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Antitrust: restrictive agreements and dominance

Section 5 of the Antitrust Law sets out that a person has a dominant position when it is the only buyer or supplier of a given product within the market or when, without being the only supplier or buyer, it lacks substantial competition or it is able to determine the economic feasibility of competitors because of a certain vertical or horizontal degree of integration.

Section 6 establishes three relevant factors to determine the existence of a dominant position: the degree of substitution for a product or service; the existence of regulatory barriers; and the extent to which a company can unilaterally set prices or restrict output.

Despite not being expressly indicated in the Antitrust Law, the Antitrust Commission also considers market share to be an important factor in determining whether there is a dominant position.

Section 1 of the Antitrust Law prohibits the abuse of a dominant position. Section 3, on the other hand, describes some vertical and exclusionary practices that could violate Section 1 as they are likely to cause harm to the general economic interest.

Since the beginning of the 1980s, antitrust authorities have been investigating different types of abuse of dominant position. Additionally, in the view of antitrust authorities, a dominant position may be abused by committing different anticompetitive conduct such as predatory pricing, fixing retail prices, tied-in sales, blocking access to essential facilities and discriminating prices; however, no significant sanctions were imposed until 1995, when a local petroleum company received a significant sanction for abuse of its dominant position by having discriminating prices in the liquid gas market. This would also be the case for which, years later, a sentence would be issued within the framework of private litigation.

i Significant casesArgentine Society of Music Authors and Composers case

The Argentine Hotel and Gastronomy Business Federation filed a complaint against the Argentine Society of Music Authors and Composers (SADAIC) for allegedly charging an abusive fixed price that consisted in a percentage of the companies' turnover under the notion of unifying the collection of certain compensations. It further stated that SADAIC was eliminating all possibilities of negotiation, option or choice and that under said argument it charged fixed prices that would not exist in regular market conditions.

The Antitrust Commission considered that SADAIC had a monopoly regarding the granting of authorisations for the playing of music in hotels and that it had abused its position of dominance, imposing excessively high, unreasonable and discriminatory taxes. Therefore, it decided to impose a fine on SADAIC and to issue a recommendation to the public entities in charge of the supervision of SADAIC's activities in order to adjust its conduct with regard to hotels and similar establishments (such as restaurants).

ii Trends, developments and strategies

The new Antitrust Law has not brought forward any major amendments to the former Antitrust Law regarding abuse of dominant position. Furthermore, it must be noted that no abuse of dominant conduct is listed under the 'per se' prohibited practices of the Antitrust Law.

The Civil and Commercial Code includes a provision regarding the prohibition of abuse of dominant position, but does not provide a definition of what should be understood by 'abuse of dominant position'. Thus, a judge would have to resort to Section 5 of the Antitrust Law in order to accurately define whether the conduct under consideration is, in fact, an abuse of dominant position.

The inclusion of the concept of abuse of dominant position could also help the prosecution of those types of cases by courts without the intervention of the Antitrust Commission. Under this new scenario, courts would be able to prosecute these cases without the intervention of said regulator. At the time of writing, we are not aware of any case on these terms.

Furthermore, the Antitrust Commission has published a draft version of Guidelines for the Analysis of Cases of Abuse of Dominance that are expected to be issued during this year. As a novelty, these guidelines include a detailed description of the anticompetitive conduct of abusive pricing.

iii Outlook

During 2018, the Antitrust Commission has shown an increasing interest with regard to cases involving dominance. In this regard, and as mentioned above, it is relevant to highlight that the Antitrust Commission has published for public consultation a draft version of the Guidelines for the Analysis of Cases of Abuse of Dominance that are expected to be issued in 2019.