RESTRICTED
WORLD TRADE WT/WGTCP/W/44
22January 1998
ORGANIZATION(98-0223)
Working Group ontheInteraction Original: Spanish
between Trade andCompetition Policy
SUBMISSION FROM COLOMBIA
Thefollowing communication, dated 7November 1997 andupdated on25November 1997,
wasreceived fromthePermanent Mission ofColombia withtherequest thatitbecirculated toMembers.
_______________
Report ontheCurrent Situation andOutlook withRegard totheApplication ofRules
Concerning thePromotion ofCompetition inColombia1
1. Background
Theenactment ofLaw155of1959containing provisions onrestrictive tradepractices provided
Colombia withabodyofrulesonthematter. However, owing tothegeneral terms inwhich therules
wereformulated, theprocedures established fortheirapplication, theeconomic policy pursued over
thepast30years andtheinstitutional capacity ofthebodies responsible forimplementing them, the
rules were never applied.2
TheNational Constitution enacted in1991establishes freecompetition asarightofeveryone.
Bylegal mandate, theState ensures thateconomic freedom isneither obstructed norrestricted and
preventsorcontrolsanyabusebypersonsorenterprisesoftheirdominantpositioninthenationalmarket.
With Decree 2153 of1992 restructuring theOffice oftheSupervisor ofIndustry andTrade
andestablishing certain other provisions, anattempt ismade torespond tothemandate given under
thenewConstitution andtocomply withthepolicy ofmodernization oftheState.
Inkeeping withthegrowing internationalization ofeconomies, Colombia hasforsome years
nowbeenpursuing apolicy ofopening upitseconomy, towhich endtheGovernment considered it
appropriate todraw upanexplicit strategy toboost competitiveness.
1Thepresent report wasprepared inOctober 1997 bytheOffice forthePromotion ofCompetition attached
tothisAgency andwassubmitted totheSupervisor ofIndustry andTrade forconsideration.
2OROZCO, CLAUDIA (1993), "Marco legal paralapromoción delacompetencia enderecho comparado
yenColombia". Planeación yDesarrollo, Volume XXIV, No.2,May-August 1993, pp.94-144.WT/WGTCP/W/44
Page2
2. Body responsible forapplying theCompetition Law
TheOffice oftheSupervisor ofIndustry andTrade isanentity attached totheMinistry of
Economic Development. Among other functions, ithasbeenentrusted withensuring compliance with
provisions onthepromotion ofcompetition andonrestrictive trade practices innational markets by
allthose involved inanyeconomic activity inthatmarket, regardless oftheirlegalform ornature,
without prejudice tothepowers given inthisregard toother authorities.
Theobjectives setoutinDecree 2153 of1992 concerning theapplication oftherulesoffree
competition include improving theefficiency ofthenational production system andensuring that
consumers havefreechoice andaccess tothemarkets forgoods andservices, thatcompanies canoperate
freely onthose markets, andthatthereisavariety ofprices andqualities ofgoods andservices available.
Among other functions, theOffice forthePromotion ofCompetition, withthesupport ofthe
Division ofthesame name, isresponsible forattending tocomplaints filedinrespect ofpossible
violations oftherules ofthepromotion ofcompetition andrestrictive trade practices andtoconduct
thenecessary investigations. TheDivision ismade upofaninter-disciplinary group ofeightofficials
including economists andlawyers, asmall number considering theenormous volume ofwork tobe
doneinthatfield.
Article 1ofLaw155of1959contains ablanket prohibition ofanypractice, procedure orsystem
thatmaylimitfreecompetition, while Articles 47,48and50ofDecree 2153 of1992 establish what
actions andarrangements areanti-competitive andwhatconduct constitutes abuse ofadominant position.
3. Practices prohibited bytheLaw
Article 46oftheaforementioned Decree prohibits, within themeaning ofLaw155of1959,
practices affecting freecompetition onmarkets, which areconsidered illegal under theCivil Code.
3.1.1 Arrangements
Article 47,initsturn,considers ascontrary tofreecompetition, interalia,arrangements whose
purpose oreffect isdirect orindirect price fixing; theestablishment ofsalesormarketing conditions
thatarediscriminatory vis-à-vis thirdparties; market sharing among producers ordistributors; the
establishment ofproduction orsupply quotas; theassignment, sharing orlimiting ofsources ofsupply
ofproduction inputs; limitation oftechnical development; making thesupply ofaproduct contingent
ontheacceptance ofadditional obligations which bytheirnature bearnorelation tothepurpose of
thetransaction, without prejudice toanyother provisions inthatregard; refusal toproduce aproduct
orservice orinfluencing theirlevels ofproduction; andcollusion inbidding orinvitations totender,
oranypractice thatinvolves distributing contract awards, bidrigging orfixing theterms ofoffers.
3.1.2 Acts
Article 48liststheactsthatarecontrary totheprinciple offreecompetition asfollows:
Infringing therulesonadvertising contained intheconsumer protection regulations; exerting
influence onacompany tomake itraisetheprice ofitsproducts orservices ortodiscourage
itfromreducing itsprices; refusing tosellorfurnish aservice toanenterprise ordiscriminating
against thatenterprise ifsuchactmaybeconstrued asaretaliation against itsprice policy.WT/WGTCP/W/44
Page3
3.1.3 Abuse ofadominant position
Where thereisadominant position, defined inArticle 45,paragraph 5oftheabove-mentioned
Decree asthepossibility ofdirectly orindirectly determining theconditions governing aparticular
market, thefollowing practices areconsidered asabuse thereof:
Thelowering ofprices below costiftheintention istoeliminate oneorseveral competitors
ortoprevent their entry intothemarket orexpansion; theapplication ofdiscriminatory
conditions forequivalent transactions, thereby placing aconsumer orsupplier atadisadvantage
vis-à-vis another comparable consumer orsupplier; committing actswhose purpose oreffect
istomake thesupply ofaproduct contingent upon theacceptance ofadditional obligations
which bytheirnature bearnorelation tothepurpose ofthetransaction, without prejudice to
anyother provisions inthatregard; saletoapurchaser onconditions different from those
offered toanother purchaser when theintention istoreduce oreliminate competition inthe
market; andthesaleorsupply ofservices inonepartofthecountry ataprice different from
theprice offered inanother partofthecountry when theintention oreffect istoreduce or
eliminate competition inthatpartofthecountry andtheprice isnotinkeeping withthecost
structure ofthetransaction concerned.
3.1.4 Exceptions
Itshould benoted thatArticle 49stipulates thatthefollowing practices shallnotbeconsidered
ascontrary totheprinciple offreecompetition:
"Practices whose purpose istocooperate inresearch andthedevelopment ofnewtechnology;
agreements oncompliance withrules, standards andmeasures thatwere notconcluded as
mandatory agreements bytheresponsible body, provided theydonotlimit theentry of
competitors intothemarket; andagreements pertaining toprocedures, methods, systems and
options fortheuseofcommon facilities."
Thefirstparagraph ofLaw155of1959 stipulates that"theGovernment maynevertheless
authorize theconclusion ofagreements orconventions which, though theymaylimitfreecompetition,
areintended toprotect thestability ofabasic sector intheproduction ofgoods orservices ofinterest
totheeconomy asawhole".
4. Procedure fordetermining alleged infringements oftherules ofcompetition
Inorder todetermine whether ornotthere hasbeenaninfringement oftherules concerning
thepromotion ofcompetition andrestrictive trade practices referred toinDecree 2153 of1992, the
Office oftheSupervisor ofIndustry andTrade initiates proceedings exofficio orattherequest ofa
third party, andconducts apreliminary enquiry, theresult ofwhich willdetermine whether an
investigation isneeded.
When aninvestigation isordered, theparty under investigation ispersonally notified sothat
itmayrequest orsubmit supporting evidence. During theinvestigation, therequested evidence is
examined together withsuchevidence asthecompetent authority mayconsider appropriate.
After thepreliminary investigation, theSupervisor isprovided withasubstantiated report as
towhether ornotthere hasbeenaninfringement. Acopyofthatreport istransmitted totheparty
under investigation.
Matters notprovided forunder thisArticle aregoverned bytheCode ofAdministrative
Procedures.WT/WGTCP/W/44
Page4
Itshould bepointed outthatunder Article 13ofLaw155of1959, investigations arestrictly
confidential.
4.1 Early termination
TheSupervisor ofIndustry andTrade mayorder theearlytermination ofaninvestigation when
heconsiders thatthealleged offender hasprovided sufficient guarantees thattheconduct which gave
risetotheinvestigation willbesuspended oraltered.
4.2 Penalties
TheSupervisor ofIndustry andTrade mayimpose finesofuptotwothousand3legalmonthly
minimum wages, andthree hundred4onmanagers, directors, legalrepresentatives, taxauditors and
other natural persons whoauthorize, execute ortolerate practices thatviolate therules regarding the
promotion ofcompetition andrestrictive tradepractices. Penalties mayalsobeimposed onthose who
failtoseekauthorization forconcentrations when under obligation todoso.
5. Mergers, consolidations andamalgamations
TheSupervisor ofIndustry andTrade isresponsible fordeciding onmergers, consolidations,
amalgamations andtakeovers planned bycompanies.
Article 51ofDecree 2153 of1992 stipulates thattheSupervisor ofIndustry andTrade shall
notoppose operations described inArticle 4ofLaw155of1959 where "theinterested parties
demonstrate thatthere could besignificant gains inefficiency which would result incostsavings that
could notbeobtained byanyother means, andaguarantee isprovided thatthere willbenoreduction
insupply onthemarket".
Article 4ofLaw155of1959 provides that: "enterprises engaging inthesame production,
supply, distribution orconsumption activities inrespect ofaparticular article, rawmaterial, product,
merchandise orservice, andwhose individual orjointassets amount to20million pesos5ormore,
shallinform theOffice oftheSupervisor ofIndustry andTrade oftheoperations theyintend tocarry
outforthepurposes ofmerging, amalgamating orconsolidating theiractivities, whatever thelegal
form ofthesaidconsolidation oramalgamation".
5.1 Procedure
Applications forauthorization tocarry outlegal andeconomic mergers, consolidations or
amalgamations areprocessed within aperiod of30daysfrom thedateofsubmission. When the
information submitted withtheapplication doesnotprovide sufficient evidence fortheSupervisor to
decide onthemerits ofthecase,theaforementioned period willnotbegin torun,asfarastheinterested
companies areconcerned, untilthedateofreceipt ofsuchadditional information asmayhavebeen
requested. Ifthedeadline goesbywithout anyannouncement from theOffice oftheSupervisor, the
operation maybeunderstood tohavebeenauthorized. (Articles 6and7ofDecree 1302 of1964)
3Approximately US$312,000.
4Approximately US$46,900.
