By means of Judgment No. 25000-23-24-000-2010-00132-01, issued on December 5, 2024, the First Section of the Administrative Litigation Chamber of the Council of State (hereinafter, the "CE") jointly decided several appeals filed against the first-instance judgment that resolved the action for annulment of certain resolutions issued by the Superintendence of Industry and Commerce (hereinafter, the "SIC").
Facts:
As part of an investigation into alleged anti-competitive practices, the SIC allowed each investigated entity to obtain a compliance insurance covering the risk of non-compliance with the obligations set forth in the administrative act concluding the investigation.
Subsequently, the SIC issued resolutions declaring the breach of obligations undertaken in the context of the prior investigation and the occurrence of the loss under the compliance insurance taken out by the investigated entities.
The affected entities argued that they had complied with their obligations and that the SIC's decision lacked legal basis. Consequently, they filed a lawsuit before the administrative litigation jurisdiction seeking the annulment of the administrative acts and the restitution of the amounts paid due to the enforcement of the compliance insurance.
Procedural History:
In 2012, the Administrative Tribunal of Cundinamarca dismissed the claims of the consolidated lawsuits, holding that the challenged administrative acts met the requirements of legality and due process. The Tribunal further concluded that the SIC had acted within its statutory authority in declaring the breach of commitments undertaken by the investigated entities and in determining the occurrence of the insured event under the compliance insurance policies.
Unconvinced by the ruling, the plaintiffs filed an appeal before the CE. Below are the arguments presented by the appellants and the CE:
- Nature of the Administrative Acts and Guarantees:
The appellants argued that the administrative acts through which the commitments were adopted and the procurement of compliance insurance for regulatory provisions was ordered were bilateral acts and, therefore, the SIC could not declare the breach of the commitments established therein. It was argued that such authority corresponded to a court of law.
The CE rejected this argument, stating that the commitments undertaken did not constitute a bilateral act but rather an administrative act concluding the investigation into anti-competitive practices:
"First, it is important to note that the commitments undertaken by (…) which served as the basis for the challenged acts did not result from a contractual agreement based on mutual consent but rather arose from an administrative act that closed an investigation into anti-competitive practices, following the SIC’s acceptance of the commitments and the compliance guarantee policies voluntarily offered by the investigated parties."
- Purpose of the Compliance Insurance for Regulatory Provisions:
The CE also emphasized the purpose of compliance insurance for regulatory provisions, that is, to "ensure compliance with obligations imposed through administrative acts." In this regard, the CE reiterated its precedent from October 6, 2017, Case No. 25000232400020070011201:
"[…] compliance insurance for regulatory provisions is intended to cover the risk of non-compliance with obligations arising from legal provisions, including laws, decrees, resolutions, and regulations, occurring during the policy period and attributable to the obligated party. In other words, unlike traditional performance bonds that secure contractual obligations, the source of the obligation secured under this type of insurance is not a contractual agreement based on mutual consent but rather an authoritative act contained in a law or administrative act […]. Accordingly, the insured risk under these policies pertains to compliance with all obligations imposed by law or regulation, which, in this case, correspond to the commitments undertaken by HOLCIM as a guarantee against engaging in anti-competitive practices. Regarding the damages to be indemnified, (…)"
- Proportionality of the Breach:
The appellants argued that SIC could not enforce the full coverage of the compliance insurance, asserting that the "execution of the policies" should be proportionate to the degree of non-compliance demonstrated for each investigated entity. They contended that SIC should limit its claim solely to the portion of coverage corresponding to the specific infractions individually proven against each entity.
The CE dismissed this argument, holding that the amount of indemnification resulting from the breach of guarantees is directly linked to the concept of "sufficient guarantee," as established in paragraph 4 of Article 52 of Decree 2153 of 1992. Consequently, the CE concluded that the sum claimed by the SIC corresponds to the maximum value of the guarantee provided, without requiring an application of proportionality based on the conduct of each obligated party:
"With respect to the proportionality of the enforcement of the policies, the Chamber notes that the SIC determined that both the networks and the banks were in breach of their obligations, and as such, it was appropriate to enforce the policy issued by each of the investigated parties, as was duly executed.
The Chamber further finds that the enforcement of the guarantee policies does not constitute a source of unjust enrichment for the respondent or the State itself, as the enforced amounts correspond to the values determined by the investigated parties at the time of presenting their commitments and guarantees for the purpose of concluding the investigation into anti-competitive practices initiated by the SIC."
If you wish to review Judgment No. 25000-23-24-000-2010-00132-01 issued on December 5, 2024, click here.