Colombia's competition authority has imposed fines totaling over COP 125 billion (approximately USD 37 million) on four companies and 13 executives for operating a cartel in the caustic soda and chlorine markets for more than 12 years. The case, which began with a leniency application from Brinsa, highlights the risks of inconsistent cooperation and signals stricter enforcement in Latin America's chemical supply chain.
Cartel operations and market impact
Between 2002 and 2014, Brinsa and Quimpac colluded to allocate customers in the Colombian chlorine market, aiming to maximize selling prices. The primary victims were water and sanitation companies that rely on chlorine for water treatment. Separately, Brinsa, Quimpac, Trichem, and Mexichem agreed that Mexichem would exit the Colombian caustic soda market, allowing the remaining firms to divide its market share and deter new entrants.
Regulatory framework and penalties
The chlorine cartel was sanctioned under Article 47 No. 3 of Decree 2153, which prohibits market-sharing agreements. The caustic soda cartel fell under the general competition prohibition in Article 1 of Law 155 of 1959. The SIC imposed fines totaling over COP 125 billion (about USD 37 million) on the companies and 13 current or former executives. Two of the sanctioned firms also have operations in Chile.
Leniency denied for Brinsa in chlorine case
Brinsa initiated the investigation in 2017 by confessing its role in both cartels to seek full immunity. The SIC granted Brinsa full exemption from fines for the caustic soda cartel due to effective cooperation. However, for the chlorine cartel, the SIC denied full immunity because of inconsistencies between Brinsa's initial leniency application and the information later provided, particularly regarding the cartel's duration. Brinsa received only a reduced fine.
What buyers should watch
Overseas buyers of caustic soda and chlorine should monitor how this ruling affects pricing and competition in Colombia. The denial of full immunity may discourage future leniency applications, potentially reducing transparency in the market. Importers and distributors sourcing from Colombia should verify supplier compliance and consider alternative suppliers in the region to mitigate antitrust-related supply disruptions.
Compliance and logistics signals
This case underscores the importance of rigorous compliance programs for chemical companies operating in Latin America. The SIC's strict interpretation of leniency rules may set a precedent for other jurisdictions. Companies with operations in Colombia or Chile should review their antitrust policies and ensure accurate documentation of any leniency submissions to avoid similar penalties.
Source: Read the original report | Published: October 31, 2019