Enforcement

Complaints procedure for private parties

Is there a procedure whereby private parties can complain to the authority responsible for antitrust enforcement about alleged unlawful vertical restraints?

According to article 34 of the Antitrust Law, any private party may complain to the CNDC about alleged vertical restraints. Once the complaint is filed, the complainant shall attend the CNDC in order to ratify the terms of the claim. The complainant may request an injunction or preventive measure. If granted, this measure (usually a temporary cessation of the conduct) will generally last until the case is finally resolved. An average investigation that concludes in a penalty takes approximately three and a half years. Once the investigation is completed, the CNDC issues a report recommending a measure to be taken by the Secretary.

Regulatory enforcement

How frequently is antitrust law applied to vertical restraints by the authority responsible for antitrust enforcement? What are the main enforcement priorities regarding vertical restraints?

The vast majority of vertical restraint cases were issued in the early 1980s, during the first decade of antitrust enforcement in Argentina. Since then, there have been very few vertical restraint cases and almost no sanctions have been imposed. There have been only two cases in the past decade in which the Authorities imposed a fine on a company for vertical restraints: one in 1997 (exclusive distribution) and the other in 2002 (minimum price). However, in both cases the Authorities understood that the vertical agreements reflected a collusive practice.

In the 1997 case, all of the companies that had permits to sell valves for gas cylinders signed exclusive distribution agreements with the same distributor during a one-month period. The Authorities found these vertical agreements to be part of a collusive practice and fined the companies.

The 2002 case was repealed by the Court of Appeals because the court concluded that the minimum price was set vertically and not as a consequence of a previous horizontal agreement. Since 2001, there have been fewer than five known cases in which the Authorities issued a resolution on vertical restraints without imposing any fines.

In recent decades, the Authorities have applied a more flexible approach when analysing vertical restraints. The Authorities have historically focused on pursuing investigations related to collusive practices.

What are the consequences of an infringement of antitrust law for the validity or enforceability of a contract containing prohibited vertical restraints?

The validity and enforceability of a contract containing prohibited vertical restraints is not at risk as a consequence of an antitrust infringement. The Authorities may, however, order the parties to cease its effects.

May the authority responsible for antitrust enforcement directly impose penalties or must it petition another entity? What sanctions and remedies can the authorities impose? What notable sanctions or remedies have been imposed? Can any trends be identified in this regard?

The Secretary may impose penalties. The Secretary, therefore, does not need to have recourse to the court system nor to another administrative or governmental agency. The penalties provided by article 55 of the Antitrust Law for anticompetitive practices are:

  • cessation of the anticompetitive behaviours and, if applicable, removal of their effects;
  • fines for anticompetitive conducts shall be calculated using whichever results in the higher of the following two alternative methods: (i) up to 30 per cent of the turnover of the product to which the infringement relates during the previous fiscal year multiplied by the number of years of infringement. This amount cannot exceed 30 per cent of the consolidated turnover achieved by the offender’s economic group in Argentina during the previous fiscal year; or (ii) twice the economic benefit deriving from the infringement. If fines cannot be established by using methods (i) or (ii), then fines for each offender cannot exceed the amount of approximately US$107 million. Fines shall be doubled in the case of recidivism for offenders that have been sanctioned for anticompetitive conduct in the previous 10 years;
  • request to the competent judge to dissolve, liquidate, order the divestiture or split-up of the non-complying companies in order to comply with the conditions aimed at counteracting the distorting effects caused to competitors or others; and
  • article 59 states that obstructions of investigations (notably, interfering with or not submitting to dawn raids) will be fined in the amount of approximately US$270 per day.
Investigative powers of the authority

What investigative powers does the authority responsible for antitrust enforcement have when enforcing the prohibition of vertical restraints?

The Authorities have very broad investigative powers when enforcing the prohibition on vertical restraints. They can request either the parties or third parties to provide any document they deem necessary to investigate a given case. However, the CNDC must obtain a judicial order if it considers it necessary to search a company.

Private enforcement

To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints obtain declaratory judgments or injunctions and bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take?

Pursuant to article 62 of the Antitrust Law, any person damaged by anticompetitive practices may bring an action for damages in accordance with the civil law before a judge having jurisdiction over the matter. This article enables private enforcement actions in Argentina. However, no private enforcement cases on vertical restraints have yet been resolved and it is improbable that there will be many of these cases in the future owing to the complexity of such cases and the lack of expertise of the judiciary on antitrust matters. It should take at least three years for the Authorities to complete the investigation in addition to at least another two years before the court issues a decision on the appeal, because of the overload of work that the judicial system faces in Argentina.