Unfair Exclusivity Agreements In Colombia

Not all exclusivity agreements are illegal in Colombia. In fact, an exclusivity agreements not incurring in unfair practices can generate reduction of costs in scale economies, an improvement in distribution channels and thus expedite commercial relations.

The above was recently stated by the Superintendence of Industry and Commerce by specifying the contents of Law 256 of 1996, which is the law regulating restrictive commercial practices and unfair competition in Colombia.

The Superintendence quoted a sentence of the Constitutional Court of Colombia (Sentence C-535 of 1997), according to which not all exclusivity clauses by themselves breach the Colombian law and Constitution, since it is also necessary to take into account their actual effect on the restriction to competition.

That said court compiled all the Colombian case law and doctrine on the topic and specified the requirements provided by Law 256 of 1996 for being classified as unfair exclusivity agreements in Colombia (Colombian Superintendence of Industry and Commerce (Superintendencia de Industria y Comercio), Opinion 02072496 of September 30, 2002), as follows:

• Restriction of the access of the participants to the market;

• Monopolize the distribution of products or services;

Even though the law only defines the exclusivity clauses agreed in supply contracts, the Superintendence established that unfair exclusivity agreements can occur in any contract.

In Colombia it is not possible to say in abstract whether or not an exclusivity agreement is unfair, since it is necessary to analyze, among other factors, the type of market affected, its size, the possibility of substitution of a good for another, the market share of competitors, the existence of monopolistic powers, the effect of the clause on the efficiency, the generation of power in the market originated by the agreement, the effect of the provision on the prices, the level of competition existing in the relevant market and many other factors.