Calculated risk between the leniency benefits and class actions in Colombia Gabriel Ibarra Pardo - Ibarra Abogados December 2015

LENIENCY PROGRAM IN COLOMBIA Law 1340 of 2009 Article 14 of Law 1340 of 2009 Superintendence of Industry and Commerce (SIC) may grant benefits to individuals or companies that having participated in a conduct that infringed the competition regime: 1. Reveal information regarding the existence of the conduct. 2. Submit pertinent information and evidence, including the identity of the other companies and individuals that participated in the conduct. Benefits can be granted even if the SIC has started a formal investigation. Benefits could include complete or partial exoneration of the sanction. Benefits will be graded in accordance with the usefulness and timing of the cooperation.

LENIENCY PROGRAM IN COLOMBIA Decree 1523 of 2015 Decree 1523 of 2015. Establishes the requirements for obtaining a marker. (i) By written application in paper. (ii) By e-mail. (iii) In person. Moderates the percentage of fine reductions available for subsequent applicants. Provides that the second applicant may obtain between 30 % and 50 % of fine reductions; and subsequent applicants may obtain up to 25 % reductions. Gives a definition of instigator of an anti-competitive agreement. The instigator cannot apply to leniency. Confidentiality. SIC can keep confidential the identity of the applicant if it considers that the company may suffer commercial retaliation. Marker: Se refiere a la posición de la compañía dentro del programa de delación.

FIRST LENIENCY CASES Diapers Notebooks Soft paper Alleged price fixing agreement in the children´s disposable diapers market between 2000 and 2013. First case in Colombia in which leniency applicants have provided evidence and information about the cartel. Notebooks Alleged price fixing agreement in the notebooks market between 2001 and 2014. Soft paper Alleged price fixing agreement in the soft paper market between 2000 and 2013.

Uncertainty in Diapers Case In principle, the application of a company covers all of its employees and directors involved in the conduct. In Diapers case, a high number of individuals are been prosecuted by SIC alongside with the companies. What happens if one person does not cooperate with the SIC giving information? Are the benefits lost for the company and other individuals? The confirmation of immunity in the leniency agreement is conditional upon complete compliance with the requirements. This evaluation will be made in the final resolution of the SIC. Before this confirmation is issued, there is no certainty of the application of the leniency benefits.

LENIENCY AND CLASS ACTIONS In Colombia, there is not an specific regulation for private parties to claim damages due to violations to the competition regime, thus, the general regime is applicable (usually class actions). This might arise important issues: Lack of protection to the evidence submitted by the leniency applicant: Within a judicial process regarding damage claims by private parties the court might order the SIC to deliver the entire file of an investigation. There is no protection concerning the corporate statement which would entail a confession in the judicial process. Lack of immunity for damages claimed by private parties Concentration of functions under the SIC: The law project been discussed currently in the Congress contains a provision that might allow the SIC to decided over damages claims by private parties.

CONCLUSIONS Leniency is a recent instrument in the Colombian competition regime. There are 3 pending cases where leniency applications have been made. Therefore, there is much uncertainty on how the leniency programs will be applied by the SIC. The lack of legislation regarding the relation between leniency programs and class actions implies important issues that might deter possible leniency applications, affecting the efficiency of the instrument.