Penalization for Cartelizing of Nightclubs in Bariloche: A Glimpse of Leniency to Come?

On November 28, 2022, the Secretary of Commerce (SC), following the recommendations of the National Commission for the Defense of Competition, issued a resolution penalizing the companies Alliance SAS and Grisú SA for cartelization, within the framework of the previous Antitrust Law No. 25156.

The investigation began in 2018, following a complaint filed by Powerlink SRL, a company that organizes and promotes artistic and cultural shows and gatherings in its establishment, "Puerto Rock Bariloche". The companies against which the complaint was filed, Alliance and Grisú, offer recreational nightclub services in the city of Bariloche, specifically to touristic agencies commercializing senior high-school student travel packages.

The anticompetitive behaviors reported by Powerlink consisted of preventing access to the nightclub entertainment service market offered by other companies, through an alleged exclusionary abuse of dominant position. The companies allegedly subjected the sale of their services to the non-acquisition of other night-touristic services offered by third parties. They were also accused of cartelization for fixing the prices and conditions of the tickets for their nightclubs.

Among the evidence gathered in the investigation, there was a "Memorandum of Understanding" signed by all the parties –including the complainant– in 2004. The Commission verified that, as a result of this agreement, the market was divided by time slots, from which the reported companies claimed the night hours, from 00.00 am onwards, limiting Powerlink to offer its services during the daytime, from 05.00 pm to 00.00 am. Further, the Commission considered proven the distribution of clients to ensure they attend each nightclub at least one time, with an arranged price for each guest. This agreement would have ceased in 2017, due to the defendants’ lack of compliance with the agreement.

Additionally, the Commission verified that the companies Alliance and Grisú established an agreement to jointly fix admittance ticket prices for their nightclubs, through a common price list sent to student tourist agencies.

The SC charged all the companies –including the complainant, Powerlink– for alleged collusive agreement for price fixing and distribution of market. It also processed Alliance for allegedly tying the tickets to its nightclubs by selling them as a package deal.

Powerlink requested the nullity of the charges and based it on the violation of constitutional rights. It stated that the evidence it had provided was in virtue of its role as complainant and that, in any case, it did not benefit from the leniency program (article 60 and subsequent, Chapter VIII, Antitrust Law No. 27442) to avoid being sanctioned. 

In its legal opinion, the Commission considered that, by simply analyzing the Memorandum, there was an explicit agreement for the joint fixing of ticket prices and for the distribution of the market. In its analysis, the Commission stated that cartelization is one of the most serious behaviors, since it has an intrinsically anti-competitive goal: the suppression of competition through prices. It was noted that the development of the cartel was possible due to the dominant position the companies had in the relevant market, which enabled them to obtain highly competitive benefits and a better negotiating position. However, in its Resolution, the Commission decided to drop the charges against Powerlink, basing this decision on Powerlink’s collaboration with the authority, and considering that it acted under duress. The leniency program in the current Antitrust Law No. 27442, which gives the Commission the power to graduate penalties, was thus applied, .

Grisú was ordered to pay a fine of ARS 90.3 million and Alliance, a fine of ARS 150 million, the maximum the former Antitrust Law No. 25156 allowed. Furthermore, Alliance was ordered to de-concentrate one of its nightclubs, ceasing any kind of control over it.

Finally, the Commission ordered the companies involved to cease the cartelization and the exchange of sensitive information, and to commercialize in an independent and competitive manner.

The Commission emphasized the importance of effective and efficient penalties to limit any future misbehaviors, since cartelization is considered one of the most harmful infractions to the general economic interest, and thus justifies severe fines like the one imposed. At the same time, it is worth noting the Commission’s reference to the clemency program as basis for exempting Powerlink, which established a first precedent in this sense.