Judge Juan Varillas Solano, head of Peru's Seventh Civil-Commercial Court, issued a precautionary measure on January 12, 2022, in favor of companies from Colombia and Ecuador against the Andean Community, blocking collection of a bond guarantee worth more than $18 million tied to a price-fixing dispute over paper products that was being handled by the Tribunal of Justice of the Cartagena Agreement.
The Andean Community, made up of Bolivia, Colombia, Ecuador and Peru, is headquartered in Lima, and the bank that issued the guarantee also operates there, which allowed the Peruvian judge to intervene in a cross-border case outside his jurisdiction. Lawyers for the companies involved admitted during hearings that the goal of the lawsuit was to buy time.
The Andean Community's secretary general complained to Peruvian authorities and asked the judge to refrain from ruling on matters that fall outside his authority and belong to Andean community law, according to case file 01-AN-2021 in the Official Gazette of the Cartagena Agreement.
Origins of the price-fixing case
The dispute traces back to November 25, 2021, when companies from the Kimberly Group sued the Andean Community's secretary general before the CAN Tribunal of Justice over a fine tied to anticompetitive practices in Ecuador and Colombia.
In 2014, Kimberly-Clark Ecuador entered a leniency program with Ecuador's Superintendence for Market Power Control, admitting to price collusion in that country. That information was later shared with the Andean Committee for the Defense of Free Competition, part of the CAN's secretary general office, because the collusion had been planned and orchestrated from Colombia through Kimberly-Clark Colombia. Authorities imposed a fine of more than $17 million. The Ecuadorian company argued the information should not have been shared with other countries or institutions.
The bond and the Peruvian judge's order
The Kimberly Group appealed to the CAN Tribunal of Justice to annul the fine. The tribunal agreed to review the case, suspended the fine payment, and required a counter-guarantee of equal value. Kimberly Colpapel S.A. issued a bond guarantee through Banco Guayaquil, backed by Liberty Seguros, in favor of the Andean Community for $18,344,916.00 to cover the suspended $17 million fine.
By 2022, with the companies unable to support their arguments, the CAN tribunal began asking that the fine be paid or the bond guarantee executed. According to CAN case files, Judge Varillas ordered Banco de Guayaquil to refrain from executing the guarantee. The move prompted the secretary general and the CAN Tribunal of Justice to demand he stop intervening. During the proceedings, Kimberly's lawyers admitted they were not willing to pay and had pursued every legal avenue available to avoid doing so, including turning to a Peruvian judge.
Peru opens its own investigation
Following the admission in Ecuador, Peru's National Institute for the Defense of Competition and Protection of Intellectual Property, known as Indecopi, opened an administrative sanctioning proceeding against Kimberly-Clark Peru, maker of Suave products, and Productos Tissue del Peru, maker of Elite products. The proceeding targets an alleged agreement to fix prices and commercial conditions in Peru's toilet paper market and other paper products.
