handbook on multijurisdictional competition law

HANDBOOK ON MULTIJURISDICTIONAL COMPETITION LAW INVESTIGATIONS

Argentina

Alfredo Miguel O’Farrell

Miguel del Pinto

A. Introduction

Before 1999, Argentina did not have a modern antitrust regime. Although the Argentine Congress previously had passed four laws related to antitrust matters, the first three focused solely on infringing conduct, not merger control.1

In September 1999, the Argentine Congress modified Argentina’s antitrust regime, by passing Law 25.156 (the “Antitrust Law”), which went into effect on September 28, 1999.2 With the enactment of the Antitrust Law, a merger control procedure was established and the antitrust regime was modernized, adapting it to international trends and recommendations. The Antitrust Law has been further developed as Argentina’s antitrust enforcement authorities have issued opinions interpreting several rules contained in the Antitrust Law.3

Infringement proceedings before the Antitrust Commission are prosecuted under the rules set forth in the Antitrust Law and in the Criminal Procedural Code.4

The Antitrust Law eliminated criminal sanctions for antitrust violations, making antitrust enforcement in Argentina a merely administrative regime. However, any party may initiate a civil action

1. Laws No. 11,210 Aug. 28, 1923, Law No. 12,906 Feb. 22, 1947

and Law No. 22262, Jan. 8, 1980.

2. Law No. 25,156 Sep. 16, 1999, B.O. 5

3. By means of Resolution 26/2006 the Antitrust Commission can issue Advisory Opinions.

4. Law No. 25,156

1

2 Handbook on Competition Law Investigations

for harm caused by anticompetitive conduct.5 These kinds of actions proceed according to the general rules for tort liability cases, provided in the Argentine Civil Code.6

The provisions of the Antitrust Law apply to all individuals and entities that carry out business activities within Argentina, as well as those that carry out business activities abroad to the extent that their acts, activities, or agreements affect the Argentine market.7 The Argentine Antitrust Commission may exchange information with other foreign regulators or take into account the results of investigations that have been carried out abroad, but its activity is currently limited to Argentina.8

1. Prohibited practices

The Antitrust Law prohibits certain acts relating to the production and exchange of goods and services if they restrict, falsify, or distort competition, or if they constitute an abuse of dominant position, provided that they cause or may cause harm to the general economic interest.9 Such behavior or conduct need not cause actual damages; it is sufficient that the conduct is likely to cause harm to the general economic interest.

The Antitrust Law outlines a series of acts which are considered restrictive practices if they cause harm to the general economic interest. This list, which is not exhaustive, includes: price fixing; practices that restrict or control technical development or the production of goods and services; practices that establish minimum quantities or the horizontal allocation of zones, markets, customers, or sources of supply; agreements or coordination of bids in public biddings; exclusion or obstruction of one or more competitors from entering a market; tying; conditioning the sale or purchase of goods or services to the boycott of a third party; unwarranted refusal to fulfill purchase or sale orders of goods or services; imposition of discriminatory conditions for the purchase or sale of goods or

5. Id. art. 51.

6. Argentine Civil Code, art. 1109.

7. This is known as the “effects doctrine.”

8. Id. art. 3 Law No. 25,156

9. I.e., conduct is evaluated using a “rule of reason” analysis. Id. art. 1 Law No. 25,156

Competition Law Investigations in Argentina 3

services; refusal of a monopolist to provide goods or services to the provider of public services; and predatory pricing.10

Cartel cases in Argentina have generally involved the following conduct: (i) agreements to set prices or capacity; (ii) agreements to allocate market shares; (iii) agreements between different bidding parties in public bids; or (iv) agreements to share competitively sensitive information for the sole purpose of restricting

11competition.

e whether or not a company has a dominant position in a market.

tion by engaging in price discrimination in the liquid gas market.15

Abuse of dominant position also violates the Antitrust Law.12 The Antitrust Law sets forth that a company has a dominant position when: (i) it is the only buyer or supplier of a given product within the market; (ii) if not the only supplier or buyer, it lacks of substantial competition; or (iii) it is able to determine the economic feasibility of competitors because of vertical or horizontal integration.13 Moreover, the Antitrust Law lists three relevant factors to help determine whether a company has a dominant position in a particular market: (i) the degree of substitution for a product or service; (ii) the existence of regulatory barriers; and (iii) the extent to which a company can unilaterally set prices or restrict output.14 The Antitrust Commission also considers market share as an important factor to determin

