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Legal framework

Antitrust law

What are the legal sources that set out the antitrust law applicable to vertical restraints?

The legal sources that set out the antitrust law applicable to vertical restraints are Law No. 27,442 (the Antitrust Law), which came into force on 24 May 2018, and its regulatory Decree No. 480/2018. Article 1 of the Antitrust Law provides that agreements between competitors, economic concentrations, acts and behaviours related to the production or commercialisation of goods and services that limit, restrict or distort competition or constitute an abuse of a dominant position in a market in a manner that may harm the general economic interest are prohibited and shall be sanctioned pursuant to the rules of the Antitrust Law.

Types of vertical restraint

List and describe the types of vertical restraints that are subject to antitrust law. Is the concept of vertical restraint defined in the antitrust law?

Neither the concept nor the types of vertical restraints are defined in the Antitrust Law. Article 3 of the Antitrust Law, however, provides a list of anticompetitive practices that could be considered unlawful. This list includes some examples of vertical restraints, such as:

  • ‘(a) fixing, directly or indirectly, any form of price and purchase conditions or conditions relating to the sale of goods, furnishing of services or production’;
  • ‘(b) fixing, imposing or practicing, directly or indirectly, in any way, conditions to (i) produce, process, distribute, buy or commercialise only a restricted quantity of goods; and/or (ii) provide a restricted number, volume or frequency of services’;
  • ‘(f) conditioning the sale of goods to the purchase of other goods or to the use of a service, or conditioning the provision of services to the use of other services or to the purchase of goods’; and
  • ‘(g) subordinating the purchase or sale to the condition of not using, purchasing, selling or supplying goods or services produced, processed, distributed or marketed by a third party’.

Thus, the vertical restraints that may be illegal pursuant to the Antitrust Law include:

  • resale price maintenance (RPM) (setting either minimum, maximum or sometimes suggested resale prices);
  • tying arrangements;
  • exclusive dealing arrangements;
  • exclusive distributorship arrangements; and
  • customers and territorial restraints.

The list of anticompetitive conducts included in article 3 of the Antitrust Law is not comprehensive. It merely sets forth examples of some of the behaviours that could be sanctioned if they fall under the general prohibition provided in article 1.

Legal objective

Is the only objective pursued by the law on vertical restraints economic, or does it also seek to promote or protect other interests?

The objective pursued by the Antitrust Law on vertical restraints is mainly to preserve the general economic interest. The Antitrust Law provides that anticompetitive practices, such as vertical restraints, with the purpose or effect of restricting or distorting competition in a manner that may harm the general economic interest are prohibited. The general economic interest has been interpreted as comparable to the concept of economic efficiency, although more inclined to consumer surplus rather than to total surplus.

Responsible authorities

Which authority is responsible for enforcing prohibitions on anticompetitive vertical restraints? Where there are multiple responsible authorities, how are cases allocated? Do governments or ministers have a role?

The Antitrust Law provides for the creation of a new antitrust authority, the National Antitrust Authority, which shall encompass: (i) an Antitrust Tribunal; (ii) an Anticompetitive Conducts’ Secretariat; and (iii) an Economic Concentrations’ Secretariat.

Until the new National Antitrust Authority is established, the agencies responsible for enforcing the Antitrust Law, including prohibitions on anticompetitive vertical restraints, are the National Commission for the Defence of Competition (CNDC) and the Secretary of Trade of the Ministry of Production and Labour (the Secretary, and, together with the CNDC, the Authorities). The CNDC is in charge of investigating illegal anticompetitive behaviours and issuing non-binding reports to the Secretary, who is the final governmental decision-maker. Resolutions issued by the Secretary may be appealed directly to the federal Court of Appeals. Neither the Minister of Production and Labour nor any other governmental agencies have enforcement powers in antitrust cases.

Jurisdiction

What is the test for determining whether a vertical restraint will be subject to antitrust law in your jurisdiction? Has the law in your jurisdiction regarding vertical restraints been applied extraterritorially? Has it been applied in a pure internet context and if so, what factors were deemed relevant when considering jurisdiction?

To be subject to the Antitrust Law, a vertical restraint must have an effect on the Argentine market. Article 4 of the Antitrust Law states that: ‘all natural or legal, public or private, profit or non-profit persons performing economic activities in whole or part in the national territory and those performing economic activities outside the country are subject to the provisions of this law to the extent that their acts, activities or agreements affect the national market’. Therefore, the Antitrust Law has adopted the effects doctrine, which could be enforced extraterritorially (acts performed or agreements entered into abroad could be challenged by the Authorities, provided they have effects in the Argentine market).

