Antitrust Commission’s Proactive Approach in the Issuance of Preventive Measures

Introduction

On November 1, 2010 the National Commission for the Defense of Competition (“Antitrust Commission”) issued a new preventive measure within the terms of Section 35 of the Law No. 25,156 (“Antitrust Law”).

This resolution was originated by an accusation filed by a freelance air-conditioner installer. It compelled the most important retail stores in Argentina to grant guarantee over air conditioners’ equipments, even if the product is installed by any person registered with the Argentine Chamber of Heating, Air Conditioning and Ventilation (Cámara Argentina de Calefacción, Aire Acondicionado y Ventilación) (the “Chamber”).

Background

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 potential to damage competition. Although not required by the Antitrust Law, the Antitrust Commission does not issue preventive measures if the requirements of likelihood of the law and danger in the delay are met.

On August 22, 2008 Mr. Jorge Ricardo Olini, a freelance air-conditioner installer, filed an accusation against the most important retail stores in Argentina (Garbarino, Falabella, Frávega, Coto, Cencosud, Bosan and Carrefour).

The claimant stated that for the last three years he was unable to install air conditioners sold by these companies because they bundled the validity of the air-conditioner guarantee to the hiring of their own team of installers. In other words, in the event that the end consumer decided not to hire the recommended installation service –whose price was informed by the claimant to be considerably higher than the average price in the market- the product guarantee was no longer valid.

On September 2, 2008 the Antitrust Commission served the accused parties with the accusation in order to allow them to provide the relevant explanations. Notwithstanding the explanations submitted by the accused parties the Antitrust Commission decided to open a summary proceedings docket.

The Antitrust Commission called the representatives of the accused parties to public hearings within the docket and focused its investigation on the guarantee given to the end consumer in the air conditioners’ transactions. Therefore, the Antitrust Commission requested the accused parties to submit within the docket samples of the guarantee certificates of the air conditioners issued by them.

The samples submitted by the accused parties within the docket could be classified into three groups depending on the person authorized to carry out the installation:

• A person appointed by the manufacturer and/or the guarantor;
• a person authorized by the retail stores; and
• a person registered in the Chamber. In order to gain a more comprehensive outlook of the relevant market, the Antitrust Commission called the President of the Chamber to a public hearing.

The analysis carried out by the Antitrust Commission within the docket was focused on determining the commission of a possible infringement of Section 2, Sub-Section (i) of the Antitrust Law which sets forth that the act of tying the sale of goods to the purchase of another or upon the use of a service limits competition and may be regarded as an anticompetitive conduct if it harms the general economic interest.

On November 1, 2010 the Antitrust Commission issued a preventive measure pursuant to Section 35 of the Antitrust Law preventing the accused parties from continuing to perform this conduct (available at http://www.cndc.gov.ar/dictamenes/c1266.pdf). It stated that although it recognized that the installation of certain products should be performed through qualified and suitable personnel, the guarantee certificates analyzed within the docket provided enough grounds to state that most of them constrained the end consumers to hiring a limited group of installers in prejudice of other suitable installers duly registered with the Chamber.

The resolution expressly ordered the accused parties to inform the end consumers air conditioners sold at their stores will only be guaranteed, provided that the product is installed by a person appointed by the manufacturer or by any person registered before the Chamber.

This new preventive measure confirms a trend within the issuance of preventive measures which seems to set out an advanced opinion regarding the alleged anticompetitive conduct itself. Given the long time the Antitrust Commission takes to resolve the cases, this type of preventive measures are also a way to decide the cases.

Conclusion

The recent upsurge in the issuance of preventive measures by the Antitrust Commission clearly shows a more proactive approach against anticompetitive conducts. This demonstrates that although the Antitrust Commission is understaffed and with scarce resources which are mostly allocated to merger control cases, efforts are being made so as to give a more comprehensive compliance of the provisions set forth in the Antitrust Law.