According to the Antitrust Commission, conduct that constitutes abuse of a dominant position includes predatory pricing, fixing retail prices, tying, blocking access to essential facilities, and price discrimination. Antitrust authorities in Argentina have been investigating different types of abuse of dominant position since the early 1980s. However, no significant sanctions were imposed until 1995 when the local petroleum company received a significant sanction for abusing its dominant posi

10. Law No. 25,156.

11. Id. art. 2

12. Id. art. 2

13. Id. art. 4

14. Id. art. 5

15. See Section E.3.


2. Current activity of the enforcing agency

The Antitrust Law provides the Argentine antitrust enforcement authorities with several enforcement powers to assist them in carrying out their duties under the Antitrust Law. However, in the recent years, a lack of resources due to budget constraints has considerably diminished the enforcement activities of the agency by forcing the agency to reduce its staff.

According to publicly available information, the enforcing agency has analyzed 218 cases involving alleged anticompetitive conduct between 1999 and 2006.16 The following chart details the outcome of these proceedings.

Agreement

to cease conduct

Case stowed

Explanations accepted

Claims rejected

Remittal to other

regulators

Sanctions issued

Total

Total 10 35 79 72 3 19 218

Share 4.60% 16.10% 36.20% 33.00% 1.40% 8.70% 100.00%

As the chart shows,, a relatively small number of investigations

resulted in sanction (8.7%), while a significantly higher number of investigations (85.3%) were stayed, rejected, or dismissed based upon a party’s explanation.

Another byproduct of budget constraints is the ever increasing length in time of cartel proceedings, which has resulted from a greater allocation of resources to merger control proceedings.

In order to counteract the current understaffing and lack of funds that the enforcing agency is facing, a fee for mergers could be implemented, so as to provide regulators with their own source of income to spend on the hiring of more professionals. A fee for the control of economic concentrations is specifically provided in the Antitrust Law.17 As for anticompetitive conduct, the creation of a leniency program could help to expedite investigations.

16. Antitrust Commission Reports, available at,

http://www.mecon.gove/ar/cndc. The information has been obtained after analyzing the Reports issued by the Antitrust Commission for the years 1999 to 2006. The information for the years 2007 and 2008 has been drafted based on resolutions available at the Antitrust Commission’s headquarters.

17. Id art. 25.


B. Investigation by Competition Authorities

1. Enforcement structure

The Antitrust Law provides for the creation the National Tribunal for the Defense of Competition (the “Antitrust Tribunal”) under the auspices of the Ministry of Economy. The Antitrust Tribunal would be the ultimate antitrust authority in Argentina and would be composed of seven members, with a minimum of two attorneys and two accounting professionals on its staff. However, the Antitrust Tribunal has yet to be created. After several cases challenging the government’s ability to enforce the Antitrust Law without setting up the enforcement agency, the Argentine Supreme Court recently found in two cases that the two-tier regulatory structure set forth in the previous antitrust law18 remains the valid enforcement mechanism. These decisions leave no room for doubt as to who will enforce the Antitrust Law until the Antitrust Tribunal is created.19

For the purposes of this article, the current two-tier regulator structure will be referred to as the “Antitrust Commission.”

2. Investigations, Sanctions, Statute of limitations.

The Antitrust Law sets out that the Antitrust Commission initiates its investigations either on its own or after a claim is filed by another party. In the latter case, the claim must contain the name and domicile of claimant, the purpose of the claim, the facts on which the claim is based, and the legal provisions on which the claim is based.20 If the Antitrust Commission decides to investigate a claim, it provides notice to the accused party, who then has ten days to respond to the allegations. After receiving the response, the Antitrust Commission must decide either to open the investigation or to dismiss the claim.

The Antitrust Commission can impose the following sanctions:

(i) An order to cease and desist the anticompetitive conduct. 18. Law No. 22262, Jan. 8, 1980, B.O. 2.

19. Corte Suprema de Justicia de la Nacion (CSJN) National Supreme Court of Justice, 6/5/2007, “in re Credit Suisse First Boston Private Equity Argentina II,” Fallos (330:2527); Corte Suprema de Justicia de la Nacion (CSJN) National Supreme Court of Justice, 6/5/2007, “Recreativos Franco s/ apel. resol. CNDC,” [not published].

