Judicial Resolution Sets a Limit on Antitrust Commission’s Powers

1. Introduction

On July 14, 2011 Tribunal “A” of the Court of Appeals on Economic Criminal Matters (the “Court”) issued a resolution by means of which it annulled a decision of the Antitrust Commission issued within the terms of Section 35 of Law No. 25,156 (the “Antitrust Law”) (the “Resolution”).

The Resolution was issued in a case that involved a company called Papel Prensa S.A. (“Papel Prensa”). This company is an Argentine corporation dedicated to the production of newsprint paper, and is the supplier of most national newspapers. The Resolution established a judicial limit to the Antitrust Commission’s powers when issuing preventive measures.

2. Background

The case was originated in an accusation filed by one of Papel Prensa’s clients, specifically the editor of a newspaper from the province of La Rioja. The accusation alleged that Papel Prensa incurred in an unjustified delay in the delivery of newsprint paper and that such conduct harmed the claimant.

Section 35 of the Antitrust Law enables the Antitrust Commission 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 potential to damage competition.

The Antitrust Commission concluded that this case evidenced that Papel Prensa incurred in an important delay in the delivery of an essential input for this type of business. Thus, on October 6, 2010 the Antitrust Commission issued Decision No. 132/10 (the “Decision”), by means of which it issued a preventive measure in order to prevent significant harm to the competition regime.

The Decision ordered Papel Prensa not to engage in conducts that constituted an unjustified discrimination of its clients when compared with the treatment given by Papel Prensa to its shareholders, and controllers and/or their subsidiaries. Papel Prensa appealed the Decision before the Court. The appeal stated that the Antitrust Commission does not have enough powers to adopt these types of measures, and thus requested the annulment of the Decision.

The Court studied the case and focused its analysis on the powers of the Antitrust Commission as regards antitrust regulations. The Resolution stated that the Antitrust Commission is a public agency, created by a law that is no longer in force (Law No. 22,262), whose duties consist of the assessment, study and instruction of those dockets decided by the Minister of the Interior. Additionally it stated that the Antitrust Law sets forth in Section 58 that the Antitrust Commission should continue to occupy itself with those matters until the National Antitrust Tribunal is created.

Finally, the Resolution stated that the antitrust regulations did not provide the Antitrust Commission with legal powers to issue this type of Decision, and therefore the Court decided on its annulment.

This Resolution sets up a limit for the Antitrust Commission’s powers to issue preventive measures. It also confirms the case-law set in 2009 by the Federal Court of Appeals on Civil and Commercial Matters (“Federal Court”) in the Telefónica / Telecom case.

In that case the Antitrust Commission concluded that a certain transaction which was not notified pursuant to Section 8 of the Antitrust Law was actually subject to antitrust clearance. As the transaction was closed before the Antitrust Commission reached such a conclusion, it ordered the buyer, by means of a preventive measure, to refrain from exercising its voting rights in the acquired company until the transaction was authorized (the “Telecom case”).

Such decision was appealed before the Federal Court and on July 27, 2009 such tribunal stated that the Antitrust Commission did not have enough powers to issue the preventive measure. Additionally it stated that in any case the issuance of such type of measures should be requested from a judge.

Thus, in the Telecom case the Federal Court stipulated that the Antitrust Commission is not competent to issue preventive measures. It also stressed that the Antitrust Commission’s duties are limited to investigating the Antitrust Law infringements and issuing certain decisions.

3. Conclusion

Both the Court of Appeals on Economic Criminal Matters (Tribunal “A”) and the Federal Court of Appeals on Civil and Commercial Matters (Tribunal “II”) are of the opinion that the Antitrust Commission is unable to issue preventive measures according to Section 35 of the Antitrust Law.