5Approximately US$18,000.WT/WGTCP/W/44
Page5
6. Action taken
Between 1994 and1997, theOffice forthePromotion ofCompetition dealt withatotalof
156cases ofalleged infringements oftherules onthepromotion ofcompetition andrestrictive trade
practices. Ofthose cases, 114were inresponse toclaims filed, 32were initiated exofficio andten
were referred totheOffice forthePromotion ofCompetition from other offices ordivisions ofthe
Office oftheSupervisor.6
In32cases, resolutions wereissued toopeninvestigations; ofthose investigations, eighttook
place in1994, three in1995, 16in1996 andfivein1997. Twenty-one ofthem wereconcluded, of
which 18wereterminated early onthebasisofguarantees. Thepractice mostfrequently investigated
todatehasbeendirect orindirect price- orrate-fixing.7
Investigations maybeterminated earlyifthebackground information isexamined andsufficient
justification found, inwhich casearesolution isissued tothateffect. AsofSeptember 1997, atotal
21investigations hadbeenterminated early onthebasis ofguarantees.
Itshould bepointed outthatthisprocedure isofparticular importance considering thatifa
violation ofthelawisproved thepenalty, apart from fines, consists inordering theoffender to
discontinue orchange thechallenged practice. Early termination makes itpossible toachieve thesame
goalinashorter time. TheDivision thenoversees compliance withtheguarantees inkeeping with
theagreed terms.
Asregards mergers, consolidations andamalgamations, atotalof264caseshavebeenapproved
todate.
TheOffice forthePromotion ofCompetition hasencountered obstacles ofdifferent types in
theexercise ofitsfunctions, butasshown below these havebeenovercome.
Although theOffice oftheSupervisor ofIndustry andTrade hasoverall competence toapply
therulesandregulations governing thisfield, withtheadoption ofsuchlegislation asLaw1of1991,
theMaritime Ports Statute, Decree 663of1993, theOrganic Statute oftheFinancial System, Law142
of1994onHousehold Public Services andLaw182of1995(theso-called Television Act),responsibility
forinvestigating andpenalizing cases ofsuchconduct hasbeenassigned todifferent bodies. However,
thisisproving unsuitable, since thedifferent entities apply thelawonthebasis ofdifferent criteria.
Through theMinistry ofFinance, thisOffice isworking ontheproject known as"Development
ofCompetition andCapacity under theAnti-Trust Policy", withWorld Bank financing. Theproject
hasseveral sub-projects, oneofwhich isentitled "Training, Preparation andTechnical Upgrading of
Human Resources". Itspurpose, interalia,istosupport thecreation andrunning ofadepartment
ofcompetition policy andlawintheFaculties ofEconomics, LawandManagement atuniversities
throughout thecountry. Thisisalready being doneinpilotproject form atsome universities inthe
Department ofCaldas.
Amajor campaign isunder waytopublicize these rulesandregulations among industrial and
commercial associations across thecountry. Atthesame time, efforts arebeing made tofoster closer
relations withthebusiness community andthejudges oftheConstitutional Court, theCouncil ofState
andtheAdministrative Tribunals withaviewtocreating acompetition culture.
6Forty-two cases were inthehealth sector.
7Attached isabrief outline ofthemost important cases, provided bytheOffice forthePromotion of
Competition.WT/WGTCP/W/44
Page6
So-called guidelines concerning economic concentrations andrestrictive trade practices are
being drawn upinorder tosimplify andgivegreater flexibility toadministrative proceedings faced
byindividuals.
Similarly, avastworking group training programme isbeing implemented covering suchareas
astheapplication oftherulesofcompetition, investigation techniques, analysis oflegalandeconomic
concentrations andadministrative proceedings, andinvolving suchactivities asinternational seminars,
university courses andinternships withorganizations having therequisite experience inthefieldof
competition law.
Given thecomplexity ofthetasks involved inthepromotion ofcompetition, itisurgent to
upgrade thebody responsible forapplying therelevant rulesfrom thestandpoint ofitsautonomy, its
composition anddecision-making levels. Itisnotenough simply toadopt lawsonfreecompetition;
itisalsoessential tofoster andconsolidate thekindofinstitutional andcultural environment inwhich
competition canbecome established.WT/WGTCP/W/44
Page7
TABLE OFCONTENTS
Page
I. TRADE PRACTICES RESTRICTING FREE COMPETITION -
SIGNIFICANT CASES .......................................9
A. Railway Sector .............................................9
Empresa Colombiana deViasFérreas (Colombian Railway Company) -
Ferrovías .................................................9
B. Automotive Sector ..........................................10
1.CCA anditsnetwork ofdealers ..............................11
2.General Motors Colmotores S.A.andnetwork ofdealers ..............11
3.Sofasa S.A.anditsnetwork ofdealers ..........................13
C. Telecommunications Sector ....................................15
Comunicación Celular S.A.(COMCEL S.A.) andCelular Móvil
deColombia (CELUMOVIL S.A.) .................................15
D. Health Sector .............................................15
E. National Matches Industry .....................................16
F. Colombian Union ofAdvertising Enterprises (UCEP) ....................17
G. Tourism Sector ............................................18
National Association ofTravel andTourism Agents (Asociación Nacional
deAgentes deViaje yTurismo, ANATO) .............................18
II. MERGERS AND CONCENTRATIONS -SIGNIFICANT CASES ...........19
Statistical overview .........................................19
A. Cement Sector ............................................19
Cementos Diamante S.A.andIndustrias eInversiones Samper S.A. ...........19
B. SaleofCertain Assets oftheCompany Productos Dietéticos Dietesyn S.A.
totheColombian Branch oftheCompany Monsanto Colombiana Inc. .........21
III. REQUESTS FOR ADVICE, INFORMATION AND
IMPLEMENTATION INITIATIVES ..............................22
IV. ROLE OFTHE COMPETITION AUTHORITIES INFORMULATING
AND IMPLEMENTING OTHER POLICIES .........................23WT/WGTCP/W/44
Page8
Page
V. CASES REVIEWED UNDER CONTENTIOUS
ADMINISTRATIVE PROCEEDINGS .............................24
1.Before theCouncil ofState .................................24
2.Before theAdministrative Tribunal ofCundinamarca .................25
VI. INTERNATIONAL AFFAIRS ..................................25
1.Group ofThree -G3 .....................................25
2.Andean Group .........................................26
3.FreeTrade Area oftheAmericas (FTAA) ........................26
4.International cooperation ...................................26
VII. OUTREACH EFFORTS ......................................27
A. In1996 .................................................27
International events .........................................27
National events ............................................28
1.Seminars andevents organized bytheOffice oftheSupervisor
ofIndustry andTrade .....................................28
2.Participation inother events involving thepresentation ofrules
andregulations governing thepromotion ofcompetition ...............28
B. In1997 .................................................29
International events .........................................29
National events organized bytheOffice oftheSupervisor ofIndustry andTrade ...29
Participation inother events involving therules andregulations governing
thepromotion ofcompetition ...................................29WT/WGTCP/W/44
Page9
DEPARTMENT FOR THE PROMOTION OFCOMPETITION
COMPETITION PROMOTION DIVISION
I. TRADE PRACTICES RESTRICTING FREE COMPETITION -SIGNIFICANT CASES
A. Railway Sector
Empresa Colombiana deViasFérreas (Colombian Railway Company) -Ferrovías
Ferrovías, aStateindustrial andtrading enterprise linked totheMinistry ofTransport, isthe
soleowner ofthenational railway network andisresponsible foroperating therailtransport system.
Itsmainpurpose istomaintain, improve, rehabilitate, extend, modernize, exploit, runandadministrate
thenational railway network, andtoregulate andmonitor theoperation ofthenational railway system.
In1991, Ferrovías signed a30-year operating contract withDrummond, aprivate company
engaged incoalexploration andmining inColombia 'sNorthern Zone, setting outtherights, obligations
andconditions governing thetransportation ofcoalbyDrummond andrelated activities onthe
LaLoma-Santa Marta sector ofthenational railway network. Thecontract allows Drummond to
transport upto10million tonnes ofcoalperyearandamaximum of1million tonnes permonth.
In1994 theannual capacity oftheLaLoma-Santa Marta railway linewas2million tonnes.
Theproceedings began withthefiling ofacomplaint against Ferrovías on27June1994 by
oneofthecoalmining companies intheso-called Northern Zone ofthecountry forabuse ofdominant
position through theimposition ofconditions thatdiscriminated infavour ofDrummond tothedetriment
oftheothercoalmining companies inthesameZone. Through Resolution No.2324of31October 1994
aninvestigation wasinitiated against Ferrovías, oftheallegation thattheprovisions ofclauses 3
(subparagraph 3.19) and8(subparagraph 8.10) oftheOperating Contract forPrivate Transport on
theLaLoma-Santa Marta railway sector constituted aviolation ofArticle 50,subparagraph 2of
Decree 2153/92. Clause 3,subparagraph 3.19refers totheso-called "guaranteed levelofservice",
which denotes anundertaking byFERROV ÍAStoDrummond togiveitfirstchoice oftrainschedules
androutes, provided theyareworked outinconjunction withtheoverall scheduling. Moreover, should
operational disputes arisewithother clients oftheCoalLine, whether inregard totheobservance of
theoverall scheduling ortheactual operation ofmoving trains, Ferrovías pledges to"take allmeasures
within itspower toresolve suchdisputes inorder toensure thateachindividual detail oftheoverall
scheduling canbecomplied with. Therights accorded Drummond through theGuaranteed Level of
Service complement theother rights granted toDrummond under thepresent contract". Clause 8,
subparagraph 8.10allows "third parties tousetheMain Linefortransit ortransport, solongasthis
doesnotimpair thecapacity ofDrummond totransport theamounts called forandguaranteed under
thiscontract oraffect itsGuaranteed Level ofService. Should Ferrovías wishtoassign anycapacity
leftidlebyDrummond temporarily toother clients fortransit andtransport ontheMain Line, thesaid
capacity mustbetaken fromanyexcess remaining afterDrummond hasplanned andagreed thetrain
composition withFerrovías. IfFerrovías wishes toallocate thatcapacity butcould thereby affect the
rightsofDrummondunderthiscontract,FerrovíasmustobtainpriorwrittenpermissionfromDrummond
tomake theallocation. Drummond maynotrefuse permission without good cause".
Relevant market: Thiscomprises theuseorservice oftherailway fortransporting coaland
coal-mining related materials. Ingeographical terms itcovers thestretch between eachofthecoal
loading points located within themining area,uptotheportofshipment atSanta Marta andCiénaga.
Themarket inquestion hasthecharacteristics ofafullmonopoly. Theinformation available makes
itpossible toestablish thatthepresent operator oftherailway lineisDrummond, which isbothacoal
exporter andarailway transport company, butthatinaddition toDrummond, finalusersandconsumers
ofthisservice would alsoinclude Prodeco, Carbones Caribe, Sororia, C.M.U., Dupela, Norcarbón,WT/WGTCP/W/44
Page10
Carboandes andSiminera, these being companies with exclusive franchising contracts forcoal
(exploration and)mining intheareaofdirect influence made upofeleven (11)settlements located
inthelocalities ofChiriguaná, ElPaso, Bosconia, LaJagua deIbirico andBecerril.