20. Law No. 25,156, art. 28.


(ii) A fine ranging from AR$10,000 (US$ 2,600) to AR$ 1,500,000 (US$ 390,000).21

(iii) In the event of abuse of dominant position, a request for the issuance of an order divest assets or dissolve the company.22

Regarding the applicable statute of limitations, the Antitrust Law sets forth that these claims must be filed within five years from the performance of the anticompetitive conduct.23 The statute of limitations is interrupted either by the filing of a claim or by new anticompetitive conduct.24

3. Appeals against the decisions of the Antitrust Commission

Fines, cease and desist orders, and dismissals of claims by the Antitrust Commission may be appealed.25 After the enactment of the Antitrust Law, there was a debate regarding the applicable Court of Appeals for the City of Buenos Aires. Under, the prior antitrust law, the applicable Court of Appeals was the Court of Appeals on Criminal Economic Matters, but under the current Antitrust Law the proper court is the Federal Court of Appeals on Civil and Commercial Matters.26 The discussion has centered on the criminal nature of antitrust regulations, since the prior antitrust law was clearly a criminally oriented procedure, while the current Antitrust Law changed that view.

The debate was settled by the recent Telecom case, in which the Supreme Court determined that appeals of resolutions issued by the

21. The amount of the fine is calculated by considering the loss

incurred by the affected parties, the benefit obtained by the parties that carried out the anticompetitive conduct, and the value of the assets involved. The amount of the fine can be doubled in the event of a repeated offence. Id. art. 46.

22. Id. art. 13 sub-section b.

23. Id. art. 54.

24. Id. art. 55.

25. Id. art. 52.

26. Id. art. 53. Originally, the Commercial Court of Appeals was also an appropriate appellate court, but this was later modified by Decree 1019/99 which eliminated the Commercial Court of Appeals from the Antitrust Law).


Antitrust Commission belong in the Court of Appeals on Criminal Economic Matters.27

C. Evidence Gathering

As stated in the introduction, the Antitrust Law provides the enforcing agency with several enforcement powers in order to perform its purpose.28 Because that the Antitrust Tribunal has not yet been created, the double tier regulator structure is currently in force.

Under the double tier regulator structure, the Antitrust Commission is in charge of gathering evidence, performing the technical review of the cases, and issuing a recommendation to the Secretary, which is the body that ultimately decides on antitrust matters.29

1. Powers of the Antitrust Commission

Pursuant the Antitrust Law, the Antitrust Commission is vested with the following powers:

To study and analyze market conditions, and request information and documents from individuals, national, provincial or municipal authorities, and consumer associations.30

To hold hearings with allegedly responsible parties, claimants or damaged parties, witnesses, and experts, and to receive testimony and order cross examinations between the parties, for which it may request assistance from public authorities.31

To perform expert analyses of financial and corporate records, documents, and other elements necessary for the

27. Corte Suprema de Justicia de la Nacion (CSJN) National Supreme

Court of Justice. 4/16/2010, “in re Telecom Italia SpA y otro s/ solicitud de inihibitoria”

28. Id. art. 17.

29. Id. Law No. 22,262

30. Art 24, Law No. 25,156

31. Id. art 24.


investigation, control over current stocks, verify origins and costs of raw materials or other goods.32

To prosecute legal actions before the courts, including the appointment of a legal representative.33

To gain access to places subject to inspection with the consent of the occupants or through a court order 34.

To petition the court for injunctions necessary to the enforcement of the Antitrust Law.35

According to Section 33 of the Antitrust Law, the Antitrust Commission’s decisions on evidentiary matters are not subject to appeal, although the parties may request that the Antitrust Commission reconsider the issues.36

Pursuant to Section 42 of the Antitrust Law, the Antitrust Commission may allow the intervention as coadjutant parties those parties affected by the investigation, such as legally recognized associations of consumers and businesses, provinces, and any other person with a lawful interest in the subject of the investigation.37

Parties who obstruct investigations or fail to comply with any requirements of the Antitrust Commission may be penalized with a daily fine of up to Argentine Pesos 500 (approximately US$ 116 at the current exchange rate).38

2. Market investigations

Section 24 of the Antitrust Law also establishes that the Antitrust Commission may begin market investigations on their own

32. Id. art 24.

33. Id. art 24.

34. Id. art. 24. To obtain the order, the Antitrust Commission must petition a competent judge, who shall decide whether or not to issue the order within 24 hours.

