restriction on competition, but also their purpose should be to promote "the well-being of consumers and economic efficiency without limiting the free participation of companies in marking”
However, it may happen that the agreements are currently or potentially generating factors of restriction. However, they will be considered legitimate, "on the basis of a weighting exercise, that the benefits derived from their efficiencies may be considered greater than the risk of affecting the competition generated by the collaboration mechanism"
Third, there are the conditions that a collaboration agreement between competitors must meet, namely:
Any of the stages of the value chain of the respective products or services must be optimized in efficiency.
If, in execution of the collaboration agreement, restrictions arise, they must be indispensable to achieve "the objectives of improvements in efficiencies that constitute the purpose of the collaboration scheme"
The benefits should not be inter parties, that is, only for the members of the collaboration scheme, but should be passed on to consumers.
In no way should the collaboration agreement lead to the removal of a competitor from the market.
In this order of ideas, taking into account the serious economic impact caused by the current emergency situation, it is understandable that business synergies aimed at facing and overcoming this crisis should be promoted and celebrated, which, the entity points out, should benefit from the regime on free competition, for which, it will guarantee that this is not an impediment or obstacle to the conclusion of such agreements.
To this end, the Superintendency has indicated that the criterion for interpreting the regulatory standards for free competition "will consist of understanding that the collaboration agreements between competitors aimed at attending to the emergency derived from the outbreak of the coronavirus COVID-19 or to overcome the affectations that they will continue for the economic system as a result of that emergency, they will observe the requirement to produce improvements in efficiencies ”
For this purpose, the entity resolved:
- Presume that the collaboration agreements concluded within the framework of the current situation or aimed at overcoming it, meet the stated requirement of producing improvements in efficiencies.
- Notwithstanding the foregoing, collaboration agreements must strictly comply with all the remaining requirements to be legitimate. At any time, the Superintendency of Industry and Commerce may exercise its functions as an inspection and surveillance authority.
- Those who enter into collaboration agreements must inform the entity's Delegation for the Promotion of Competition about:
- The execution of the collaboration agreement,
- The market agents that will participate in the dynamics,
- The products and / or services that could be affected,
- The specific content of the collaboration agreement and
- Its Duration, specifying the projected start and end time