Thefeatures common tothese users arethattheyareexporters andhavetheirownoran
authorized portofshipment inthelocalities ofSanta Marta andCiénaga inthedepartment ofMagdalena.
Thisdoesnottakeaccount ofpotential coal(prospectors and)miners inthecoalareas ofGuaymaral,
ElDescanso andelHatillo, located within theareaofinfluence concerned. Drummond currently
accounts for49.38 percentofcoaloutput, while theother exporters produce theremaining
50.61 percent.
Inthisparticular instance, landtransport cannot beconsidered asaneffective substitute for
railtransport, asthere aredifferences, beginning withitsconsiderably higher cost. Indeed, asmay
beimagined, theratioliesbetween twoandthreetoone:transportation insurance premiums arehigher
owing totheincreased risk,transport timetotheportofshipment islonger, andunloading costs are
higher.
TheOffice oftheSupervisor concluded that:
- Asthesoleowner ofthenational railway network andbeing solely responsible for
operating thesystem, Ferrovías hadadominant market position withrespect tothe
useofthecountry 'srailways andhadabused thatposition through theabove-mentioned
contractwithDrummondbyapplyingconditionsthatdiscriminatedagainstDrummond's
current andpotential competitors, particularly asregards clause 3,subparagraph 3.19.
Theprovisions ofthecontract made itclearthatFerrovías would apply conditions that
were discriminatory tothose persons whomaywishtoengage inthesame activity,
i.e.thetransportation ofcoalbyrailtotheAtlantic coast forexport, fromthemines
located inthedepartment ofElCesar andintheinterior ofthecountry. Indeed,
Drummond hasbeengiven firstchoice inselecting trainschedules androutes and,
where there wasapossibility ofallocating some partoftheservice guaranteed tothat
company, Ferrovías wasrequired toobtain prior permission inwriting. Thisplaced
Drummond 'scompetitors atadisadvantage.
- Clause 8.10wasnotaninfringement oftherulesoffreecompetition, since oncethe
operating contract came intoeffect, ifFerrovías wished todispose ofthecapacity not
usedbyDrummond ithadtoseekpermission. Thiswasconsidered logical inthelight
oftheagreed minimum guaranteed service, which could notbewithheld.
Early termination: Under Article 52,subparagraph 4ofDecree 2153of1992, theSupervisor
ofIndustry andTrade mayorder theclosure ofaninvestigation when, inhisjudgement, thealleged
offender offers sufficient guarantees thattheconduct under investigation willcease orbealtered.
ByResolution No.523of11April 1997, theOffice oftheSupervisor ofIndustry andTrade
accepted theguarantees provided byFerrovías thatthecontract signed withDrummond would be
renegotiated toamend thementioned clauses andeliminate therestriction oncompetition byremoving
thefirstchoice intheselection oftrainschedules androutes aswellastherequirement thatFerrovías
should seekprior written permission fromDrummond ifitwanted tomake capacity available tothird
parties.
B. Automotive Sector
After exofficio preliminary inquiries, aninvestigation wasinitiated withregard tothecountry 's
main motor vehicle assembly firms andtheirnetwork ofdealers, asfollows: Compañia ColombianaWT/WGTCP/W/44
Page11
Automotriz S.A.(CCA), which assembles Mazda vehicles, byResolution 1574of15July1994; General
Motors Colmotores S.A.,which assembles Chevrolet vehicles, byResolution 801of30April 1996;
andSociedad deFabricación deAutomotores S.A.(Sofasa S.A.), which assembles andimports Renault
andToyota vehicles, byResolution No.925of13May1996.
These investigations alsocovered thelegalrepresentatives andtheauditors ofthesecompanies,
onallegation ofhaving authorized, carried outortolerated thepractices under scrutiny.
1. CCA anditsnetwork ofdealers
Thisinvestigation wasinitiated onthebasis oftwocharges:
- Alleged direct orindirect price-fixing between CCA anditsnetwork ofdealers inthe
formofanalleged agreement ondiscount prices, theconditions ofeligibility forsuch
prices andthestandard financing rate(Article 47,paragraph 1ofDecree 2153of1992,
Article 1ofLaw155of1959);
- alleged market sharing byCCA among itsdealers (Article 47,paragraph 3of
Decree 2153 of1992).
Offer ofguarantees: Under Article 52ofDecree 2153 of1992, andopting forthebenefit
ofearly conclusion, theinvestigated firms offered guarantees thattheywould amend theirfranchising
contracts asfollows:
- Asregards thealleged price-fixing agreement, theywould provide forpricefreedom,
allowing dealers toselltothepublic atmarket prices andpermitting eachdealer to
setitsdiscounts individually according toitscoststructures, andtheywould eliminate
thepossibility ofsuggesting saleprices forvehicles andspare partsandformaintenance
services.
- Asregards thepresumed market-sharing arrangement, theywould ensure thatthere
werenoterritorial restrictions apart from theobligation toprovide timely guarantee
andmaintenance services, andthatthecontracts didnotgrant exclusivity orpreference
inregard tothegeographical location ofthedealer 'sshowrooms.
Early termination: ByResolution 1382 of11October 1995, theOffice oftheSupervisor of
Industry andTrade accepted theguarantees offered byCCA anditsdealers, thusbringing the
investigation toanearly conclusion.
2. General Motors Colmotores S.A.andnetwork ofdealers
Charges were brought inconnection withthefollowing:
- Analleged price-fixing arrangement based onthemechanism ofresale prices suggested
bythemanufacturer, which would periodically sendoutpricelists,andtheapplication
ofuniform oridentical discounts andconditions ofeligibility (Article 47,paragraph 1
ofDecree 2153 of1992);
- allegedmarketsharingbyasystemofcustomerselectionthroughthedealerAutomayor,
which isowned bytheother dealers andwhose business purpose istochannel sales
towards official bodies (Article 47,paragraph 3ofDecree 2153 of1992);WT/WGTCP/W/44
Page12
- conclusion ofanagreement under marketing conditions allegedly notinkeeping with
thepurpose ofthecontract, especially withregard tothefollowing:
- Territorial limitation: Assignment ofapredetermined zoneasthedealer 's
operating territory;
- Advertising: Inamanner andamount determined bytheproducer andbas
edonlyonguidelines supplied bytheproducer;
- Internal auditing systems, bookkeeping, stocks, saleandsupply ofspare pa
rtsandservices: maintaining theuniform system designed bytheproducer
.Inspection ofthedealer 'sinstallations, books andfiles: norestrictions
whatsoever. Guarantees: buyers could demand guarantee service onlyfro
mtheir owndealer, asthesellers ofthevehicle inquestion (Article 47,
paragraph 7ofDecree 2153 of1992).
Offer ofguarantees: Opting forthebenefit ofearly conclusion, theinvestigated firms offered
guarantees andrequested theclosure oftheinvestigation under Article 52ofDecree 2153 of1992.
Tothatend,theyhadtoamend theirrespective franchising contracts asfollows:
- Asregards thealleged price-fixing agreement, elimination ofthelistsofsuggested
unitprices, thefranchises retaining thepossibility ofperiodically disclosing theirmarket
surveys totheirdealers, including theproducts 'positioning intheirmarket segment;
- Asregards marketing conditions allegedly notinkeeping withthepurpose ofthe
contract:
(a) Advertising: elimination oftherequirement thatdealers advertise inama
nner andamount recommended bytheproducer, taking account ofthe
producer 'sguidelines only;
(b) internal auditing systems, bookkeeping, stocks, saleandsupply ofspare pa
rtsandservices: Elimination oftheobligation toconduct these activities i
naccordance withproducer 'sguidelines, though theproducer willcontinu
etooffer suchadvice asthedealer mayrequest;
(c) elimination oftheobligation tousetheuniform accounting system devised by
theproducer, whoreserves theright, however, torequest financial statements
andanyother datafrom dealers;
(d) limitation toanormal working day,subject tocoordination withthedealer
,ofthespecial authorization oftheproducer toexamine andcheck thedea
ler'sstocks andinstallations aswellasthebooks andfilesrelating tothe
franchise;
(e) guarantees: Extension ofthedealers 'obligation tohonour guarantees toc
overallbuyers from thenetwork rather thanjusttheirowncustomers.
Other elements inregard towhich theOffice oftheSupervisor decided toterminate the
investigation forlackofgrounds onwhich toimpose sanctions:
- Asregards marketing conditions allegedly notinkeeping withthepurpose ofthe
contract:WT/WGTCP/W/44
Page13
(a) Theprohibition ofdealers from participating intheresale oftheproducts
covered bythecontract, andprohibition from selling orengaging inany
business involving products orspare parts andaccessories other thanthose
soldand/or recommended bythefranchiser: itwasdecided thattheprohi
bition onresale didnotapply tooperations ofthiskindbetween dealers an
dthatonthecontrary, itwasintended toprotect consumers.
(b) Territorial limitation: After asurvey ofthecurrent situation ofthecountr
y'sautomobile market inregard toterritorial restrictions, noobjection was
found totheinclusion ofthistypeofrestriction inautomobile franchising
contracts within thenational territory, provided thattheyimproved thepro
vision oftimely andefficient service totheuser, helped toposition andpr
eserve theimage ofthebrand name andenhanced theorganization ofthe
network forthepurposes ofproviding aspecialized service. Atthesame t
ime,there must beaguarantee ofobligatory maintenance andafter-sales s
ervice byanyofthedealers belonging tothenetwork, atthechoice oftheuser,
anddealers mustnotbeprevented fromselling tocustomers fromoutside the
areas designated astheir operational territory. That istosay,territorial
limitations should notprevent aconsumer orpurchaser from outside that
territory from calling onthedistributor ordealer ofhischoice, whether to
purchase products ortorequest guarantee servicing ormaintenance ofaproduct
purchased from another distributor ordealer inadifferent territory.
(c) Causes andeffects ofthetermination ofthecontract.
- Thealleged market-sharing arrangement: Asregards thealleged selection ofcustomers
originating inthefranchising contract signed between G.M.C. andAutomayor S.A.
andgiving risetothealleged market-sharing among distributors, itwasestablished
thatnoexclusive rights hadbeengranted toanydealer forsalestoofficial orpublic
bodies.
Early termination: Asthechanges proposed bythefirms under investigation wereconsidered
sufficient, theguarantees offered byGeneral Motors Colmotores S.A.anditsnetwork ofdealers were
accepted byResolution 367of18March 1997, thusbringing theinvestigation toanearly end.
3. Sofasa S.A.anditsnetwork ofdealers
Charges were brought inconnection withthefollowing:
- Analleged price-fixing arrangement, through amechanism whereby retail prices are
suggestedbytheproducer,andtransmittedtodealersassuggestedpricelists(Article47,
paragraph 1ofDecree 2153 of1992);
- Conclusion ofanagreement involving marketing conditions thatwere allegedly not
inkeeping withthepurpose ofthecontract, mainly asregards:
. Exclusivity inrespect ofproducts, newcars, spare parts andaccessories:
Dealers wereexpressly prohibited frompurchasing, supplying, promoting and
selling newmotor vehicles, spare parts andaccessories notsupplied directly
tothem bythefranchiser, regardless ofwhether ornottheywere ofother
brands competing withthose ofthefranchiser.