35. Id. art. 24.

36. Id. art. 33.

37. Id. art. 42.

38. Considering an exchange rate of AR$ 4.3 for U$S 1, available at, http://www.x-rates.com.


initiative.39 Investigations may also be ordered by the Secretary or at the request of any other public officer.40 During the market investigation, the Antitrust Commission is empowered to request information, documents, and samples from any third parties, public authorities, or associations for the defense of consumers, at its sole discretion.41 It may also order hearings with company owners and other witnesses.42

The purpose of an investigation is to find evidence of anticompetitive acts by a party that participates in a particular market. If there is prima facie evidence of an anticompetitive act, the Antitrust Commission will start a separate proceeding and will require the party to respond to the allegations.43 After the party is given an opportunity to respond to allegations, the Antitrust Commission must decide whether to continue or to terminate the investigation.44

If the Antitrust Commission is not able to find evidence in support of anticompetitive conduct, it will terminate the market investigation with no further consequences, but it may also suggest actions to facilitate competition.45

Pursuant to Section 35 of the Antitrust Law, during the course of an investigation, the Antitrust Commission may take steps to protect competition by ordering companies to comply with procompetitive conditions or to cease anticompetitive conduct.46 However, recent judicial precedents have limited the scope of such preventive measures, as evidenced in the Cable TV Industry investigation.47

39. Id. art. 24.

40. Id. art 26.

41. Id. art 24.

42. Id. art 24.

43. Id. art 29.

44. Id. art. 30.

45. Id. art. 31.

46. Id. art 35.

47. See Section E.6, infra.


3. Dawn-raids

As explained in Section C.1., the Antitrust Commission may carry out inspections with the consent of the occupants.48 If the occupants deny access, the Antitrust Commission must obtain a search warrant from a competent court to gain access to the premises.49 Inspections carried out under these circumstances are similar to dawn raids. In the course of the inspection, the Antitrust Commission may review documents and hard disks and interview the company’s employees.

The Antitrust Commission has performed both types of investigations. Despite the difficulty of persuading a court to issue a search warrant, in the last 5 years a number of search warrants have been issued.50

4. Use of evidence by the Antitrust Commission

In a recent case, the Antitrust Commission faced challenges in properly analyzing evidence, as well as in interpreting and following procedural rules. In Shell Totalgaz, 51 the Federal Court of Appeals for the City of Posadas (the “Court of Appeals”) overturned the Antitrust Commission’s sanctions on procedural and analytical grounds. The Court disagreed with the Antitrust Commission’s market definition and, therefore, with the Antitrust Commission’s competitive effects analysis. The Court also found that the Antitrust Commission had not presented sufficient evidence to justify the sanctions.52 Because of these errors, the Court of Appeals decided that it was not necessary to review the Antitrust Commission’s analysis of potential harm to the general economic interest, instead overruling the Commission’s decision.53

48. Id. art. 24.

49. Id. art. 24.

50. See Section E.

51. Camara Federal de Apelaciones de Posadas [CFed.][federal court of appeals], 5/30/08, “Shell Gas S.A., Totalgaz Argentina S.A. s/ recurso de Apelación”

52. Id.

53. Id. It is important to note that these types of proceedings are private and cannot be accessed by third parties that do not participate in the proceedings. Additionally, accused parties hold


5. Cooperation agreements with Brazil

On July 15, 2009, the National Executive Power of Argentina sent a bill to the National Congress regarding a “Cooperation Agreement between Argentina and the Federative Republic of Brazil on cooperation between their Antitrust Authorities in the application of their antitrust laws” (the “Cooperation Agreement”).54 The purpose of the Cooperation Agreement is to promote cooperation between enforcement authorities of each country in antitrust matters, not only with regard to the enforcement of antitrust laws but also as to technical cooperation.

Under the Cooperation Agreement, one country’s enforcement authorities must notify the other’s of enforcement activities that: (i) relate to the activities of the other country’s antitrust enforcement activities; (ii) involve anticompetitive practices, other than mergers or acquisitions, carried out entirely or substantially in the territory of the other country; (iii) involve acts of concentration in which one or more of the involved parties or a company controlling one or more parties of a transaction is a company incorporated or organized under the laws of the other country; (iv) involve conduct allegedly researched, promoted, or approved by the other country; and (v) involve a search for information available in the territory of the other country.55

The Cooperation Agreement facilitates the exchange of information that assists in the effective enforcement of the corresponding country’s antitrust laws or promotes a proper understanding of the economic and market conditions relevant to competitive activities.56 The Cooperation Agreement also provides that the Party who investigates an anticompetitive practice under this agreement may notify the Republic of Uruguay and Paraguay about the progress and outcome of the investigations.57

the constitutional and criminal law rights to counsel and against self-incrimination. Argentine Constitution, art. 18.

