An important step towards the creation of a leniency program in Argentina

Last November, the Argentine Antitrust Commission (the “Commission”) released a preliminary version of the Bill as well as of the Regulations in order to receive comments on its drafting. The Bill sets out two different scenarios for infringing parties, namely an exemption one and a reduction one, both based on a “race-to-the-door” structure.

Infringing parties must comply with the following requirements to obtain an exemption of the sanctions set out by the Antitrust Law No 25,156 (the “Antitrust Law”):

Those parties that would not be the first ones to require the enforcement of the leniency program could request a reduction of the sanctions, if they are able to meet the remaining requirements and provide the Commission with useful information for the investigation. The Bill sets out that the reduction could be of 20%, 30% or 50% of the sanction.

The Bill also includes a leniency plus provision, by means of which those parties that would not be able to request for an exemption regarding an anticompetitive conduct but that could provide information on a second anticompetitive conduct can obtain an exemption on the latter, ande a 30% reduction in the former.

Additionally, the Bill specifically sets out that there cannot be a joint enforcement by two parties of the leniency program, the sole exception being if a company and its directors or other members of its staff request the enforcement of the program.

The private litigation action set out by Section 51 of the Antitrust Law would not be modified under the Bill. This entails that, should a requesting party obtain the enforcement of the leniency program and be granted a total exemption of the applicable fines, it would still be liable before any third party that may have been damaged by the anticompetitive conduct.

Finally, an issue that has not been covered by the Bill is the fact that there are criminal sanctions set out by Section 300 of the Argentine Criminal Code.  Such section sets out that any person that may generate the rise or decrease of the price of merchandise, public offer funds or securities, by means of false news, fake negotiations or by agreement of the main holders of a good, in order to sell or to refrain from selling at a specific price, will be sanctioned with imprisonment, which may range from six months to two years.

The leniency program, under its current drafting, would only be applicable to the sanctions that are set out in the Antitrust Law. Therefore, a requesting party would be granted immunity regarding the sanctions of the Antitrust Law, but could be prosecuted under the settings of the Argentine Criminal Code.

While it is still too early to decide whether this leniency program will be effective, it shows that the Commission has taken notice of the requests of both the public and private sectors regarding the need for such program. There are, however, certain issues that should be further analyzed by the Commission.

The inclusion of a provision regarding any applicable penal sanctions would help the future application of this program; otherwise, this process would be in jeopardy due to the fact that managers or other key members of the company’s staff would have an open flank for their criminal prosecution regarding the very same events of which they have provided evidence to the Commission about.

Such possibility, added to the fact that third parties could initiate a private litigation process against the company based on the result of the investigation of the Commission, will most certainly cast a shadow on the enforcement of this Bill.