. Exclusive direct sales: Reserving forthefranchiser theexclusive righttosell
tocertain customers indicated inthecontract.WT/WGTCP/W/44
Page14
. Territorial limitation: Assignment ofapre-determined areaasthedealer 's
operating territory.
. Advertising: Thedealer hadtobearthecostofadvertising jointly withth
efranchiser, eventhough suchadvertising wasplanned andcarried outdir
ectlybythelatter.
. Accounting andreporting systems: Unrestricted access tothedealer 'sboo
ksofaccount andstatistics (Article 47,paragraph 7ofDecree 2153 of199
2).
Offer ofguarantees: Opting forthebenefit ofearlyconclusion, theinvestigated firms requested
theclosure oftheinvestigation, offering guarantees under Article 52ofDecree 2153 of1992, and
amending theirfranchising contracts asfollows:
- Thealleged price-fixing arrangement: Theuseofsuggested price listsisreplaced by
periodic general information concerning theautomobile market, tobedistributed by
thefranchisers totheirdealers, consisting ofgeneral information ontheindustry, on
competing products andonthevehicles andspare parts manufactured bythem.
- Marketing conditions allegedly notinkeeping withthepurpose ofthecontract as
regards:
(a) Direct sales: Thefranchisers 'exclusive right tomake direct sales isabolis
hed,though theyretain theright tomake salesonanon-exclusive basis thr
ough contracts thatareseparate from andindependent ofthefranchising
contract, onbehalf oftheir suppliers andemployees, tothedepartments,
municipalities, public corporations andpublic transport bodies, andin
connection withadvertising andpromotional campaigns orsporting andcul
turalevents.
(b) Advertising: Thiswillnolonger beplanned andcarried outunilaterally b
ythefranchisers according totheirowncriteria andfinanced jointly witht
hedealer; anynationwide orregional advertising thatthefranchiser mayplan,
direct andcarry outjointly withdealers willhenceforth befinanced onthe
basis ofprior agreement astotheamount tobecontributed byeachofthe
parties.
(c) Accounting andreporting systems: Thefranchiser willnolonger have
unrestricted access tohisdealers 'accounts andstatistics; inreturn, dealer
sundertake tofurnish, aspromptly aspossible, suchaccounting informatio
nandstatistics asmayberequested byfranchisers withrespect totheirco
mpany andaspects ofthefranchising contract. Dealers willbeobliged tokeep
theirbooks ofaccounts asprescribed bylaw,tomaintain statistics thatgive
atrueandfairreflection oftheireconomic andfinancial situation, salesmade
andother commercial operations, andtoproduce, intheformrequired bythe
franchiser, monthly reports onsales andstocks ofvehicles andspare parts,
andonworkshop activities, inaccordance withprocedures previously agreed
between theparties.
Other elements inregard towhich theOffice oftheSupervisor decided toterminate the
investigation forlackofgrounds onwhich toimpose sanctions:WT/WGTCP/W/44
Page15
Marketing conditions allegedly notinkeeping withthepurpose ofthecontract:
(a) Exclusivitywithrespecttoproducts,exceptwherepriorwrittenauthorizationisobtained
from Sofasa S.A.
(b) Territorial limitation: Having examined thematter inthelightofthecurrent situation
oftheautomobile market, wefound noelements thatcould beconsidered asinfringing
therulesoffreecompetition orthatconstituted restrictive practices inthecontext of
thecontract asamended.
Early termination: Theaforementioned modifications being considered sufficient, by
Resolution 1187 of6August 1997 theguarantees offered bySofasa S.A.anditsnetwork ofdealers
were accepted andanearly termination oftheinvestigation ordered.
C. Telecommunications Sector
Comunicación Celular S.A.(COMCEL S.A.) andCelular Móvil deColombia (CELUMOVIL S.A.)
Thecompanies COMCEL andCELUMOVIL, which operate thecellular mobile telephone
service asgovernment franchise holders, provide theirservices exclusively totheeastern partofthe
country. Thebusiness context andmarket environment inwhich these companies operate provide for
administrative barriers totheentry ofnewcompetitors, which assures thetwocompanies ofashared
dominant market position.
TheOffice oftheSupervisor learned thatwhile ontheonehand, COMCEL andCELUMOVIL
hadestablished identical ratesforconnection, basiccharges andcharges perminute (calls), ontheother,
users whosubscribed fortheservice between JuneandOctober 1994werebeing charged ratesdifferent
fromthose applied tousers thatwereidentical fromthecommercial standpoint andthathadsubscribed
fortheservice asofFebruary 1995.
Preliminary enquiries ledtoResolution No.840of1995, initiating aninvestigation ofoperators
ofthecellular mobile telephone service intheeastern partofthecountry todetermine whether they
wereviolating Article 50,paragraph 2ofDecree 2153of1992through thealleged abuse ofadominant
market position inestablishing discriminatory ratesforthesameoperations, placing onegroup ofusers
oftheservice atadisadvantage vis-à-vis otherusersofthesametype. Atthesametime,theinvestigation
sought todetermine whether Article 47,paragraph 1ofthesame Decree hadbeenviolated through
thealleged price-setting arrangement.
Earlytermination:ByResolutionNo.1736of15November1995,theinvestigationofCOMCEL
andCELUMOVIL wasterminated, thetwocompanies having offered guarantees thattheywould
eliminateanyallegedratediscriminationamongusersthatwereidenticalfromthecommercialstandpoint.
They would berequired toinform theOffice oftheSupervisor within aperiod of30daysoftheplans
offered, thecommercial conditions, thenumber ofusers foreachplanandtheratesapplied, insuch
awayastoeliminate thealleged discrimination between thedifferent plans. Thiswas,infact,done.
D. Health Sector
Law100of1993reorganized Colombia 'ssystem ofsocial security inhealth which comprised,
interalia,health promotion entities, health service institutions andprepaid medical service entities.
Prepaid medical services formasystem organized andsetuptomanage health care,toprovide
health services and/or toprovide, directly orindirectly, theservices covered byapre-established health
planinvolving thecollection ofaregular, previously agreed premium.WT/WGTCP/W/44
Page16
Thehealth promotion entities aretheinstitutions responsible forthebasic organization ofthe
system ofsocial security inhealth, including membership ofColombians inthesystem, themobilization
offinancial resources andtheprovision ofhealth services, whether directly orthrough thehealth service
institutions.
Based onthedifferent complaints filedduring 1996, mostly byprepaid medical service entities
andhealth promotion entities, theOffice oftheSupervisor ofIndustry andTrade initiated
11investigations ofColombian societies inthefields oforthopaedic surgery andtraumatology,
cardiology, urology, nephrology, digestive endoscopy, andradiology, theAtlantic Society ofObstetrics
andGynaecology, theAtlantic Neurosurgery Society andtheColombian Federation ofObstetrics and
Gynaecology, foralleged violation oftherulesoffreecompetition andforrestrictive trade practices
inconnection withthefollowing actions: ratesetting, discriminatory conditions, refusal toprovide
health services inretaliation against pricing policy, anddenial, interruption oralteration ofthelevel
ofhealth services.
These practices arecovered byDecree 1663 of1994, which regulates thesystem offree
competition inthehealth sector andprohibits, ingeneral, anyaction oragreement thathastheeffect
oflimiting ordistorting freecompetition within thehealth services market andanypractices thatamount
toabuse ofdominant position.
Health professionals areorganized intoscientific societies (sociedades científicas ),depending
ontheirfieldofspecialization, withaviewtoobtaining agreater economic compensation forservices
rendered. Depending onitsdegree ofcomplexity, eachtypeofmedical treatment isassigned acertain
number ofpoints known as"Units ofRelative Value" (Unidades deValor Relativo -UVR)andeach
point isassigned avalue inpesos, allofwhich allegedly amounted toratefixing. These arrangements
hadbeenapprovedbytherespectiveGeneralMeetingsorBoardsofDirectors.Ifthesocietiesestablished
rates were notaccepted bytheprepaid medical service entities orhealth promotion entities, the
professionals would withhold theirservices.
Inthiscase, theOffice oftheSupervisor wasoftheopinion thatthehealth professionals were
engaging inaneconomic activity byoffering orrendering theirservices inexchange foraremuneration
known asafee. Thisactivity tookplace onthe"health services market", which wassubject to
competition lawbothinterms ofitsorganization andoperation.
Byofferingtheirservicesonthemarket,healthprofessionalsinaparticularfieldofspecialization
wereacting ascompetitors, andtherefore hadthepossibility ofconcluding agreements contrary tofree
competition.
Taking advantage ofthepossibility offered byArticle 52ofDecree 2153of1992, thealleged
offenders requested theearly termination oftheinvestigation, providing guarantees thattheywould
abolish thevalue inpesos assigned toeachtypeofmedical treatment, eliminate thediscriminatory
conditions andprovide health services onaregular basis. Eight investigations wereconcluded inthis
way.
InearlyFebruary 1997, theOffice oftheSupervisor ofIndustry andTrade sentcommunications
tothepresidents ofscientific societies atthenational leveldescribing themeasures taken inthehealth
sector andwarning against engaging inpractices considered contrary totherulesoffreecompetition,
inanattempt toprevent future violations.
E. National Matches Industry
Theproceedings started asaresult ofseveral press articles thatappeared inmid-June 1995
concerning alleged violations byFonandes S.A.ofprovisions onthepromotion ofcompetition and
restrictive trade practices.WT/WGTCP/W/44
Page17
Pursuant toArticle 11,paragraph 1andArticle 52ofDecree 2153of1992, preliminary inquiries
weremade which resulted intheinitiation ofaninvestigation, byResolution 1264of7September 1995,
ofthecompany Fonandes S.A., todetermine whether ithadviolated firstly Article 1ofLaw155of
1959 inconjunction withArticle 46ofDecree 2153 of1992, andsecondly Article 48,paragraph 1
ofthesame Decree, concerning theprohibition against practices thataffect freecompetition andthe
rulesofadvertising setforthintheConsumer Protection Statute (Estatuto deProtección alConsumidor ),
byengaging inthefollowing practices:
- Theuseofasystem ofsalesknown as2x1whereby oneboxofmatches isprovided
freeofcharge witheachboxpurchased, which ineffect amounted toapplying unrealistic
orpredatory prices;
- theuseofthatsame system ofsalesonanongoing basis asfromJanuary 1995, with
noindication astowhen theoffer would come toanend.
Onthebasisoftheinvestigation, itwasdecided thatthepractices inquestion didnotconstitute
aviolation oftherulesonthepromotion ofcompetition andrestrictive tradepractices, forthefollowing
reasons:
Theso-called 2x1system ofsales usedbyFonandes during thefirstfourmonths of1995
represented 5.71percentofitstotalsales, andacomparison between production costs, including
promotional costs, andtheprice ofsaletothedistributor showed areasonable gross profit, refuting
anyallegation ofunrealistic orpredatory prices.