In practice, there have been no known extraterritorial vertical restraints cases in which such sanctions or remedies have been imposed.

Agreements concluded by public entities

To what extent does antitrust law apply to vertical restraints in agreements concluded by public entities?

According to article 4 of the Antitrust Law, there are no limitations on its enforcement with respect to vertical restraints arising from agreements concluded by public or state-owned entities. In fact, the Authorities have investigated such conducts in the past. However, neither the Authorities nor the courts have considered these conducts to be unlawful if a vertical restraint agreed upon by the parties is adopted based on a federal or local governmental regulation. The rationale used by the Authorities to sustain these criteria is that the goal of the Antitrust Law is not to judge other governmental decisions, since these regulations are subject to the corresponding administrative or judicial review.

Sector-specific rules

Do particular laws or regulations apply to the assessment of vertical restraints in specific sectors of industry (motor cars, insurance, etc)? Please identify the rules and the sectors they cover.

The Patents for Inventions and Utility Models Law (Law No. 24,481, amended by Laws No. 24,572 and 25,859, jointly referred to as the Patents Law) provides certain rules regarding anticompetitive conducts. In connection with the total or partial licensing of patents, the Patents Law prohibits restrictive trade clauses:

  • affecting production;
  • restricting competition; or
  • imposing any other procedure, such as:
    • exclusive transfer-back requirements;
    • requirements preventing any challenge to validity;
    • mandatory joint licences; or
    • any anticompetitive practices specified in the Antitrust Law.

The Patents Law provides that compulsory licences shall be granted if the patentee performs anticompetitive practices, specifically stating that: ‘the right to use a patent shall be granted without the patentee’s authorisation if the competent authority has determined that the patentee has committed anticompetitive practices’. In such event, the authorisation shall be granted without the need for any special procedure.

For the purpose of the Patents Law, the following shall, among others, be considered as anticompetitive practices:

  • the establishment of excessive or discriminatory prices of the patented products as compared to the average prices prevailing in the market; in particular, if prices offered on the market are significantly lower than those offered by the patentee for the same product;
  • the refusal to supply the local market under reasonable commercial terms;
  • the obstruction of commercial or production activities; and
  • any other conducts punishable by the Antitrust Law.

The regulatory decree of the Patents Law provides that the Authorities shall first determine if the practices are unlawful.

Another sector with particular regulation on vertical restraints is the distribution of newspapers and magazines. This sector has been regulated by the former Ministry of Labour, and an antitrust case based on vertical restraints was rejected in 1992 because of this particular sector’s special regime.

General exceptions

Are there any general exceptions from antitrust law for certain types of agreement containing vertical restraints? If so, please describe.

Although the Antitrust Law does not specifically provide an exception for certain types of agreements containing vertical restraints, pursuant to the general principle set forth in article 1, the Antitrust Law does not prohibit those agreements containing vertical restraints when the parties do not have sufficient market power so as to potentially harm the general economic interest.

Types of agreement

Agreements

Is there a definition of ‘agreement’ - or its equivalent - in the antitrust law of your jurisdiction?

There is no definition of ‘agreement’ or its equivalent in the Antitrust Law.

In order to engage the antitrust law in relation to vertical restraints, is it necessary for there to be a formal written agreement or can the relevant rules be engaged by an informal or unwritten understanding?

In order to engage the Antitrust Law in relation to vertical restraints, it is not necessary for there to be a formal written agreement and the relevant rules can be engaged by an informal or unwritten understanding. Pursuant to article 1, the Antitrust Law will be applicable to anticompetitive acts or behaviour regardless of the way these are manifested, whereas article 4 of the Antitrust Law sets forth the economic reality principle by which the Antitrust Law takes into consideration the true nature of the act or behaviour, regardless of how it is manifested.

Parent and company-related agreements

In what circumstances do the vertical restraints rules apply to agreements between a parent company and a related company (or between related companies of the same parent company)?

The Antitrust Law does not apply to agreements between a parent and a related company because it establishes the principle of economic reality in article 4. Therefore, it considers companies controlled by the same parent company as belonging to the same economic group.

Agent-principal agreements

In what circumstances does antitrust law on vertical restraints apply to agent-principal agreements in which an undertaking agrees to perform certain services on a supplier’s behalf for a sales-based commission payment?

