New Bill to Reinforce Price Control and Trade Regulation Laws

On February 20, 2014, Congressman Héctor Recalde and other lawmakers for the ruling Victory Front Coalition (Frente para la Victoria) introduced a bill (the “Bill”) to approve significant amendments to the current legislation in the field of economic and commerce regulation.
The Bill provides for amendments to the (i) Supply Act No. 20,680 (Ley de Abastecimiento, the “Supply Act”); (ii) the Fair Trade Act No. 22,802 (Ley de Lealtad Comercial, the “LLC”); and (iii) the Consumer Protection Act No. 24,240 (Ley de Defensa al Consumidor, the “LDC”).
According to the press, it is expected that the Bill will begin to be analyzed by the relevant committees as from March 1, as the Congress resumes its ordinary sessions.

1. Main Amendments Proposed in the Bill
The main amendments proposed in the Bill are as follows:

1. The staying effect (efecto suspensivo) of appeals against sanctions imposed under the Supply Act, LLC or LCD is abrogated. According to the Bill, filing of an appeal will not stay the effectiveness of the sanctions imposed, thus sanctions —even if appealed— would be effective immediately.
   
2. Before filing an appeal, the aggrieved party must deposit the total amount of the imposed fine or post a sufficient guarantee thereof. Until now, this requirement only applied to sanctions under the Supply Act.
   
3. The term to file an appeal against the aforementioned sanctions is reduced to three days. Currently, the term is five days under the Supply Act and ten days under the LLC and LDC.
   
4. The fines provided in the Supply Act, LLC and LDC are significantly increased (ten fold). The maximum fine under the Supply Act would go from AR$ 1,000,000 to AR$ 10,000,000, and could go up to three times the profit gained from the activity that constituted an infraction under the Act. In the LLC and LDC, the maximum fines would go from AR$ 500,000 to AR$ 5,000,000.
   
5. Furthermore, the minimum and maximum amount of the fines will be adjusted once every six months in accordance with the mobility index of pension benefits under article 32 of Law No. 24,241. At present, only the LLC provides for an adjustment mechanism in relation to fines, which has not been applied in recent years.
   
6. In addition, the maximum penalties provided for disqualification and special disqualification under the Supply Act increase to four and seven years, respectively. The current provision establishes maximum penalties of two and five years.
   
7. The term to file a response and submit evidence in fact-finding proceedings instituted for alleged infringement of the Supply Act, LLC or LDC is reduced to three days. Currently, the term is five days under the Supply Act and ten days under the LLC and LDC.
   
8. The jurisdiction to review the sanctions imposed by these laws is unified and will be vested exclusively in the Federal Court of Appeals on Administrative Law Matters or other competent Federal Court of Appeals, in accordance with the seat of the administrative authority which applied the sanction. At present, the sanctions imposed under the Supply Act are subject to review by the Court of First Instance on Criminal Law in connection with Economic Matters or the competent Federal Court of Appeals, also in accordance with the seat of the administrative authority which imposed the sanction.
   
9. All goods related to health, food, clothing, hygiene, housing, culture and supplies for industrial means, that fulfill the common needs of the population, are declared of “public interest” and “subject to expropriation” by the Federal Executive Branch (the “PEN”) when they are subject to shortages, hoarding or speculation. According to the current provisions of the Supply Act, the PEN may only carry out this kind of expropriations “when a state of economic emergency so requires”. The Bill eliminates this requirement.
   
10. The PEN is empowered to intervene and arrange for the sale of products and goods in the event of failure to comply with the regulations enacted by the PEN in the exercise of its regulatory powers as provided in the Supply Act, notwithstanding the application of the sanctions established therein. According to the current Supply Act, this power may only be exercised by the PEN in case of “urgent public need”. The Bill abrogates this requirement.
    

2. Basis and Purpose of the Bill
In support of the proposed amendments, the authors of the Bill invoke the following objectives: to “provide certainty for legal transactions,” to “expedite proceedings” established under each law to be amended and to “unify legal criteria in common aspects of the legislation.”
The Bill refers to the existence of “various speculative maneuvers of certain production and trade sectors” and deems that the proposed amendments will “foster legal compliance within productive and service sectors, as well as by the other actors in the supply chains of products and services, and avert exorbitant profits that adversely affect the general market.”
In this line of reasoning, the authors assert that the “deterrent effect” of said laws will be “more effective when the penalties are more severe and the terms of the established proceedings are reduced.” Furthermore, they affirm that the exclusion of the staying effect of an appeal against sanctions imposed under the relevant laws and the requirement that the aggrieved party deposits the total amount of the fine or posts a sufficient guarantee thereof, tend to ensure the "immediate effectiveness" (ejecutoriedad) of administrative orders.
Lastly, concerning the increase of the PEN’s expropriation powers under the Supply Act, it is stated that the rationale underlying the exclusion of the “economic state of emergency requirement” is that “the responsibility to fulfill the essential needs of the population affected by the type of maneuvers described in the Bill must also be guaranteed in ordinary situations.”

3. Preliminary Comments
The Bill, if passed by the Congress, will undoubtedly provide the Administration with more tools to intervene heavily in the economy and trade.
However, many of the proposed amendments may be challenged on constitutional grounds.
The Supply Act is already subject to severe objections concerning its current effectiveness and there are claims that some of its provisions are unconstitutional. Thus, the increase of the PEN’s powers under such law will be challenged along similar lines.
The same applies to the amendments provided in the Bill —in particular, the abrogation of the staying effect of appeals— that significantly curtail the constitutional right of defense.