Fonandes hasalower coststructure thanitsformer competitors (nolonger inbusiness), thanks
inparticular, toitssophisticated technology which hasenabled ittolimittheoverall costofproduction.
Thus, making useofthecompetitive advantage deriving fromitsbetter production coststructure, the
company launches promotions thatdonotinvolve salesbelow production cost; inother words, they
donotresort tounrealistic orpredatory prices.
Themarket formatches inColombia wasreorganized asaresult ofthedifference in
competitiveness ofthecompanies involved, butnotasanidentifiable result ofpractices restricting free
competition asdescribed inResolution 1264 of1995. Thus, Fonandes S.A.wasabletoincrease its
market share significantly between 1January 1994 and30June1995.
Withrespect tothesecond charge, regarding theuseofthesystem ofsalesknown as2x1without
indicating thedatewhen itwould end,toconstitute ananti-competitive practice itwould havetobe
aimed atorhavetheeffect ofunduly restricting competition. However, forthereasons outlined above
thiswasnotproved bytheinvestigation.
ByResolution No.1097 of7June1996 theinvestigation ofFonandes S.A. anditslegal
representative wasterminated withnopenalties imposed.
F. Colombian Union ofAdvertising Enterprises (UCEP)
ByResolution No.2406of8November 1996aninvestigation wasinitiated against UCEP on
thegrounds thatithadallegedly setthefeetobecharged byadvertising agencies totheirclients at
17.65 percentbyissuing collective recommendations toitsmembers, inwhich theystated that"agencies
affiliated toUCEP maynotreduce theagency feeoranyother form ofremuneration asameans of
competing among themselves when twoormore suchagencies areinvited tosubmit proposals oroffers
ofservices toanadvertiser, andtheymustinform theircompetitors ofthepercentage feeortheamount
ofequivalent remuneration specified intheiroffer, which amount theymaynotreduce when submitting
theiroffer" (Agreement No.004,issued bytheUnion 'sBoard ofDirectors).WT/WGTCP/W/44
Page18
Itwasfurther stipulated that"practices incontravention oftheforegoing provision must be
reported totheBoard ofDirectors oftheUnion, which willbeempowered toimpose thepenalties
provided forintheby-laws, depending ontheseriousness oftheinfringement" (Circular No.007of
17April 1996 senttothepresidents andmanagers ofaffiliated agencies).
Ananalysis oftheinformation obtained fromUCEP -affiliated advertising agencies revealed
thatincalculating theirfees,thegreatmajority usedorapplied therateof17.65 percentoftheirclient's
netadvertising investment. Others applied a15percentcommission onthegross value ofthe
advertiser 'sinvestment, thisbeing equivalent tothestipulated 17.65 percentofthenetvalue ofthe
investment. Although several agencies asserted thattheycharged different percentages depending on
thevolume ofbusiness ortheclient, theyallregarded 17.65 percentastheceiling.
TheOffice oftheSupervisor wasoftheopinion thattheabove practices constituted "collective
recommendations", defined asguidelines orinstructions given byunions, associations, federations or
groups ofenterprises, formulated publicly orprivately, andwhose aimplaced them inthecategory
ofpractices regarded asanti-competitive andprohibited bythelawregardless ofwhether ornotthey
were applied bythose towhom theywere directed.
Ineconomic terms, recommendations nottoraiseprices ortoraisethembyacertain amount
doaffect thefreeplayofmarket forces, andcompetition could besignificantly affected byinterference
withwhatconstitutes oneofitscomponent elements, prices. Thisinterference hampers thenormal
functioning ofthemarket byremoving thespontaneity offreedecision making byeconomic agents.
Theinvestigation wasterminated byResolution No.2678of10December 1996when theUnion
offered guarantees thatitwould fullyrevoke thecontroversial Agreement No.004,andsubmit an
agreement tothateffect stating thatfeeswould bedetermined bythelawsofsupply anddemand, and
thatitwould inform thepublic atlarge thattheprice mechanism andfeescharged byUCEP agencies
would befreely determined andgoverned bythelawsofsupply anddemand ontheadvertising market,
andbyindividual negotiations.
G. Tourism Sector
NationalAssociationofTravelandTourismAgents(AsociaciónNacionaldeAgentesdeViajeyTurismo,
ANATO )
ByResolution No.2437of15November 1996, aninvestigation wasinitiated against ANATO
forhaving concluded anagreement tosetitsmarketing conditions inregard tocredits granted bytravel
agencies. Theinvestigation came inthewake ofadecision adopted through aresolution approved
bytheANATOCongressofJune1996andratifiedbytheANATOGeneralMeeting,stipulatingpayment
procedures fortravel agencies affiliated totheAssociation andsuspending thesystem ofcredits hitherto
applied, because ofthegradual increase inpayment arrears onairline tickets sold.
AneconomicanalysiscarriedoutbytheDepartmentforthePromotionofCompetitionconcluded
thatoneofthevariables normally usedincommercial transactions, apart from price andquantity of
production ordistribution ofproducts, isthemethod ofpayment, thisbeing oneofthemostimportant
competitive factors inthemarketing ofgoods andservices.
Theagreements ontheterms ofcredit tobegranted tocustomers, stipulated bothinthe
Resolution andinthecircular laying down the"methods ofpayment", could presumably result ina
cartel among competitors andtherefore aprobable violation ofprovisions onfreecompetition and
restrictive trade practices.
TakingadvantageofthepoweroftheSupervisorofIndustryandTradetoterminateinvestigations
ofpresumed violations ofprovisions onthepromotion ofcompetition andrestrictive trade practicesWT/WGTCP/W/44
Page19
if,inhisjudgement, thealleged offenders offersufficient guarantees thattheywillterminate ormodify
theconduct forwhich theyarebeing investigated, theExecutive Director ofANATO offered guarantees
thatCircular No.026of9August 1996 would berevoked andthataproposal would besubmitted
tothenextGeneral Meeting ofANATO toannul Resolution No.1adopted atthe1996General Meeting.
TheOffice oftheSupervisor made itsacceptance contingent upon thefurther condition that
within amaximum often(10)days, Circular No.026of1996 wasrevoked, thatthesaidmeasure
andthereasons foritsadoption waspublished inanewspaper withnational circulation, andthatANATO
informed itsaffiliates ofthecommitment toobserve therulesoffreecompetition. ANATO appealed
against thepublication requirement onthegrounds thatthemeasure waspointless, asthematter had
received extensive press coverage atthestartoftheinvestigation inthenewspapers LaRepública of
29November 1996 andElTiempo of29May1997.
TheDepartment resolved theappeal bydeciding thatthepublication persewasameans of
informing theconsumer, anobjective which hadbeen attained bymeans oftheaforementioned
publications, andthatthepublic wasfully aware thatpractices such asthose giving risetothe
investigation were prohibited because theycould beharmful totheeconomic system.
II. MERGERS AND CONCENTRATIONS -SIGNIFICANT CASES
Statistical overview
From1993until1997,theOfficeoftheSupervisorofIndustryandTradeexaminedandapproved
atotalof230applications forlegal andeconomic integration. Itisimportant tostress thatahigh
percentage oftheapplications examined andapproved were from companies belonging tothesame
group ofshareholders andunder theircontrol. Alargeportion alsocamefromcompanies which, owing
totheirsmall market share, hadnosignificant impact onthestructure ofthemarket, afactwhich is
explained bythefactthataccording toLaw155of1959, concentrations aretobeconsidered incases
where theindividual oraggregate assets ofthecompanies concerned amount to20million pesos
(approximately US$20,000).
Inaccordance withArticle 4,paragraph 3ofLaw155of1959, information supplied by
companies applying forauthorization toformeconomic concentrations isconsidered tobeclassified.
A. Cement Sector
Cementos Diamante S.A.andIndustrias eInversiones Samper S.A.
Thecase, reported in1996, concerned theintegration oftheColombian companies Cementos
DiamanteS.A.andIndustriaseInversionesSamperS.A.throughacquisitionbythecompanyCemexS.A.
deC.V., amajority shareholder inthecompanies withmore than50percentshares inCementos
Diamante S.A., andacontrolling interest inIndustrias eInversiones Samper S.A.through itssubsidiary,
Capital Colombia Holdings.
Theoperation tookplace through apublic tender offerfor73.33 percentoftheoutstanding
stock ofSamper S.A. Following theirintegration, thetwocompanies remained onthemarket as
individual legalentities guided bythesame interests andthesame business policy.
Cemex S.A., aMexican company, isthelargest multinational cement company ontheAmerican
continent andthefourth largest intheworld with anannual productive capacity ofclose to
47million tonnes, more than17,212 employees in613plants, withmarine terminals anddistribution
centres, andwithannual salestotalling approximately US$2,600,000,000.WT/WGTCP/W/44
Page20
Market analysis: Theapplicants were involved inconstruction through theproduction and
distribution, interalia,ofcement andconcrete, themostrepresentative products ofthesector. Thus,
there were tworelevant markets: thecement market, andtheconcrete market.
Thecement market: Grey cement isthematerial mostusedintheconstruction industry. It
consists ofagreypowder composed ofburned silicates. There arevarious types classified according
totheir resistance, themost common ofwhich isType I,forgeneral use,applied mainly inthe
construction ofhouses, buildings andbridges, inmasonry, etc.There arenosubstitute products.
White cement isacement inwhich ironoreshavebeeneliminated toproduce averywhite
powder usedprincipally fordecorative purposes. From thepointofviewofsales, thisproduct accounts
for1.2percentofthecement market inthecountry. Astheconcentration would nothaveanyeffect
inthatarea,white cement wasnotincluded intherelevant market fortheproduct. Intheconstruction
industry, white cement isconsidered tobewithout substitute.
Grey cement hastraditionally beendistributed through direct salesbythefactories tomajor
consumers suchasconstruction companies andpublic works contractors, either attheproduction plant
orattheplace ofconsumption. Another distribution system consists inselling through theso-called
wholesalers whobuyfromtheproduction plant forsubsequent retail sale. Thecement issoldeither
inbulkorin50kg.sacks. Approximately 70percentofproduction isdistributed insacks, andthe
remaining 30percentinbulk.
Inshort, therelevant market inthiscasecomprises theproduction andsalewithin thecountry
ofgreycement either in50kg.sacks orinbulk.
Itisimportant tostress thatthecement industry inColombia isoneofthesubsectors withthe
highest levelofmarket concentration. Statistics issued bytheColombian Institute ofCement Producers
(ICPC) show thatin1995, there werefivemajor producers: theArgos andDiamante Groups, with
market shares of45.7percentand23.6percentrespectively, followed byCementos Samper with
11.8percent, Cementos Boyacá with10.9percentandAcerías PazdelRíowith7.3percent.
