On November 1 2010 the National Commission for the Defence of Competition issued a new preventive measure under Section 35 of the Antitrust Law (25,156). The resolution, which originated from an accusation filed by a freelance air conditioning unit installer, compelled Argentina's largest retail stores to grant guarantees for air conditioning equipment, even if the equipment is not installed by the stores' own team of installers.
Pursuant to Section 35 of the law, during the course of an investigation the Antitrust Commission is entitled to issue preventive measures to establish compliance with certain conditions or to order the cessation of conduct which has the potential to damage competition.
On August 22 2008 Jorge Ricardo Olini, a freelance air conditioning unit installer, filed an accusation against the largest retail stores in Argentina (Garbarino, Falabella, Frávega, Coto, Cencosud, Bosan and Carrefour).
The claimant stated that for the past three years he had been unable to install air conditioning units sold by these companies because they bundled the validity of the air conditioning guarantee to the hiring of their own team of installers. In other words, if the end consumer decided not to hire the recommended installation service - the price of which, according to the claimant, was far beyond the average in the market - the product guarantee was no longer valid.
On September 2 2008 the commission served the retail stores with the accusation to allow them to provide relevant explanations. Notwithstanding their submitted explanations, the commission decided to open a summary proceeding docket.
The commission called the representatives of the accused parties to public hearings within the docket and focused its investigation on the guarantee given to end consumers for the air conditioning equipment. The commission requested the accused parties to submit samples of their guarantee certificates for the air conditioning units.
The samples submitted by the accused parties within the docket could be classified into three groups depending on the person authorised to carry out the installation:
- a person appointed by the manufacturer and/or guarantor;
- a person authorised by the retail stores; and
- a person registered with the Argentine Chamber of Heating, Air Conditioning and Ventilation.
In order to gain a more comprehensive outlook of the relevant market, the commission called the president of the Chamber of Heating, Air Conditioning and Ventilation to a public hearing.
The analysis carried out by the commission within the docket focused on determining a possible infringement of Section 2(i) of the law, which provides that the act of conditioning the sale of goods on the purchase of another product or the use of a service limits competition and may be regarded as anti-competitive conduct if it harms the general economic interest.
On November 1 2010 the commission issued a preventive measure pursuant to Section 35 of the law preventing the accused parties from continuing with this conduct. The commission stated that although it recognised that the installation of certain equipment should be performed by qualified and suitable personnel, the guarantee certificates analysed within the docket provided sufficient grounds to conclude that most constrained the end consumer to hire a limited group of installers in prejudice of other suitable installers duly registered with the Chamber of Heating, Air Conditioning and Ventilation.
The resolution expressly ordered the accused parties to inform end consumers that the guarantees for the air conditioning units sold at their stores will survive provided that the equipment is installed by a person appointed by the manufacturer or by any person registered with the Chamber of Heating, Air Conditioning and Ventilation.
This new preventive measure confirms a trend for the issuance of preventive measures which seem to express an advanced opinion on the alleged anti-competitive conduct itself. Given the long time that the commission can take to resolve these cases, such preventive measures are also a method for deciding cases.
The recent upsurge in the issuance of preventive measures by the commission clearly shows a more proactive approach towards combating anti-competitive conduct. This demonstrates that although the commission is understaffed and has limited resources, which are mostly allocated to merger control cases, efforts are being made towards ensuring comprehensive compliance with the Antitrust Law.
For further information on this topic please contact Alfredo M O'Farrell or Miguel del Pino at Marval O'Farrell & Mairal by telephone (+54 11 4310 0100), fax (+54 11 4310 0200) or email ([email protected] or [email protected]). The Marval O'Farrell & Mairal website can be accessed at www.marval.com.ar.