54. Cooperation Agreement between Argentina and the Federative Republic of Brazil on cooperation between their Antitrust Authorities in the application of their antitrust laws executed on July 15, 2009

55. Id.

56. Id.

57. Id.


D. Leniency

In November 2009, the Antitrust Commission unveiled draft legislation (the “Bill”), to amend the Antitrust Law to include a leniency program and corresponding regulations for the enforcement of the program (the “Regulations”).58 The Bill includes provisions relating to both immunity and reductions in sanctions,, both of which are based on a “race-to-the-door” structure.

Infringing parties must comply with the following requirements in order to obtain immunity from sanctions under the Antitrust Law:

The party seeking leniency must be the first party involved in the cartel to provide the Antitrust Commission with information and evidence in a case not currently under investigation or in a case for which the Antitrust Commission does not have sufficient evidence to prove the anticompetitive conduct;

The party must immediately cease the infringing conduct, unless the Antitrust Commission deems that continuing the conduct is necessary to preserve the investigation;

The party must collaborate until the end of the investigation;

The party must not destroy, forge, or hide evidence of the anticompetitive conduct, nor make public the fact that it has filed for a leniency program, unless such communication is to other antitrust regulator; and

The party must not be the leader of the anticompetitive conduct.

Subsequent applicants to the leniency program could request and receive a reduction of sanctions if they are able to meet all of the requirements except for the first and if they provide the Antitrust Commission with useful information for the investigation.59 The Antitrust Commission would determine the reduction in sanctions by taking into account the chronological order of the filing, as well as the number of participants involved in the conduct. Should the conduct involve three cartel members, the first party requesting 58. Bill for the amendment of the Antitrust Law drafted by the

Antitrust Commission, not published.

59. Id.


leniency would be entitled to a reduction of 50%; if the conduct involves four parties, the second party to request leniency would be entitled to a 30% reduction; and if the conduct involves at least five parties, the third requesting party would be eligible for a reduction of 20%.60

Additionally, the Bill specifically forbids a joint application for leniency by, more than one party, unless those joint applicants are a company and its directors or other members of its staff.

The Bill also includes a “leniency plus” provision, which would enable parties ineligible for immunity from sanctions for anticompetitive conduct to report additional anticompetitive conduct and receive a 30% reduction in sanctions for the first conduct and immunity from sanctions as to the additional conduct.61

According to the Regulations, a Leniency Division would analyze applications to the leniency program and inform the Antitrust Commission as to whether the leniency requirements are met. All members of the Leniency Division would be obligated to treat the information filed by the requesting parties as confidential and may be held liable in the event of a leak of information.62

Finally, it is important to note that the Bill does not address penal sanctions set out by Section 300 of the Argentine Penal Code. This provision states that any person who fixes the price of merchandise, public offer funds, or securities through misstatements, fraudulent negotiations, or a conspiracy to fix prices will be sanctioned with imprisonment ranging from six months to two years.63 The leniency program in its current form would only apply to the sanctions under the Antitrust Law. Therefore, a leniency applicant could be granted immunity with regard to the sanctions of the Antitrust Law, but could still be prosecuted under the Argentine Penal Code.64 This would ultimately discourage parties from using this leniency program. The Bill is currently under review by the Secretary of Domestic Trade, but has not yet been sent to Congress.

60. Id.

61. Id.

62. Id.

63. Argentine Penal Code, art. 300

64. Id.


E. Recent Enforcement Activity

1. Cement case

The most renowned case regarding cartels in Argentina is the Cement case,65 in which six major cement producing companies were accused of agreeing to allocate markets nationwide for almost 20 years. The Antitrust Commission’s investigation began in 1999, when a disgruntled employee supposedly revealed to a newspaper that the cement companies were exchanging information and agreeing to divide their market shares.66 While the source of the article was never revealed, it was used as a starting point for the Antitrust Commission’s investigation.

According to the findings of the Antitrust Commission, the alleged exchange of confidential detailed market information was performed via the Association of Portland Cement Manufacturers (“APCM”). After a raid on the APCM premises, the Antitrust Commission found records of real time software that was used in order to exchange current commercial records of the cement companies.67

This finding, as well as evidence of meetings in hotels between representatives of four of the companies, led the Antitrust Commission to discover the existence of a cartel that exchanged confidential and sensitive information about the cement market and that fixed prices in some areas.68

The fine imposed on July 25, 2005 by the Antitrust Commission and the Secretary of Domestic Trade totaled 309,729,289 Argentine Pesos (approximately US$ 72,000,00069) and was confirmed by an appellate Court on August 26, 2008.70 Four cement companies and the APCM were sanctioned. These proceedings are currently under review by the Supreme Court.

