AmBev / Quilmes - Challenge by a legislator

On May 24, 2004 the Federal Court of Appeals on Civil and Commercial Matters rejected an appeal made by a member of the Chamber of Deputies against the Secretariat for Competition, Deregulation and the Defense of the Consumer’s Decision No 5/2003 (issued on January 13, 2003), which had approved the economic concentration of Companhia De Bebidas Das Americas S.A. (“AmBev”) and Cervecería y Maltería Quilmes SAICAyG (“Quilmes”).

In 2002 AmBev and Quilmes requested the National Commission for the Defense of Competition’s approval of a transaction in which AMBEV acquired 37.5% of Quilmes Industrial Société Anonyme, the controlling shareholder of Quilmes. This transaction was notified pursuant to the terms of Section 8 of Law No 25,156 for the Defense of Competition (the “Antitrust Law”). The Commission approved the transaction, subject to the transfer of certain assets (beer trademarks, a brewery plant and a malt plant, jointly with mandatory distribution and production of beers manufactured by the newcomer) to a company with no previous presence in the Argentine beer market.

Mr. Jorge Luis Bucco, a member of the Chamber of Deputies and President of its Defense of Consumers Commission challenged the approval based on Section 42 of the Argentine Constitution that protects collective rights (such as consumer and defense of competition rights).

The Court of Appeals stated that Mr. Bucco’s position in the Chamber of Deputies does not grant him the right to challenge decisions to which he is not a party nor where there is no controversy. The Court held that although the Argentine Constitution protects collective rights, only current cases can be reviewed, and therefore the protection of collective rights falls within the sphere of the Ombudsman and the associations specifically focused on such matters.

In addition, the Court also stated that the Antitrust Law does not provide for a challenge to a decision of the Commission approving a transaction: only decisions which reject an economic concentration may be challenged. The Court also mentioned that the purpose of the Antitrust Law is to grant protection only to the parties involved in the procedure for approval of the economic concentration.

This rejection by the Court of Appeals puts an end to yet another challenge to the AmBev/Quilmes joint venture. The Court of Appeals’ decision upheld all the legal grounds that AmBev and Quilmes had invoked for the rejection of the claim, such as (i) the procedure for the approval of an economic concentration is not a “contradictory proceeding” and therefore does not provide for a third party acting as “joining party”; (ii) the time periods provided in the Antitrust Law for the analysis and approval of an economic concentration are not long enough to produce all the evidence relevant to a contradictory proceeding; and (iii) the right to appeal a decision is very restrictive and is only granted to the aggrieved party when an approval has been rejected.