The Authorities have relied on both US and European law to distinguish between purchase-resale and agency relationships and their respective antitrust consequences. In light of those precedents, the Authorities set forth the criteria to distinguish a valid sales agency from an RPM arrangement. The Authorities held in Trisa-TSCSA (2002) that RPM exists when the following elements are present: transfer of the legal title to the product from the seller to the reseller and the transfer of the entrepreneurial risks from the seller to the reseller. However, in order for the RPM arrangement to be sanctioned by the Authorities, the parties must have enough market power to potentially harm the general economic interest.

Consequently, under the standard set forth in Trisa-TSCSA, setting the sale prices will be legal within the context of a sales agency where the principal retains the legal title to the product and the entrepreneurial risks of the transaction. Conversely, in a principal-agent relationship where there is a transfer of title and of the entrepreneurial risks from the principal to the agent, an RPM arrangement would be unlawful depending on its competitive effects.

There are no known cases in which a vertical restraint in an agency agreement has been sanctioned by the Authorities.

Where antitrust rules do not apply (or apply differently) to agent-principal relationships, is there guidance (or are there recent authority decisions) on what constitutes an agent-principal relationship for these purposes?

There is no guidance on what constitutes an agent-principal relationship. The Authorities held in Trisa-TSCSA that in order to accept the existence of an agency agreement, the principal has to keep the legal title to the product and bear the entrepreneurial risks of the transaction. However, in Trisa-TSCSA, the Authorities failed to provide a detailed analysis with regards to the entrepreneurial risks that should remain on the principal for the relationship to be qualified as an agency.

Intellectual property rights

Is antitrust law applied differently when the agreement containing the vertical restraint also contains provisions granting intellectual property rights (IPRs)?

The Antitrust Law does not provide any special treatment for any determined sector or activity. However, as explained in question 7, the Patents Law establishes some special rules and procedures. These rules and procedures have not yet been applied in any case since the Patents Law’s enactment in 1994.

Analytical framework for assessment

Analytical framework for assessment

Framework

Explain the analytical framework that applies when assessing vertical restraints under antitrust law.

The Antitrust Law does not prohibit any vertical restraints per se. All vertical restraints are analysed under the rule of reason. In order to determine whether a vertical restraint infringes the Antitrust Law, the CNDC first determines whether there is a vertical restraint and examines the explanation given by the parties to justify their behaviour. The agreement that binds the undertakings does not necessarily have to be a formal one. If an anticompetitive restraint is perceived by the CNDC, it will analyse the market structure. For this purpose the CNDC first defines the relevant geographic and product market. Once the relevant market is determined, the CNDC analyses the entry barriers and the impact of imports in the market. The CNDC analyses the level of market power the parties exert to determine whether their conduct is capable of producing damage to the general economic interest. If the companies do not have sufficient market power, then no damage could be done to the general economic interest and, even if they have such market power, a vertical restraint may still be considered as not damaging the general economic interest if the conduct is considered by the CNDC to be pro-efficiency or pro-competitive, or both. The latter has been the CNDC’s most frequent position in the past decade.

Market shares

To what extent are supplier market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other suppliers relevant? Is it relevant whether certain types of restriction are widely used by suppliers in the market?

Since the Antitrust Law does not consider any vertical restraints as unlawful per se, the Authorities, when assessing the legality of individual restraints, take into consideration as a relevant factor the market shares of the supplier, as well as taking into account the market share and other circumstances of both the supplier’s and the buyer’s markets.

To what extent are buyer market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other buyers relevant? Is it relevant whether certain types of restriction are widely used by buyers in the market?

The Authorities take into consideration as a relevant factor the market power of the buyer, as well as the market share and other circumstances of both the supplier’s and the buyer’s markets.

Block exemption and safe harbour

Function

Is there a block exemption or safe harbour that provides certainty to companies as to the legality of vertical restraints under certain conditions? If so, please explain how this block exemption or safe harbour functions.

There are neither block exemptions nor safe harbours under the Antitrust Law that provide certainty to companies as to the legality of vertical restraints under any conditions because the Authorities analyse every vertical restraint on a case-by-case basis.

Types of restraint

Assessment of restrictions

How is restricting the buyer’s ability to determine its resale price assessed under antitrust law?

The Authorities have been very permissive with both suggested and maximum resale prices. In 1995, in the FECRA case, the Authorities held that although Yacimientos Petrolíferos Fiscales (YPF), an Argentine energy company, had a ‘suggested’ price system that entailed strong pressures to comply with it, this vertical restraint was not considered illegal under the Antitrust Law. The Authorities considered that since YPF’s prices were lower than those of its competitors, this conduct did not affect the general economic interest.

The Authorities’ position regarding minimum prices is a little more restrictive; however, in the past 15 years, there has only been one known case in which this practice was considered unlawful under the Antitrust Law. This case is explained in further detail in question 21.