65. CNDC Res. 513 (July 25, 2005).

66. Id.

67. Id.

68. Id.

69. Considering an exchange rate of AR$ 4.3 for U$S 1.

70. Sentence issued by the Court of Appeals on Economic Matters on August 26, 2008.


2. Liquid Oxygen case

This investigation in the Liquid Oxygen case71 was initiated in 2001 by the Antirust Commission after hospitals filed complaints stating that they were unable to acquire liquid oxygen for medical purposes from any suppliers other than those with whom they had already contracted via public bidding. The remaining competitors in the market would always submitted higher bids than the company that the hospitals had hired. 72

After performing several raids on the liquid oxygen companies and obtaining documentary evidence, the Antitrust Commission unveiled a cartel that had been coordinating the bidding prices in public biddings for liquid oxygen.73 The four members of this acartel had actively arranged between themselves the amounts and conditions of their offers in each bidding for five years, so as to allocate the public hospital market.74

On July 8, 2005 the companies involved in the cartel were fined a total of AR$ 70,300,000 (U$S 16,300,000).75 This case is currently under review by the Court of Appeals.

3. YPF case

Increases in the price of liquid petroleum gas (“LPG”), an essential source of energy for many residences in Argentina, led to the investigation in the YPF case.76. The Antitrust Commission

71. CNDC Res. 510 (July 8, 2005), ”Praxair Argentina S.A., Air

Liquide Argentina S.A., Messer Argentina S.A. y AGA S. A. e Indura Argentina S. A.” CNDC ruling, 07/08/2005, No. 064-011323/2001 (C. 697), available at http://www.mecon.gov.ar/cndc/oxigeno.pdf.

72. Id.

73. Id. Section 2, sub-section d) of the Antitrust Law specifically prohibits the coordination or agreements between competitors in public biddings. Law No. 25156 art. 2(d), of Sept. 16, 1999.

74. CNDC Res. 510. Section 2, sub-section c) of the Antitrust Law sets out that the division of zones, markets, clients and suppliers constitutes an infringement to the law. Law No. 25156 art. 2(c), of Sept. 16, 1999

75. Considering an exchange rate of AR$ 4.3 for U$S 1, available at http://www.x-rates.com.

76. CNDC Res. 314 (Mar. 22, 1999).


determined that Yacimientos Petroliferos Fiscales (“YPF”), a local petroleum company, had a dominant position in all phases of the market for bulk LPG production and supply. It also found out that the market entry barriers were high and that imports were not a constraint on domestic producers.77

The conduct investigated by the Antitrust Commission was YPF’s practice of exporting a large amount of LPG at prices that were lower than those they charged for LPG in Argentina. Further, YPF’s export contracts prohibited the re-import of LPG to Argentina.78 The Antitrust Commission concluded that this conduct was harmful to the general economic interest and ordered YPF to cease its price discrimination as between the domestic and export markets and to eliminate the prohibition of re-importing LPG. Additionally, it imposed YPF a fine of AR$ 109,644,000 (US 25,400,000).79 The decision was upheld by the Supreme Court of Argentina.80 This case has also led to the first private antitrust litigation in Argentina.81

4. Monsanto case

In the Monsanto case,82 the National Court of Appeals for Civil and Commercial Federal Matters (the “Court of Appeals”) reversed the decision of the Antitrust Commission to investigate Monsanto Technology LLC and Monsanto Argentina SAIC (“Monsanto”) for the potential infringement of the Antitrust Law in Argentina based on Monsanto’s enforcement of certain patent rights outside of

77. Id.

78. Id.

79. Considering an exchange rate of AR$ 4.3 for U$S 1. Available at http://www.x-rates.com.

80. Corte Suprema de Justicia de la Nacion [CSJN][National Supreme Court of Justice], “Yacimientos Petroliferos Fiscales,” Fallos 325:1702.

81. d. See Section F.

82. Camara Nacional de Apelaciones Especial Civil y Comercial de la Capital Federal, [CNPenal Economico][National Court of Special Civil and Commercial Appeals of the Federal Capital, Chamber III], 9/30/2008, “Monsanto Company s/ Apel. Resol. Comisión Nac. de Defensa de la Competencia. Acumulada: Causa,” [L.L.] 638/2008., Monsanto Argentina SAIC s/ Apel. Resol. Comisión Nacional de Defensa de la Competencia”, case No. 13.676/07. Publisher in elDial - AA4D7A.