Theconcrete market: Therelevant market includes onlytheproduction ofpremixed concrete
according totheprecise technical specifications oftheparticular building project asregards theresistance
oraqueousness oftheproduct. Themore-or-less makeshift manner inwhich concrete isproduced
ontheworksite precludes thepossibility ofguaranteeing suchspecifications. Consequently, itcannot
beconsidered asaperfect substitute.
According totheinformation supplied bytheICPC for1995, therelevant market forconcrete
isshared bythefollowing companies: Central deMezclas S.A.andConcretos Bogotá, eachbelonging
50percenttotheSamper Group and50percenttotheArgos Group andrepresenting, together,
34.95 percentofthedomestic market forpremixed concrete; Concretos Premezclados, which belongs
totheHolderbank Group andrepresents 27.75 percentofthemarket; Cementos Diamante S.A., with
21.86 percentofthemarket; andtheconcrete companies oftheArgos Group, which represent
15.42 percentofthemarket.
TheOffice oftheSupervisor concluded fromitsanalysis thatinviewoftheexistence ofanother
group holding amarket share greater thanthepotential share ofthecompany resulting fromtheproposed
operation, themerger between Cementos Diamante S.A.andIndustrias eInversiones Samper S.A.
would stimulate competition inthesector.
Withthebacking ofthecompany Cemex S.A., theprocesses applied byIndustrias eInversiones
Samper S.A.would bemodernized andtheiroperations improved through theintroduction ofinnovative
systems which would bring them uptointernational standards.WT/WGTCP/W/44
Page21
Atthesame time, itwould bepossible tointroduce inthecountry thesystem ofcontrols used
byCemex forenvironmental protection attheglobal levelinvolving theuseofmodern anti-pollution
systems andmethods forexploiting thenecessary rawmaterials.
B. SaleofCertain Assets oftheCompany Productos Dietéticos Dietesyn S.A.totheColombian
Branch oftheCompany Monsanto Colombiana Inc.
Thisoperation, reported in1996, consisted inthetransfer bytheColombian company Productos
Dietéticos Dietesyn S.A.totheColombian branch oftheforeign company Monsanto Colombiana Inc.
ofassets relating tothemanufacture anddistribution ofthelineofproducts carrying thenational brand
names "Sabro", "Choco-Sabro" and"Sabro-Fresh", thesanitary registrations fortheseproducts, certain
rawmaterials usedintheir preparation, packaging andadvertising materials, apercentage ofthe
company 'sholdings, acomprehensive listofcustomers andbuyers oftheproducts, andthecodes needed
fortheacquiring company tosellanddistribute theproducts inallofthesupermarkets anddrugstores
inwhich theywere currently sold.
Atthesame time, Dietesyn S.A.transferred alltechnical andfinancial information obtained
through previous market andconsumer acceptance surveys, studies involving anyformofconsultancy
relating tothemanufacture, marketing anddistribution oftheproducts including alloftheproduction
formulae andinformation, andthestocks asofthedateofthetransaction.
Market analysis: InColombia, thepharmaceuticals industry hasbeengrowing atannual rates
exceeding theGDP growth rate. Theaverage annual rateforthepasttenyears hasbeen6percent.
Theindustry ismade upof315enterprises ofwhich ahighpercentage areofforeign origin
(principally European andAmerican), consisting largely ofthemajor world manufacturers ofrecognized
brand names represented through theirsubsidiaries.
Themarket isdivided intotwomain customer groups: private consumers, andpublic health
andsocial security institutions. Thecompanies Monsanto andDietesyn supplied thefirstofthese two
groups.
High product differentiation isapredominant factor inthisindustry, andisreflected notonly
inthecompetition, butalsointhepreparations developed bythesame company: itisnotuncommon
forthesamechemical substance tobemarketed under twoormoredifferent brand names andatdifferent
prices. Thisdiversification anddifferentiation, backed byscientific promotion, isusedasastrategy
toboost thevolume ofoperations inthefaceofsuchlimiting factors asthelargenumber ofcompetitors,
therelatively small domestic market andthelowlevelofpercapita income.
Relevant market: Thecaseconcerned thedomestic market forsweeteners and/or sweetening
agents, withahighlevelofconcentration reflected inthefactthataccording totheinformation provided
bythecompany A.C. Nielson ofColombia, Abbot Laboratories accounted for50percentofsales
in1995, followed byMonsanto, with6.5percent, andDietesyn with30.5percent. These three
companies formed anoligopoly, i.e.amarket inwhich there isarestricted number ofsuppliers each
oneofwhich sellsadifferentiated product andwhose activities onthemarket mustbetaken intoaccount
bytheother companies inviewoftheirpower toinfluence theconditions ofcompetition.
Product market: Theproduct market wasdefined asthelineofsweeteners orsweetening agents,
ormore specifically ofproducts other thansugar, honey andpanela (brown sugarloaf) usedbythe
consumer tosweeten foodandfalling within thecategory ofdietetic, foodandnutritional products,
distributed nationally inthree different forms (tablets, powder andgranules).
Sabro products aresoldintheirdifferent forms directly orindirectly, through traditional or
non-traditional channels. Traditional channels include supermarket chains andnational clearing houses,WT/WGTCP/W/44
Page22
while non-traditional channels include wholesalers orwarehouses, retailers, drugstores, restaurants,
hotels, social andsporting clubs, clinics, regional sports offices andcompanies withalarge number
ofemployees.
Close substitutes aredefined asthesametypeofsweetening agents totheextent thattheyserve
thesame purpose forbothgroups ofconsumers under consideration, andhavesimilar characteristics.
Although theproducts inquestion were closely identified withthetrademark oftheparent
company orthelaboratory oforigin andwiththebrand names used, theconsumer didnotreact in
anysignificant waytoaparticular trademark. Competitive products werepresented inthesame form
andtheirpackaging wassimilar. Theconsumer could obtain therange ofsweetening agents through
thesame distribution channels (drugstores andsupermarkets), afactwhich made substitution easier.
Upon completion ofitsanalysis, theOffice oftheSupervisor concluded thattheparticipating
companies could notmodify thecurrent market structure forthefollowing reasons:
(a) Production wasnottobereduced following theacquisition ofassets, sinceLaboratorios
Synthesis Ltdawould continue tooperate under thesame production, costandquality
conditions aswiththecompany whose assets werebeing acquired (Productos Dietéticos
Dietesyn S.A.);
(b) thecompanies participating intheacquisition could notinfluence theprices
independently ofthecompetitors, whoheldalarge market share, andhadaccess to
sources ofsupply, inputs anddistribution networks tocounterbalance theeffect ofthe
operation andrestore themarket toitsoriginal state, nottomention theabsence of
anysignificant obstacles totheentry intothemarket ofnewcompetitors;
(c) thepurpose oftheacquisition wastotakeadvantage oftheexperience andresources
oftheacquiring company withaviewtomanaging production more efficiently;
(d) possible action bythemerged companies inrespect ofprices would notbetaken
independently oftheconsumers since thereweresubstitute products towhich demand
could shift.
III. REQUESTS FOR ADVICE, INFORMATION AND IMPLEMENTATION INITIATIVES
During 1996, theOffice forthePromotion ofCompetition responded to46requests foradvice
byentrepreneurs, students andconsumers ingeneral onavariety ofsubjects suchastheapplication
ofregulations regarding economic concentrations, thenewlawscontained intheCommercial Code
onthedifferent types ofmergers andsplits, onconduct contrary totherules offreecompetition and
onrestrictive trade practices, inparticular theexclusivity arrangements covered byLaw256of1996
onunfair competition.
Itshould bepointed outwithrespect tothepermissibility ofexclusivity arrangements from
thepoint ofviewofthepromotion ofcompetition thatunder Decree 2153 of1992 andLaw155of
1959 considered inconjunction withArticle 19ofLaw256of1996 onunfair competition, such
arrangements cannot beconsidered tohavebeenprohibited inanyabsolute sense from theoutset.
Under Article 19ofLaw256,onlyexclusivity arrangements "whose purpose oreffect isto
restrict access bycompetitors tothemarket ortomonopolize thedistribution ofproducts orservices"
areconsidered unfair.WT/WGTCP/W/44
Page23
Asfarastherulesonthepromotion ofcompetition areconcerned, eachexclusivity arrangement
must beexamined individually todetermine itseffects andconsequences, andtheproduct and
geographical market forwhich there areexpectations thatmight beaffected.
Asregards exclusivity arrangements withrespect todistribution contracts, itshould bepointed
outthatexclusivity assuch, inspiteofitsobvious restrictive effect onbusiness activity andalthough
itdoes, toagreater orlesser extent, limitcompetition, doesnotdirectly constitute aprohibited practice
under therules onthepromotion ofcompetition.
According toArticle 19oftheabove-mentioned Law, theconditions under which exclusivity
clauses areconsidered unfair mayrelate toapurpose oraneffect, andineither case, theymayarise
fromoneoftwoalternatives orvariables, stillasregards expectations inthecaseofeffect: restriction
ofmarket access forcompetitors, orthemonopolization ofthedistribution ofproducts orservices,
withtheexpress exception ofthedistilling industries.
Theassessment andqualification asunfair ofexclusivity arrangements whose purpose oreffect
comes under theabove-mentioned legalconditions isclearly notwithin thecompetence oftheSupervisor
ofIndustry andTrade: indeed, Law256/91 expressly attributes thatresponsibility tothecommercial
andcivilcourts.
Finally, itshould bepointed outthatArticle 2033 ofDecree-Law 410of1971, alsoknown
astheNewCommercial Code, expressly stipulates thatthese matters areentirely regulated bythat
Code. Consequently, therulesandregulations dispersed invarious other lawsanddecrees havebeen
tacitly repealed.
Thus, therules andregulations governing unfair competition being fullycovered byTitleV
ofBook Ioftheabove instrument, theoriginal provisions contained incertain Articles ofLaw155
of1959 inthatrespect should beunderstood tohavebeentacitly revoked.
Moreover, theOffice oftheSupervisor provides direct assistance totheuseroftheservice,
whocanaddress anyenquiries personally totheDivision forthePromotion ofCompetition, inaddition
towhich there areplans tocreate a24-hour on-line enquiry facility.
IV. ROLEOFTHECOMPETITIONAUTHORITIESINFORMULATINGANDIMPLEMENTING
OTHER POLICIES
- TheOffice oftheSupervisor ofIndustry andTrade participates intheNational Competition
Strategy together withthemain government entities. Itisspecifically involved inmatters
concerning thepromotion ofcompetition, interaliaintheframework ofmeasures tobetaken
bytheState.
- With respect toforeign competition, theOffice oftheSupervisor ofIndustry andTrade
participates intheCommittee onTrade Practices, coordinated bytheColombian Foreign Trade
Institute, which decides ontheimposition ofanti-dumping andcountervailing duties.
