In light of the commotion caused by the situation between Viva Air and Avianca, especially regarding the merger operation that the companies allegedly carried out without the authorization of the competent authority, it is worth delving into another discussion that has been developing for some time, namely the one related to the competence to grant authorization for this type of operations in the aeronautical sector.
It is necessary to begin by defining that in this type of complex transactions, in which the integration of business assets is carried out for essentially economic purposes, one or more companies are extinguished, transferring, once the operation is perfected, all of their assets to one or more companies that, it may be said, may already exist or may have been incorporated precisely on the occasion of said commercial operation.
Having defined the above, it is necessary to continue by clarifying that, with regard to the fundamental right to free competition, the sole authority that ensures its protection is the Superintendence of Industry and Commerce (SIC), under the terms of Law 1340 of 2009. What does this mean? That the Superintendence, by virtue of the aforementioned Law, was assigned the general competence to hear all administrative proceedings that are carried out under the general regime for the protection of competition, which includes "matters relating to restrictive commercial practices, that is, agreements, acts, and abuses of dominant position, and the regime of business integrations."[1]
As for business integration operations, Law 1340, in its Article 9, establishes the obligation to request the corresponding authorization from the SIC for those companies that intend to merge, consolidate, acquire control of one over the other, or, in short, any type of legal transaction that results in different organized commercial activities that were previously carried out in the market autonomously and independently by a legal or natural person, becoming permanently and centrally managed by a single management body.[2]
The merger, then, coincides with the assumption provided for in the aforementioned Article 9, so that, in principle, those companies that intend to carry out this type of operation must request authorization from the SIC. However, this authorization will not proceed with respect to all operations that are intended to be carried out in the market, but only when the companies involved in the operation are engaged in the same economic activity or participate in the same value chain, and, in addition, that individually or jointly, in the year prior to the request, they have had operational income or total assets exceeding the amount defined by the authority, which until 2022 amounted to 57,322,387,083.44 pesos or 14,398,413.29 USD.
Having addressed the business integration regime in a very abbreviated manner, it should be noted that the Commercial Code, in its Article 1866, determines that the aeronautical authority, the Aerocivil, must authorize "agreements between operators that imply collaboration, integration, or joint operation agreements, connection, consolidation, or merger of services, or that in any way tend to regulate or limit competition or air traffic."
In light of this normative provision, it would seem that the Commercial Code contains an exception to the general rule of competence established by Law 1340 of 2009; however, in our view, that should not be the conclusion, as will be explained below.
On the occasion of the issuance of Law 1340 of 2009, the Superintendence of Industry and Commerce was established as the sole authority in matters of competition, establishing in a exhaustive manner certain special circumstances that constitute exceptions or exemptions to that general rule.
One of the exceptions established by the same cited norm is that contained in the sole paragraph of Article 8, which very clearly provides that "the Special Administrative Unit of Civil Aeronautics shall retain its competence for the authorization of all commercial operations between aircraft operators consisting of code-sharing contracts, joint operation, use of aircraft in charter, exchange, and blocking of space on aircraft."
Having recognized both provisions, the situation becomes even more confusing, making it more difficult to determine who is the competent authority and what exactly are the operations that the law recognizes for the purposes of the prior authorization studied.
Analyzing carefully the wording of Article 1866 of the Commercial Code, it is possible to conclude that the norm refers to agreements between aircraft operators in a broad and general manner, proceeding to make an enumeration in which collaboration, integration, or joint operation agreements are found, thus implying that said enumeration is of an enunciative nature, that is, it does not seek to exhaust all possible agreements that may be subject to the competence of the Aerocivil, but rather seeks to cover any legal transaction that may "regulate or limit competition or air traffic."
On the other hand, the sole paragraph of Article 8 specifies a reduced competence and exhaustively determines which agreements will fall within the scope of competence of the aeronautical authority, that is, it seeks to exhaust all possible agreements whose authorization will be the competence of said authority. For that purpose, the cited article makes exclusive reference to four specific assumptions, so that only the authorization for the celebration of business collaboration contracts for joint operation, such as the joint venture, remains under the Aerocivil, without mentioning economic integration operations.
Taking into account the purpose of Law 1340 of 2009, in addition to the fact that the same studied Law establishes those assumptions that constitute the exception to the general competence of the SIC, such as the case of the cited Article 8[3], it is considered that the sole paragraph of said article tacitly repealed Article 1866 of the Commercial Code, which would make the conclusion clear as to which authority should hear merger operations to be carried out by companies in the aeronautical sector: the Superintendence of Industry and Commerce, with the competence of Civil Aeronautics being limited to the operations expressly determined in Law 1340 of 2009, just cited.
For the purposes of interpreting the Law, according to the general rules contained in the Civil Code, "when the meaning of the law is clear, its literal text shall not be disregarded under the pretext of consulting its spirit"[4]. The cited norm is clear regarding the scope of the Aerocivil's competence, as specified above, adding, furthermore, that authorities may only exercise those competences expressly authorized by the Constitution and the Law[5], without it being possible for them to extend their competence to matters that have not been so provided by law.
This conclusion is clearly not shared by the competent authorities, since application continues to be given to the provision of Article 1866 of the Commercial Code, which, as studied and in our view, was tacitly repealed by Law 1340.
[1] Law 1340 of 2009. Article 2.
[2] Concept 00001365 of 2000 of the SIC.
[3] Law 1340 also recognizes other exceptions and exemptions in matters of competition. First, operations in the agricultural sector, under the terms of Article 5 of said law, are exempt from the competence of the SIC; in addition, integration operations in the financial sector also have the same exception, adding the exemption from the provisions contained in the studied norm when it comes to institutions for the protection of public trust ordered by the Financial Superintendence of Colombia, under the terms of Article 28 of the cited norm.
[4] Civil Code. Article 27.
[5] Political Constitution of Colombia. Article 6.