Third, and finally, what exactly did the SGCAN decide in 2018 and why is it such a threat to antitrust enforcement in the region? Eduardo Frade, Vinicius Marques, Carlos Mena and Jaime Barahona – all former senior members of the antitrust authorities of Brazil, Mexico and Chile – have already described the matter in detail in their excellent articles The end of leniency programs in the Andean Region? and A Call to Arms to protect Latin American Leniency Programs but, to summarize, in 2018 the SGCAN decided to impose fines on two multinational companies operating in the region on the basis of conduct that had already been reviewed by the authorities of Colombia, Ecuador and Peru. The parties had already filed leniency applications and secured benefits in Colombia and Peru. But most importantly, the SGCAN’s case was entirely based on evidence shared by the Ecuadorian antitrust authority, after it unilaterally decided to refer the case to the SGCAN and to disclose all the confidential information a leniency applicant had shared as part of a leniency application. The decision by the SGCAN was so egregious that both the Colombian and Peruvian authorities took the unprecedented step of filing reconsideration pleas against the decision and have since then been constantly calling for significant reforms.
So given that background, what has transpired since then, and what is the current state of affairs? On the specifics of the case, the parties filed reconsideration pleas before the SGCAN (joined, as mentioned above, by reconsideration pleas filed by the Colombian and Peruvian authorities.). One of the parties also filed judicial complaints in Ecuador and an annulment action before the TJCA. While the Ecuadorian complaints failed to yield positive results, the TJCA did lay out a path forward: while the annulment action was dismissed due to a ripeness issue (the TJCA argued that given the reconsideration pleas, the 2018 SGCAN decision was not yet a final decision and the question of annulment was not yet “ripe” for judicial review), the TJCA specifically indicated that “. . . statements provided by the leniency applicant or applicants in the context of a leniency program should not be used against the leniency applicant in other proceedings, as doing so would disincentivize future leniency applications, which would in turn negatively impact leniency programs, thus debilitating the fight against cartels.” Those comments were obiter dictum and not part of the TJCA’s ratio decidendi, but they still gave hope to many that the SGCAN would need to take them into account when deciding on the use of the information it had received from the Ecuadorian authority for its case. Those hopes would turn out to be, as we will see, clearly misplaced.
In the meantime, the first consequence of the decision was a significant slowdown in the number of leniency applications filed in the region. Given the confidential nature of leniency applications, figures are hard to come by, but based on the number of cases decided recently by the Colombian, Peruvian and Ecuadorian authorities, leniency-based decisions are mostly a thing of the past.
Second, and from the perspective of the regional antitrust bar, the Andean countries have become a significant source of uncertainty for decision makers at companies operating in the region. Questions on how to engage and when to engage with local antitrust authorities have given way to a general preference to avoid engagement, when at all possible, given the risk posed by the looming presence of the SGCAN.
Third, and perhaps more concerning, the heightened profile of the SGCAN has given rise to opportunistic parties attempting to use the SGCAN to pursue cases when local authorities have either decided not to initiate investigations or have not expressed a clear position on the matter. Specifically, in 2020, following a flurry of activity in the tech sector, a complaint was filed simultaneously with national antitrust authorities in the Andean Region and with the SGCAN, listing a number of alleged violations of Andean antitrust law. That same year, the same complainant filed a separate case, also simultaneously before national authorities and the SGCAN, against several vaccine manufacturers, arguing, in broad terms, that lack of access to vaccines and pricing practices in connection with COVID-19 vaccines amounted to restrictive conduct.
While those complaints were dismissed by the SGCAN in 2021 due to lack of evidence and a failure to state proper cause of action, the dismissal was driven more by the ineptitude of the complaints than by a commitment by the SGCAN to respect the jurisdictional sphere of each national authority within the CAN. Furthermore, the filings highlighted, once again, the difficulties companies face when operating in the region given the asymmetries between local and regional antitrust enforcement: first, if any of the companies involved in the complaint would have wished to apply for leniency, any local application would have been rendered useless given the lack of a leniency program at the SGCAN and the SGCAN’s continued refusal to honor local leniency grants. Second, the absence of double jeopardy protections would have meant that there was a distinct possibility of concurring national and CAN-based investigations and fines based on the same facts.
Finally and most recently, to make things worse, in 2021, even though the TJCA had signaled its reluctance to allow the use of evidence gathered for a leniency application in other proceedings, the SGCAN decided to plough ahead and confirm its initial decision. In doing so, the SGCAN spent very little time addressing the arguments of the parties on the existence of local leniency agreements and instead provided new arguments on its authority. On the absence of a regional leniency program, the SGCAN argued that since it had the authority to decide on the amount of a given fine, investigated parties could certainly have access to benefits, equivalent to those of a leniency program by fully cooperating with the SGCAN, even if they had already cooperated with other authorities, therefore confirming that it would not honor national leniency agreements. On the specifics of cooperation, and even though the case at hand involved the use of evidence obtained using highly suspect means, the SGCAN did argue that by presenting a defense and failing to yield to its investigation, the parties had disqualified themselves from securing any benefits.
So, in sum, as of today, there are two active and parallel antitrust enforcement tracks for CAN member states, with no clear rules preventing prosecution at both a national and regional level. Furthermore, leniency benefits granted by national antitrust authorities are not binding upon the SGCAN and - as made clear by the SGCAN- will not be honored at a regional level. And finally, the SGCAN has taken the position that the only way to obtain benefits similar to leniency is to yield to the SGCAN and hope for a reduction in fines.
In their 2018 articles, Frade, Mena, Barahona and Marques anticipated that the decision by the SGCAN on the reconsideration pleas filed by the investigated parties would be a game changer. Sadly, the SGCAN’s refusal to change course has proven that prediction to be accurate, for all the wrong reasons. Even if the TJCA ends up granting relief to the parties in the 2018 case, now that the SGCAN’s decision is final (and thus “ripe” for review), that relief will only concern the use of evidence shared with national authorities as part of a leniency process but is unlikely to solve the tension between national and regional enforcement. So unless serious reforms are undertaken, forcing the SGCAN to honor local leniency agreements and preventing concurring fines, national leniency programs are unlikely to recover and companies will need to carefully plan their activities in the region to avoid parallel enforcement.
