Limits to the Antitrust Authority: Inviolability of Correspondence

1. The background

During an ex-oficio investigation (which by law it is entitled to perform) the Argentine Antitrust Commission (the “Commission”) required Telefónica de Argentina S.A. (“Telefónica”) (one of the major companies providing telecommunications services in Argentina) to produce a list of communications made by them to several phone numbers in the City of Tandil, Province of Buenos Aires.

Due to Telefónica’s refusal to produce such information, the Commission passed a resolution through which it fined Telefónica with AR$ 500 (US$ 125 at the current exchange rate) for every day of non-compliance with the Commission’s requirement and ordered the immediate surrender of the information requested.

Telefónica’s legal basis to refuse the information requested was Section 17 to 19 of the Argentine Constitution (inviolability of private property and personal correspondence, and the impossibility of forcing a conduct not instructed by law), and 18 to 21 of Telecommunications Law No. 19,798 (the “Telecommunications Law”).

2. The Appeal

Given the Commission’s resolution, Telefónica appealed.

During the appeal stage, the Commission invoked Sections 24 and 50 of  Argentine Antitrust Law No. 25,156 (“AAL”), which provides that “it is the function of the Antitrust Court to: a) perform research and market investigations that it may consider pertinent. To such extent it can require from private citizens, national, provincial or municipal authorities […] the documentation and collaboration that it may consider necessary [to fulfill such research or investigation]” and “those obstructing or not complying with the Court’s requirements shall be fined with up to AR$ 500 a day”.

On the other hand, Telefónica argued that the Commission’s requirements were opposed to Sections 17 to 19 of the Argentine Constitution and 18 to 21 of Telecommunications Law, putting itself at risk, if complying with the Commission’s requirements, to the penalties and fines established in the latter.

In particular, Telefónica pointed out that “telecommunication correspondence is confidential and can only be disclosed if required by a competent judge” (Section 18 of Telecommunication Law). Since the Commission’s requirement did not observe due procedure Telefónica was not under the obligation of producing the information requested.

3. Federal Court of Appeals resolution

Even though this case presented itself as a possible conflict of laws, the Court determined that it was not so since all three invoked laws were perfectly compatible with each other.

It is correct that the Commission (as provided by the AAL) can perform the research and market investigations that it may consider pertinent, requiring from private citizens, national, provincial or municipal authorities the documentation and collaboration necessary to that extent but it is not empowered to run over whatever restriction or limit another law may establish.

Such is the case of the restrictions set forth in Section 18 of Telecommunication Law that obliges whoever may require the disclosure of telecommunication correspondence to first request an order of disclosure to a competent judge, since telecommunication correspondence falls under the protection of the Argentine Constitution. In pursuit of its purpose, the Commission must have required the pertinent information by means of a Court order.

Therefore, the Commission breached due procedure when directly required such disclosure (not with a Court order) and fined Telefónica when the latter denied such information.
 
Such was the resolution of the Court of Appeals, which overruled the Commission’s resolution.