- Although Article 2,paragraph 20ofDecree 2153/92 entrusts theOffice oftheSupervisor of
Industry andTrade withthetaskofadvising theGovernment inmatters concerning the
formulation ofpolicies forthepromotion ofcompetition, itsparticipation intheformulation
ofprivatization andregulation strategies, forexample, hasbeenlimited.WT/WGTCP/W/44
Page24
V. CASES REVIEWED UNDER CONTENTIOUS ADMINISTRATIVE PROCEEDINGS
1. Before theCouncil ofState
ByOrder of2June1995, theSupervisor incharge ofthepromotion ofcompetition decided
nottoopenanadministrative investigation orconsider acomplaint filedbyanindividual inconnection
witha"Framework Agreement ontheAbsorption andSupply oftheDomestic Production ofAfrican
Palm Oil"concluded on12September 1994between theNational Federation ofPalm OilCultivators
(FEDEPALMA), representing thedomestic African palm cultivators, andtheColombian Federation
ofManufacturers ofEdible FatsandOils, (FECOLGRASAS), theNational Association ofSoapand
DetergentProducers(ANALJA),GrascoS.A.,GacetalesS.A.,ProgralS.A.,DetergentesS.A.,Jaboneria
Central S.A., Fagrave S.A., Aceites yGrasas Vegetales S.A., Acegrasas S.A., Sociedad Industrial
deGrasas Industriales Sigra S.A.andDelLlano S.A.fortheoilsandfatsprocessing industry, with
theguarantee oftheMinistry ofAgriculture andRural Development, theMinistry ofEconomic
Development, andtheMinistry ofForeign Trade, Finance andPublic Credit, whose purpose wasto
provide theindustry withaguaranteed supply andthepalmoilcultivators withaguarantee ofabsorption
ofdomestically-producedpalmoil,andtoguaranteeaminimumpurchasepricefordomestically-produced
crude palmoil,establishing ageneral framework fortheperiodic agreements ontheregulation ofthe
domestic market forpalmoilanditsfractions. According tothecomplainant, theAgreement violated
thelegal provisions onthepromotion ofcompetition andrestrictive trade practices contained in
Article 47,paragraphs 1to5ofDecree 2153/92, firstly because itgaverisetoprice fixing, market
sharing among itssignatories, anddiscriminatory conditions withrespect tothirdparties, andsecondly,
because itinvolved theallocation, distribution andrestriction ofsources ofsupply ofinputs andthe
assignment ofproduction andsupply quotas. Under Article 50,paragraph 2oftheabove Decree,
thisconstituted anabuse ofdominant market position.
InthelightofthePolitical Constitution, theprovisions regulating theagricultural sector in
Colombia andthelawsoneconomic intervention, inparticular Article 1ofLaw155of1959containing
anumber ofprovisions onrestrictive tradepractices, according towhich theGovernment mayauthorize
theconclusion ofagreements orarrangements which, while limiting freecompetition, areintended
tomaintain thestability ofabasicsector ofproduction ofgoods andservices ofinterest fortheeconomy
asawhole, theargument thatthestipulation inparagraph 2ofArticle 333ofthePolitical Constitution
thatfreecompetition wasa"right ofallpersons" meant thatitwasanabsolute rightthatmustbeapplied
without exception toallsectors ofthenational economy wasunfounded. What wasclearly meant was
thatitwasacollective right, asalsostipulated inArticle 88ofthesame instrument.
TheOffice oftheSupervisor ofIndustry andTrade concluded thattheAgreement inquestion
came under thelegalprovisions ofsubparagraph (ñ)ofArticle 4ofExtraordinary Decree Law1279
of1994, Article 1ofLaw155of1959 andArticles 1,3and6ofLaw101of1993, known asthe
Agrarian Law. Indeed, alloftheseclauses provided forStateintervention intheeconomy 'sagricultural
activities andwere consistent withArticle 2,paragraph 9ofDecree Law2350 of1991.
Actiontaken:ActionforAnnulmentandRestorationofRightsagainsttheOrderof2June1995.
On16December 1996 theCouncil ofState, through theFirstSection oftheAdministrative
Litigation Division, rejected theapplication forreconsideration onthegrounds thatnoneofthecharges
werevalid,thusclearlydemonstratingthatitwasnotaforegoneconclusionthateverycomplaintreceived
would leadtoaninvestigation. Indeed, ifthepreliminary enquiry shows thatfromthepoint ofview
ofthepurposes oftheapplicable rulethecomplaint isnotsignificant, oriftheconduct inquestion
isconsidered tobeexempt, theentity canhardly beexpected toinitiate aninvestigation.
Itshould bepointed outthatthiswasthefirstruling onacompetition casedealtwithbythe
Office oftheSupervisor ofIndustry andTrade.WT/WGTCP/W/44
Page25
2. Before theAdministrative Tribunal ofCundinamarca
Article 13ofLaw155of1959stipulates that"Theinvestigation, ofastrictly classified nature,
shallinvolve obtaining reports concerning production, imports, utilization offoreign anddomestic raw
materials, distribution systems andsales, visiting thecompanies concerned and,ingeneral, gathering
allofthenecessary evidence. Therecord oftheconclusions shallbetransmitted within areasonable
interval ofupto30daystothealleged offenders andtotheentities thathavebecome involved inthe
course oftheinvestigation, sothattheymayprepare theirrebuttals."
Article 21ofLaw57of1985 stipulates that"The administration mayonlydenytherightto
examine certain documents, orcopies orphotocopies thereof, onthebasis ofareasoned decision
indicating theirclassified nature andlisting therelevant legalprovisions. Ifthecomplainant maintains
itsrequest, theAdministrative Court oftheareainwhich thedocuments arelocated shalldecide, as
thesoleinstance, whether ornotitaccepts therequest orwhether therequest should bedealt with
partially.
Iftheapplicant should insist upon consulting orreceiving therequested copy, thecompetent
official shallsendthesaiddocuments totheCourt, which shallruleonthematter within tenworking
days. Thisperiod shallbeinterrupted iftheCourt requests copies orphotocopies ofthedocuments
onthedisclosure ofwhich itiscalled upon torule,untilsuchdateasitreceives them officially."
TheOffice oftheSupervisor ofIndustry andTrade referred twodifferent appeals tothe
Administrative Court ofCundinamarca foraruling ontheconfidentiality ofrecords inrespect ofthird
parties. Inthefirstcase, theCourt issued aruling intheformofadecision dated 29February 1996
onthenegative ruling bytheOffice oftheSupervisor ofIndustry andTrade inrespect ofthetransmission
oftherecord ofthecompleted investigation inthecaseinvolving COMCEL andCELUMOVIL. The
Court considered thattherequested records qualified asclassified information under Article 13of
Law155of1959andcould nottherefore behanded overbytheOffice oftheSupervisor asrequested.
Inthesecond case,byadecision of19June1997theFirstSection, having resolved theappeal referred
toitbytheOffice oftheSupervisor ofIndustry andTrade andhaving examined therules onwhich
thatOffice hadbased itsdecision torefuse access bythecement producers under investigation tothe
record ofthecase, concluded thattheinvestigation hadclearly beenstrictly classified (Article 13of
Law155/59), inthatitinvolved aspecial rule, andconsequently came under Article 29ofthe
Administrative Litigation Code.
VI. INTERNATIONAL AFFAIRS
1. Group ofThree -G3
Article 16-03 oftheFreeTrade Agreement -G3-between Mexico, Venezuela andColombia
provides forthecreation ofaCompetition Committee composed ofrepresentatives from eachparty
(inthecaseofColombia, theOffice forthePromotion ofCompetition oftheOffice oftheSupervisor
ofIndustry andTrade). ThisCommittee submits reports andrecommendations totheCommission
onmatters relating totherelations between competition lawsandpolicies andtrade inthefree-trade
zone.
ThisCommittee hasmettwice: onthefirstoccasion, in1995, inCaracas, Venezuela, each
country undertook tosupply information concerning thecompetition policies reflected intheir
development plans, andonalloftheregulations currently inforce aswellaslegalpractice andtheory.
Colombia drew upacomparative tableofcompetition provisions inforce ineachcountry, which it
submitted tothemembers forconsideration. Atthesecond meeting, agreement wasreached on
conducting comparative workinthefollowing areas: classification ofconduct, definition oftherelevant
market, dominant position, andeconomic concentrations. Itwasalsodecided thattheCommittee would
focus onaspects relating tofreetrade.WT/WGTCP/W/44
Page26
2. Andean Group
ThisGroup, made upofBolivia, Colombia, Ecuador, PeruandVenezuela, plans toamend
Decision285oftheCommissionoftheCartagenaAgreementcontainingregulationstopreventorcorrect
distortions tocompetition. TheOffice oftheSupervisor prepared thecorresponding draftamendment
which itsubmitted totheMinistry ofForeign Trade forconsideration. Theproposal isinnovative,
inthatittreats theprotection ofcompetition asaprimary objective anddismisses thecausal relationship
contained inthecurrent Decision.
3. FreeTrade Area oftheAmericas (FTAA)
Working Group onCompetition Policy
TheWorking Group onCompetition metonfouroccasions inLima, Peru. TheOffice ofthe
Supervisor ofIndustry andTrade participated inthefirsttwoofthesemeetings, andwhile itwasunable
toparticipate intheother twoforbudgetary andadministrative reasons, delegates from theMinistry
ofForeign Trade andtheMinistry ofEconomic Development didattend.
Inthisconnection, inaccordance withthecommitments made ateachoneofthese meetings,
Colombia prepared anumber ofdocuments suchas:Guidelines toColombian Competition Law;
Questionnaire fortheIdentification ofTechnical Cooperation Needs intheFieldofCompetition Policy;
Proposed Format forthePreparation ofaReport ontheApplication ofDomestic Regulations andLaws
onCompetition Policy intheCountries oftheHemisphere; ListofNational Laws andRegulations
onCompetition Practices intheWestern Hemisphere; Comments ontheListofRegulations onFree
Competition inTrade andIntegration Agreements intheWestern Hemisphere; andthebasicdiscussion
document entitled "Similarities andDifferences between National Laws onCompetition Policy inthe
Western Hemisphere". Colombia alsosubmitted comments onthepreliminary draft document on
technical cooperation prepared byUNCTAD.
4. International cooperation
TheOffice oftheSupervisor ofIndustry andTrade received support from theWorld Bank
inorganizing projects relating tothedefence ofcompetition inthecountry. Thus, during 1996, the
World Bank financed adraftsetofguidelines, drawn upbytheconsultant LuisDiez-Canseco Núñez,
tobefollowed inthatrespect inthelightoftheexpress reference byDecree 2153 of1992 tothe
Administrative Litigation Code.
TheOffice forthePromotion ofCompetition alsomaintains contacts with therelevant
international authorities, forexample theTribunal fortheDefence ofCompetition, theEuropean
Commission (Directorate-General IV)andvarious organizations forthedefence ofcompetition atthe
Latin American level, inorder toexchange information ontheinterpretation oftherules offree
competition andtherelevant legaltheory andpractice.
