Preventive Measures under Argentine Antitrust Law

1. Introduction

The Argentine agency designed to enforce antitrust provisions has recently published its memories for the years 1999, 2000 and 2001 (available at www.minprod.gov.ar/CNDC/memoria00/indice.htm). The Memories describe the work that has been carried out by the Antitrust Tribunal during those years and Chapter 4 is entirely devoted to the preventive measures imposed in different cases investigated by the Antitrust Tribunal.

Argentine antitrust provisions authorize the imposition of preventive measures (injunctions) to prevent restrictions that may cause serious damage to the competition. According to the law, preventive measures may be imposed at any moment of the proceedings. The purpose of this article is to analyze when a preventive measure may be imposed in Argentina and under what circumstances.

2. Antitrust in Argentina

Argentine antitrust regime is governed by Antitrust Law No 25,156, which became effective on September 28, 1999 (the “Antitrust Law”). The Antitrust Law was regulated by Decree No 89/2001, effective on January 30, 2001 and partially modified and amended by Decree No 396/2001, effective on April 9, 2001 (ADLA, LIX-D, 3943; ADLA, LXI-A, 255; ADLA, LXI-B, 396, respectively).

The Antitrust Law will be enforced by the Tribunal for the Defense of Competition. Since this body has not yet been formed, the Antitrust Law is currently enforced by the Commission for the Defense of Competition, a government agency designed by the former antitrust legislation to enforce antitrust provisions (the “Antitrust Tribunal”).

The Antitrust Law prohibits certain acts or conducts relating to the production and exchange of goods and services if they limit, restrict, falsify or distort competition, or if they constitute an abuse of a dominant position in a market, and provided that in both cases, such conduct harms general economic interest. Such behavior or conduct is not however unlawful per se, nor is it necessary that it causes actual damage; it is only unlawful if the conduct is likely to cause harm to general economic interest.

The Antitrust Law sets out, merely as examples, a series of acts considered as restrictive practices provided the acts harm the general economic interest. The list, which is not exhaustive, includes: price fixing; practices that limit or control technical development or the production of goods and services; practices that establish minimum quantities or horizontal allocation of zones, markets, customers, and sources of supply; agreeing or coordinating bids in public bidding; excluding, impeding, or hindering, one or more competitors from accessing a market; conditioning the sale of goods to the purchase of other goods or to the use of a service, or conditioning the provision of a service to the use of another service or the purchase of goods; limiting the purchase or sale to a condition of not using, purchasing, selling or supplying goods or services produced, processed, distributed or commercially exploited by third parties; unwarranted refusal to fulfill purchase or sale orders of goods or services submitted in existing market conditions; imposition of discriminatory conditions for the purchase or sale of goods or services not based upon existing commercial practices; suspending the provision of a dominant monopoly service in the market to a provider of public services or of services which are of public interest; and establishing predatory pricing.

The Antitrust Law is applicable to all individuals and entities that carry out business activities within Argentina and to those who carry out business activities abroad, to the extent that their acts, activities or agreements may have any effects on the Argentine market.

3. Antitrust Law provisions on Preventive Measures

According to section 35 of the Antitrust Law, at any moment of an antitrust investigation the Antitrust Tribunal may impose special measures obliging the parties to comply with special conditions or to cease or to abstain from carrying out competition restrictive conducts. Moreover, this section states that when the restrictive conduct may cause serious damage to competition, the Antitrust Tribunal may order those measures needed to prevent such damage (“Preventive Measures”). The Antitrust Tribunal has interpreted that such measures are used to protect competition in a free market.

Under the Federal Civil and Commercial Procedural Code, a Court may declare an injunction at any moment during judicial proceedings if the party requesting such measure demonstrates: (i) that “prima facie” its claim shouldf be admitted; (ii) serious danger in the delay; and (iii) sufficient guarantee. The claimant must demonstrate the right that is being damaged if the injunction is not granted and that there is sufficient proof that such right will be protected by the judge’s final decision. Also, there must be a serious danger to the party to prevent it from waiting until a final decision is issued by the Court because it may not have consequences. The claimant must provide sufficient guarantee for the damage that the injunction may cause, if the final decision does not admit the claim.

According to the Antitrust Tribunal Memories, Preventive Measures have been imposed and they have been decided once the claimant has “prima facie” proved its right and the serious danger in the delay of obtaining a final decision from the Antitrust Tribunal. There is no mention as to whether a special guarantee was requested to the parties pursuant the Federal Civil and Commercial Procedural Civil Code by analogy.

4. Description of certain Preventive Measures imposed by the Antitrust Tribunal

In cases No 652 and No 648, the Antitrust Tribunal verified that the bus station of the City of Salta was managed by one of the main bus companies in the Province of Salta. Pursuant to a complaint filed by a competitor denouncing the lack of space at the bus station to sell tickets, the Antitrust Tribunal assessed that the existence of both horizontal and vertical relations justified a Preventive Measure instructing such company to grant and lease space to its competitors at the bus station.

In case No 735 the Antitrust Tribunal ordered a Preventive Measure instructing some local chambers of medicine to authorize the provision of a special medicine by companies other than their exclusive supplier. Their supplier executed a provision agreement with the local chambers for the exclusive provision of certain specific medicines. Pursuant to the terms of the provision agreement, the supplier raised a 90% share of the relevant market. The Antitrust Tribunal considered that the damages of continuing with the exclusion of other competitors based on the exclusivity of the supplier’s provision agreement directly damaged patients with oncology treatments and other patients treated in public facilities who may have to pay higher prices due to the supplier’s market position.

In a very similar case (No 587), since it also involved pharmaceutical laboratories, the Antitrust Tribunal grounded the imposition of a Preventive Measure on the fact that the conduct affected the normal development of a very sensitive market, incorrectly distorting consumer preference and preventing the entrance of new competitors into the market.

In case No 696 and No 625 the Antitrust Tribunal granted a Preventive Measure in favor of a TV cable company, instructing one ot its suppliers to sell transmission rights of soccer games for the 1998 World Cup Qualifications. Its supplier offered the transmission rights to a TV cable company under conditions that differed from those offered to other competitors.

In a very similar case, case No 702, the Antitrust Tribunal granted a Preventive Measure against to two TV cable companies, instructing them to guarantee the free disposition of TV transmission rights for all TV operators in the country. The Antitrust Tribunal considered that both companies were in a position of generating a possible restriction to the competition of TV transmission rights in Argentina.

5. Conclusion

Since the Antitrust Tribunal does not publish decisions related to Preventive Measures, the cases can not be analyzed in depth. The information here has been obtained from the Antitrust Tribunal’s Memories for the years 1999, 2000 and 2001.

Preventive Measures represent a fast and inexpensive tool for any competitor that allows them to stop any conduct that could be considered as a restriction to competition in any given relevant market.

Therefore, whenever a company decides to implement a conduct that may cause a restriction to competition, as provided in section 1 of the Antitrust Law, it is worthwhile analyzing in advance whether such conduct may lead to a possible investigation by the Antitrust Tribunal and the possible imposition of a Preventive Measure. Since antitrust investigations can be initiated by the Antitrust Tribunal or upon the request of any person, any competitor may initiate an antitrust investigation requesting the Antitrust Tribunal to impose a Preventive Measure.