Argentina. According to the Antitrust Commission, Monsanto abused its dominant position in the soybean market of soybean because of its ownership of the Round Up Ready patent outside of Argentina.83 On September 30, 2008, the Court of Appeals held that Monsanto had a constitutional right to petition judicial authorities and such actions could not be considered anticompetitive conduct in Argentina. 84

The Court of Appeals also found no evidence that Monsanto’s legal actions had been baseless and expressly mentioned the “Noerr-Pennington” doctrine developed in the United States.85 Further, the Court of Appeals stated that there was no evidence that Monsanto had abused its right to petition foreign judicial authorities.86

5. Preventive measure on the clothing industry

On November 5, 2009, the Antitrust Commission initiated an investigation regarding competition in the Argentine clothing industry, based on certain articles published in one of the most important newspapers of Argentina.87 The articles indicated that major clothing companies were planning to stop granting discounts offered during 2009 just prior to the commencement of the holiday season.88 According to the articles, the managers of the clothing companies had contacted each other to organize meetings at which they agreed on a coordinated strategy to stop granting clothing discounts. The decision to stop discounted was based on said the fact that discounts were unnecessary during the holiday season because sales tend to increase, notwithstanding the prices.89

83. d.

84. d.

85. d. See also Noerr v. Eastern Railroads, 365 US 127 and Pennington v. United Mine Workers, 381 US 657.

86. onsanto, This case is still under the analysis of the Supreme Court. The Antitrust Commission requested the review of the decision from the Court of Appeals.

87. esolution issued by the Antitrust Commission on November 19, 2009 in re. “CNDC s/ Investigación de Oficio de Sistemas de Comercialización (c. 1307)”. Available at http://www.mecon.gov.ar/cndc/dictamenes/cautelar_tarjetas.pdf.

88. d.

89. d.

http://www.mecon.gov.ar/cndc/dictamenes/cautelar_tarjetas.pdf


The Antitrust Commission questioned the legality of the alleged agreement and stated that such coordinated practices could harm competition. The Antitrust Commission pointed out that the discounts offered during 2009 had a positive impact on consumers since they resulted in a reduction in the price that the consumers paid for clothing products in Argentina.90 It further emphasized that prices should result from competition and not from agreements among competitors. Thus, it ordered the investigated parties to maintain the discounts that had been offered during the year 2009. 91

6. Preventive measure on the cable TV industry

On January 19, 2010, the Antitrust Commission initiated an investigation of the cable TV market, after newspaper stories reflected the simultaneous increase in prices in the market, as well as the performance of collusive activities by the principal operators and entities of this industry.92 The Antitrust Commission believed that these facts proved the existence of a conspiracy among the principal operators and entities of the cable industry to jointly raise the fees in the cable TV market.

The Antitrust Commission issued Resolution No. 08/10,93 through which it set preventive measures pursuant to Section 35 of the Antirust Law regarding the Pay TV industry, ordering the most important operators of the Pay TV as well as all members of certain cable TV associations to: (i) refrain from collusive conduct, and in particular, not to raise the price of cable tv services for a period of 60 days; (ii) to the extent that the prices had already been increased by the Pay TV operators, the prices must be reduced to the price of such services in November 2009, for a period of 60 (sixty) days.94

On February 19, 2010, the Court of Appeals suspended the effects of the resolutions, holding that: (i) the Antitrust Commission does not have the power to issue preventive measures pursuant to Section 35 of the Antitrust Law; and (ii) the decision of the Antitrust 90. d.

91. d.

92. esolution issued by the Antitrust Commission on January 21, 2010 and February 2, 2010 in re. “Investigación de Oficio de los Abonos de Televisión Paga” (c. 1321)”, available at http://www.mecon.gov.ar/cndc.

93. d.

94. d.

http://www.mecon.gov.ar/cndc


able to Auto Gas.

ion and use of Auto Gas’ canisters, and bulk transfer of business.98

e been performed either by negligence or by means of deceit.99

anticompetitive and that the conduct had been performed by means of

Commission was supported only by media reports and press releases.95

F. Use of Evidence in Investigations in Private Litigation

As mentioned in Section G.3., the YPF case led to the first private antitrust litigation in Argentina. The claim was initiated by Auto Gas S.A. (“Auto Gas”), who claimed it had been affected by the anticompetitive conduct performed by YPF.96 Auto Gas stated that at the time of the conduct analyzed by the Antitrust Commission, Auto Gas was a company engaged in the distribution of LPG. It based its claim on the fact that the YPF’s abuse of its dominant position caused an unwarranted increase in LPG prices and a decrease in the quantity of LPG commercially avail

