Argentine Antitrust Commission restricts elimination of promotions for Christmas

1. Introduction

On November 19, 2009, the Argentine Antitrust Commission (the “Antitrust Commission”) issued a preventive measure pursuant to Section 35 of the Argentine Antirust Law No 25,156 (the “Antitrust Law”) affecting the clothing industry.

The Antitrust Commission ordered the most important clothing companies to maintain the commercialization conditions and discounts that they have been offering during 2009 in order to prevent an increase in retail prices during December 2009, when sales tend to rise due to the Christmas holidays. The decision was also notified to the shopping malls where the stores of the clothing companies are located and to the banks that issued the credit cards needed to access the discounts.

On November 5, 2009, the Antitrust Commission initiated an investigation regarding competition conditions in the Argentine clothing industry, based on certain articles published in one of the most important newspapers of Argentina. The article indicated that major clothing companies were planning to stop granting the discounts that had been offered during 2009.

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.

According to the articles, the managers of the clothing companies had been in contact in order to organize meetings among them to agree on a coordinated strategy to stop granting the discounts offered to consumers to buy clothes during 2009. The main reasons for said decision would have been that clothing companies considered that said discounts were unnecessary at this time of the year because sales tended to increase, notwithstanding prices.

In order to prevent the harm that said coordinated practices would have over consumers during the Christmas’ holidays, the Antitrust Commission decided to investigate the conducts adopted by the clothing companies involved in the alleged practices.

The Antitrust Commission questioned the legality of the alleged agreement celebrated among the clothing companies and stated that the performance of coordinated practices could harm competition. It further emphasized that prices should result from effective competition and not from agreements among competitors.

Pursuant to Section 35 of the Antitrust Law, the Antitrust Commission is entitled to issue, during the course of an investigation, preventive measures establishing the compliance of certain conditions or ordering the cease of an anticompetitive behavior, when said conduct has the potentiality to damage competition. The Antitrust Commission considered that in this case the requirements to adopt a preventive measure pursuant to Section 35 of the Antitrust Law were duly evidenced.

In order to guarantee the compliance of the preventive measure, the Antitrust Commission also ordered that the decision be notified to the shopping malls and banks that were involved in the implementation of the discounts’ scheme.

3. Conclusion

The preventive measure evidences that the Antitrust Commission is vigorously implementing the provisions of the Antitrust Law in order to prevent any possible anticompetitive behavior.

The legal grounds quoted by the Antitrust Commission seemed as not sufficient to issue a preventive measure, since the preventive measure was issued exclusively based on an article published in a newspaper that informed about certain coordinated practices among clothing companies.

Finally, please note that the competence of the Antitrust Commission to issue these types of preventive measures has recently been questioned by the courts.