Theproject entitled "Development ofCompetition andtheCapacity ofAnti-Trust Policy" is
currently being carried outwiththehelpoftheWorld Bank. Thisproject willlastfortwoyears
beginning inAugust 1997 andcovers thefollowing:
- Development ofinstitutional knowledge ofthepolicy process andsubstantive areas,
inparticular the"transfer ofknowledge regarding anti-trust matters andpolicies, and
industrial organization". Itincludes advisory services foruniversities.
- development ofinstitutional knowledge ofprocedural matters;WT/WGTCP/W/44
Page27
- developmentofguidelinesconcerningeconomicconcentrationoperationsandrestrictive
trade practices;
- development ofinfrastructure, forexample creation ofalibrary onfreecompetition,
development ofadatabase onrestrictive trade practices, development ofsectoral
indicators reflecting thestructure ofthemarkets andmodifications thereof withaview
tocreating adecent andup-to-date database onmarkets, development ofaspecial
network intheOffice forthePromotion ofCompetition, andanalysis ofmergers and
ofinvestigations ofrestrictive trade practices.
VII. OUTREACH EFFORTS
Inaneffort tocreate acompetition culture inthecountry, theOffice oftheSupervisor ofIndustry
andTrade hastriedtoenhance itsoutreach touniversities, industrial sectors, business circles and
consumers ingeneral. These efforts canbesummarized asfollows:
- Preparationofacompendiumofrulesgoverningthepromotionofcompetitioncontaining
provisions fromLaw155of1959, Decree Law2153of1992andother relevant items
oflegislation;
- participation bytheOffice forthePromotion ofCompetition invarious national and
international events inthecourse of1996 and1997, forexample:
A. In1996
International events:
- Seminar organized bytheNational Institute fortheDefence ofCompetition and
Protection ofIntellectual Property (INDECOPI) on"Competition Policy andthe
Economic Reform Process inLatin America", heldinLima, Peru, inAugust 1996.
- 23rdAnnual Conference onInternational Anti-Trust LawandPolicy, organized by
theFordham Corporate LawInstitute inNewYork on17and18October 1996.
- Emerging Market Economy Forum -Seminar onCompetition Policy andtheEntry
intoForce ofCompetition organized bytheOECD incooperation withtheWorld Bank
andheldinArgentina inOctober 1996. TheSupervisor incharge ofthepromotion
ofcompetition presented apaper onthesubject "Substantive Provisions oftheLaw
onCompetition".
- Second Meeting onCompetition Policy inLatin America andtheCaribbean, organized
bythePermanent Secretariat oftheLatin American Economic System inCaracas,
Venezuela, inDecember 1996. Themeeting wasattended byrepresentatives ofthe
competition agencies of27Latin American countries, anditspurpose wastofollow
upthevarious items ofthefinalreport adopted attheFirstMeeting.
TheSupervisor incharge ofthepromotion ofcompetition participated intheinternational
workshop on"How toGuarantee Competition inanOpen Economy", speaking onthesubject of
consumer protection, anddirected discussions inatechnical seminar on"The RoleofCompetition
Policy intheFormulation ofIndustrial Policy".WT/WGTCP/W/44
Page28
National events:
Inthecontext ofitspromotion andoutreach efforts withrespect tocompetition lawandpolicy
andrestrictive trade practices, theOffice forthePromotion ofCompetition coordinated andtookpart
indifferent national events, forexample:
1. Seminars andevents organized bytheOffice oftheSupervisor ofIndustry andTrade
- National Seminar onthePromotion ofCompetition andRestrictive Trade Practices
heldattheUniversidad delRosario ,Bogota, inMarch 1996. Papers werepresented
bythePresident andVice-President oftheTribunal fortheDefence ofCompetition
ofSpain andtheSupervisor incharge ofpromotion ofcompetition, and150persons
attended.
- Organization andcoordination oftheSeminar onCompetition Policy andLaw, held
attheheadquarters oftheOffice oftheSupervisor, fordeans, professors andstudents
ofthefaculties oflaw,economics, business andmarketing ofthecountry 'svarious
universitieson21November1996withaviewtointroducinganddevelopingthatbranch
ofstudy.
- National Forum onthePromotion ofCompetition, heldattheChamber ofCommerce
ofManizales on23August 1996.
2. Participationinothereventsinvolvingthepresentationofrulesandregulationsgoverning
thepromotion ofcompetition
- Seminar "Guidelines fortheEvaluation ofEconomic Concentrations inColombia",
organized bythefirmArthur Andersen inBogota inMay1996. Itwasattended by
150business representatives fromthemostimportant sectors ofthenational economy.
- IVthInternational Congress andIXthNational Congress onMarketing, heldinthe
townofPaipa inOctober 1996. Itspurpose wastoimprove theintegration ofstudents
andacademic professionals witheducational, governmental andbusiness circles. The
Supervisor incharge ofthepromotion ofcompetition, representing theOffice ofthe
Supervisor ofIndustry andTrade, spoke onthesubject "Entrepreneurs andthe
Provisions ofCompetition Law".
- "XIIIth Latin American Congress ofFuelEntrepreneurs", organized bytheNational
Federation ofDistributors ofPetroleum Derivatives (FENDIPETROLEO) in
October 1996 andattended byleading Latin American entrepreneurs inthesector.
TheSupervisor incharge ofthepromotion ofcompetition contributed astatement
entitled "Competition andTransparency intheFuelMarket".
- Presentation on"Competition Policy andLaw" intheauditorium oftheCentral
University inBogota, inOctober 1996. Itwasattended by150students from the
Faculties ofBusiness andEconomics.
- Lecture entitled "Competition Policy and Economic Openness", given by
Dr.Mario Ernesto Fonseca Colmenares andDr.Sigifredo LLano Tobón, from the
Competition Promotion Division, onthepremises oftheOffice oftheSupervisor of
Industry andTrade, forstudents from theFaculty ofIndustrial Engineering ofthe
Manizales campus oftheNational University ofColombia, inNovember 1996.WT/WGTCP/W/44
Page29
- Seminar entitled "Application ofCompetition Regulations", heldintheChamber of
Commerce ofSincelejo ontheoccasion ofits60thanniversary. Itwasattended by
themost important entrepreneurs intheregion.
B. In1997
International events:
TheOffice oftheSupervisor ofIndustry andTrade wasrepresented bytheOffice forthe
Promotion ofCompetition andtheDivision atfollowing events:
- "Training Course inCompetition LawandEconomics", heldinSanta CruzdelaSierra,
Bolivia, inAugust 1997, atwhich theSupervisor incharge ofthepromotion of
competition spoke onthesubject of"Negotiated Solutions".
- Seminar entitled "Competition Policy andEconomic Reform" heldinRiodeJaneiro,
Brazil, inJuly1997. Thedelegation ofColombia presented thecaseofFerrovías
(Colombian Railway Company).
- Seminar entitled "Protection andPromotion ofCompetition intheNational and
International Environment", held inSan José, Costa Rica, on9,10and
11September 1997. TheSupervisor incharge ofthepromotion ofcompetition spoke
onthesubject "Administrative andJudicial Procedures: TheCase ofColombia".
National events organized bytheOffice oftheSupervisor ofIndustry andTrade:
- Seminar entitled "Legal andEconomic Aspects ofCompetition inColombia" heldat
theFundación Santillana inBogotá on17and18June1997. International contributions
were made byDr.Radoslav Depolo Razmilic, professor ofEconomic Law and
Competition attheCatholic University ofValparaiso, Chile; Dr.JoséEugenio Soriano,
Expert inCompetition LawofSpain; andMarie-Chantal Boutard Labarde, Member
oftheFrench Competition Council. TheSupervisor ofIndustry andTrade,
Dr.Marco Aurelio Zuluaga Giraldo, andtheSupervisor incharge ofthepromotion
ofcompetition, Dr.Margarita Alarcón Carrillo alsoparticipated, together withother
eminent Colombians. Atotalof150persons attended. Abookcontaining thedifferent
contributions iscurrently being prepared forpublication anddissemination.
- "Second Ibero-American Congress onBusiness Law. Forms ofControl, Cooperation,
Business Competition andIndustrial Property", heldonthepremises oftheChamber
ofCommerce ofBogotá on21,22and23October 1997. TheOffice forthePromotion
ofCompetition contributed toleading thediscussions (22October), andpapers were
submitted byDr.Margarita Alarcón Carrillo, Supervisor incharge ofthepromotion
ofcompetition, Dr.Sigifredo LLano Tobón, Dr.Pedro Luis Escobar and
Dr.JoséFernando Martínez Puertas.
Participation inother events involving therules andregulations governing thepromotion of
competition:
- Lecture entitled "Competition Policy. TheImportance ofCompetition. Interaction
between Competition Policy andother Economic Policies", given attheUniversidad
Externado deColombia inBogotá byDr.Pedro LuisEscobar Ramírez, Head ofthe
Competition Promotion Division, inMarch 1997.WT/WGTCP/W/44
Page30
- Lecture entitled "Competition Policy. TheImportance ofCompetition. Perfect
Competition andMonopoly. Competition inanInternational Context. Model of
Openness. International-Type Agreements" given attheheadquarters oftheChamber
ofCommerceinFlorencia(Caquetá)bytheHeadoftheCompetitionPromotionDivision
inApril 1997.
- Lecture entitled "The Benefits ofFreeCompetition forIndustry andtheConsumer"
given byDr.Gerald E.Meyerman, World Bank Competition Coordinator for
Latin America, attheheadquarters oftheChamber ofCommerce ofCaliinApril 1997.
Itwasattended bytheSupervisor ofIndustry andCommerce andtheSupervisor in
charge forthepromotion ofcompetition.
- Cotelco General Assembly, atwhich theOffice oftheSupervisor ofIndustry andTrade
wasrepresented bytheHead oftheCompetition Promotion Division, whopresented
apaper onthesubject "Abuse ofDominant Position, Agreements andActsContrary
tothePrinciple ofFree Competition", heldinthetown ofPopayán, Cauca, in
May1997.
- Lectureentitled"ProhibitionsAffectingEntrepreneursintheAreaofFreeCompetition"
byDr.Gerald E.Meyerman, Competition Coordinator forLatin America atthe
World Bank, heldattheheadquarters oftheChamber ofCommerce ofCartagena,
Bolívar, inJune1997.
- Lecture entitled "Independence oftheCompetition Authorities asanEssential
Requirement forEconomic Operators andAgents inSpanish Law" bytheSpanish
Professor JoséEugenio Soriano, international expert inCompetition Law, heldatthe
headquarters oftheChamber ofCommerce ofMedellín, Antioquia, inJune1997.
Participation bytheSupervisor ofIndustry andTrade andtheSupervisor incharge
ofthepromotion ofcompetition.
- Lecture entitled "Legal Framework andConstitutional Foundations ofCompetition
Policy inColombia" byDr.Mario Gustavo Cárdenas Ramírez, lawyer inthe
Competition Promotion Division, heldonthepremises oftheOffice oftheSupervisor
ofIndustry andTrade forstudents oftheIndustrial Engineering Department ofthe
Manizales Campus oftheNational University ofColombia inOctober 1997.
__________