97

Auto Gas requested AR$117,113,962 (approximately US$ 27,000,000 under the current exchange rate), in damages for abuse of dominant position, breach of contract, supply cuts, and coordinated activities regarding pricing and the retent

The Argentine Civil Code sets out that in order to seek reparations, the following conditions should be met: (i) there must be an illicit act; (ii) the act must have caused damages; (iii) there must be a causal link between the act and the damages; and (iv) the act must hav

In the Auto Gas case, the court dismissed YPF’s defenses and noted that it would not analyze YPF’s anticompetitive conduct, since the conduct had already been analyzed and sanctioned by the Antitrust Commission and ratified by the Supreme Court. Thus, it considered that it had already been proven that YPF’s conduct was

95. entence issued by the Federal Civil and Commercial Court on

February 19, 2010.

96. Corte Suprema de Justicia de la Nacion [CSJN][National Supreme Court of Justice], “Yacimientos Petroliferos Fiscales,” Fallos 325:1702.

97. d.

98. d.

99. d.


deceit.100 The analysis was therefore focused on whether there had been damages to Auto Gas and whether those damages had been caused by the anticompetitive conduct. As a result of its analysis, the Judge ordered YPF to pay AR$13,094,457 (approximately US$ 3,392,346 under the current exchange rate) to Auto Gas, plus attorneys’ fees.101 This sentence is still subject to appeal by the parties.

G. Conclusions

The Antitrust Commission has been involved in several high profile cases that have shown its capacity to uncover anticompetitive conduct. However, in recent years, the case load of the Antitrust Commission has greatly increased, without a corresponding increase in important results, due to the severe understaffing of the Antitrust Commission. The creation of a leniency program in Argentina could greatly alleviate the Antitrust Commission’s investigative tasks, while providing insider information which could prove to be very helpful for convictions.

If the Antitrust Commission regains the momentum it showed years ago in cases such as the Cement and Liquid Oxygen cases, the infringement of antitrust regulations would most certainly decrease. Until then, it remains to be seen whether the Antitrust Commission will be able to meet the standards set by other regional regulators, such as the Brazilian CADE.

CONTACTS & BIOGRAPHY SECTION

FIRM NAME: Marval, O’Farrell & Mairal

FIRM ADDRESS: Av. Leandro N. Alem 928 (C1001AAR) - Buenos Aires. Argentina

TELEPHONE NUMBER: (54-11) 4310-0100

FAX NUMBER: (54-11) 4310-0200

FIRM CONTACT EMAIL: [email protected] – [email protected]

WEBSITE ADDRESS: www.marval.com.ar

100. d.

101. d.

mailto:[email protected]

mailto:[email protected]

http://www.marval.com.ar/

Competition Law Investigations in Argentina 21 AUTHOR BIOGRAPHY

Alfredo O’Farrell has been a partner with Marval, O’Farrell & Mairal since 1978 and he specializes in general corporate and company law, M&A, privatizations, “shareholders disputes” and other related corporate matters as well as in antitrust issues.

Within his area of specialization he has advised national and foreign firms in corporate matters, mergers, acquisitions, different antitrust issues, distribution and agency contracts, privatizations and financings. His advice includes operation structuring, acquisition of real estate, contracts relating to the construction of plants and other related matters.

He graduated from the Universidad de Buenos Aires in 1975 and obtained a Master in Comparative Jurisprudence from New York University in 1977.

Before joining the firm he worked for the law firm Rosenmann, Colin, Freund, Lewis & Cohen, in New York.

He is the Chair of the firm since December 2007.

Miguel del Pino joined Marval, O’Farrell & Mairal in 1998 and he has been recently appointed as Partner (August 1, 2008). His area of specialization is centered around competition and mergers and acquisitions.

His professional work focuses on advising clients and representing them before the antitrust authorities on matters relating to pre-merger control, cartel investigations, anticompetitive investigation and general market investigations.

He has also dealt with mergers, acquisitions and joint venture transactions, advising buyers and sellers on the transfer of shares or assets in Argentina. He has been very active in advising foreign clients on setting up businesses in Argentina and compliance with local regulations.

He has published several works related to his area of expertise and has participated as a panelist and moderator in different conferences related to his area of expertise.

He is an assistant professor of Competition Law at the Post-Graduate Courses of Business and Economics Law of the Universidad Católica.


He graduated as a lawyer at the Universidad de Buenos Aires in 1994 and in 1997 he obtained a Master of Laws from the University of Pennsylvania (Philadelphia, Pennsylvania, USA).

handbook on multijurisdictional competition law

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