September 21, 2018

SIC Sanctions Company for Paying Fines Imposed on Its Senior Executives

Simulated Bonus Payments Assumed Fines Levied in 2016 Cartelization Case
Holland & Knight Alert
Danilo Romero Raad | Camila Lopez

Leer en Español: SIC Sanciona Empresa por Asumir Pago de Multas Impuestas a Sus Altos Directivos

For the first time, Colombia's Superintendence of Industry and Commerce (SIC) has investigated and sanctioned a company for paying with its resources fines imposed by the Competition Authority to its employees.

The SIC sanctioned the company in 2016 in a case of cartelization that included six of its senior executives.

Two years following the mentioned sanction, the SIC established that this company allegedly assumed the payment of the fines that were imposed to five of the directors by means of operations that simulated the payment of occasional bonuses, which is a conduct expressly prohibited by competition law in Colombia. More particularly, Article 26 of Law 1340 of 2009, which regulates the promotion and protection of competition, establishes that fines imposed by the SIC to individuals for infringing the competition regime cannot be assumed directly or indirectly by the company to which the individual was related when the infringing conduct was executed.

Therefore, on Sept. 17, 2018, the SIC issued Resolution No. 68722, which sanctioned the company with a fine of more than 25 billion Colombian pesos, and imposed penalties to the five senior directors ranging from 50 million to 312 million Colombian pesos.

The previous case represents not only an alleged infringement of the competition regime applicable in Colombia by this company and the corresponding individuals, but it also shows a serious breach of the orders imparted from the Competition Authority.

It is important to mention that the payment of bonuses to employees is not prohibited, as it depends on the internal policies of each company. However, what is not allowed is to simulate these payments with the purpose to infringe applicable regulations and orders issued by national authorities, as allegedly happened in this case.

Considering the above, it is recommended that companies establish a compliance program that states, among other things, the consequences of incurring in practices contrary to free competition both for the company and for its employees as individuals. This program should be known and internalized by each one of the employees that constitute the company in order to avoid the occurrence of these type of conducts.

For further information, please contact the authors.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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