Have the authorities considered in their decisions or guidelines resale price maintenance restrictions that apply for a limited period to the launch of a new product or brand, or to a specific promotion or sales campaign; or specifically to prevent a retailer using a brand as a ‘loss leader’?

There are no known cases or guidelines where the Authorities have considered RPM restrictions that apply for a limited period to the launch of a new product or brand, or to a specific promotion or sales campaign, or specifically to prevent a retailer using a brand as a ‘loss leader’.

Relevant decisions

Have decisions or guidelines relating to resale price maintenance addressed the possible links between such conduct and other forms of restraint?

The most relevant RPM case in Argentina also involved an accusation of horizontal collusion among buyers. In Trisa-TSCSA, the Authorities imposed penalties on three cable TV operators and two content providers that jointly owned the exclusive rights to transmit live first division football matches for unlawfully fixing minimum prices of pay-per-view events.

The Authorities imposed fines of around US$500,000 on the content providers and around US$350,000 on the cable TV operators for fixing minimum prices. The providers had signed identical vertical agreements with the three cable TV operators, setting a minimum price for the pay-per-view of live football matches. The Authorities concluded that the agreements were a consequence of a collusive action between the operators with the connivance of the producers.

The Court of Appeals revoked the decision, holding that the producers were the ones who imposed the minimum prices, and redefined the relevant market. It broadened the definition of the relevant market from live first division football matches (which corresponds to the Authorities’ definition) to all football matches, which was a very competitive market. Hence, the court held that there was not sufficient market power in the relevant market and, thus, no possible damage to the general economic interest, and therefore considered the RPM as lawful.

Have decisions or guidelines relating to resale price maintenance addressed the efficiencies that can arguably arise out of such restrictions?

In FECRA, several entities that operated petrol stations filed a complaint against YPF, the main Argentine oil company, for imposing a maximum retail prices scheme that, if not obeyed by retailers, would cause an automatic increase in the petrol price at which YPF sold its petrol to the petrol stations. The case had an additional element (consisting of a price discrimination scheme) in the differential treatment YPF provided to ACA’s petrol stations, which acquired petrol from YPF at a lower price than the other petrol retailers.

The CNDC approved the policy conducted by YPF, pointing out its convenience in terms of reduction of petrol retail prices. Of particular importance was the fact that the suggested prices were maximum and not minimum. This produced an increase in inter-brand competition and a benefit to consumers. Regarding the price discrimination scheme, the CNDC accepted YPF’s explanations, based on the fact that the differences in acquired volume justified the difference in pricing.

Explain how a buyer agreeing to set its retail price for supplier A’s products by reference to its retail price for supplier B’s equivalent products is assessed.

The Antitrust Law does not specify how pricing relativity agreements should be assessed besides the general rule that such agreements must not affect the general economic interest. There are no known cases in which the Authorities have sanctioned such conduct.

Suppliers

Explain how a supplier warranting to the buyer that it will supply the contract products on the terms applied to the supplier’s most-favoured customer, or that it will not supply the contract products on more favourable terms to other buyers, is assessed.

The Antitrust Law does not specify how wholesale most-favoured nation (MFN) agreements should be assessed besides the general rule that such agreements must not affect the general economic interest. There are no known cases in which the Authorities have sanctioned such conduct.

Explain how a supplier agreeing to sell a product via internet platform A at the same price as it sells the product via internet platform B is assessed.

The Antitrust Law does not specify how retail MFNs in the online environment should be assessed besides the general rule that such agreements must not affect the general economic interest. There are no known cases in which the Authorities have sanctioned such conduct.

Explain how a supplier preventing a buyer from advertising its products for sale below a certain price (but allowing that buyer subsequently to offer discounts to its customers) is assessed.

The Antitrust Law does not specify how a supplier preventing a buyer from advertising its products for sale below a certain price should be assessed besides the general rule that such agreements must not affect the general economic interest. There are no known cases in which the Authorities have sanctioned such conduct.

Explain how a buyer’s warranting to the supplier that it will purchase the contract products on terms applied to the buyer’s most-favoured supplier, or that it will not purchase the contract products on more favourable terms from other suppliers, is assessed.

There are no known cases in which the CNDC has analysed a buyer’s warranting to the supplier that it will purchase the contract products on terms applied to the buyer’s most-favoured supplier, or that it will not purchase the contract products on more favourable terms from other suppliers.

Restrictions on territory

How is restricting the territory into which a buyer may resell contract products assessed? In what circumstances may a supplier require a buyer of its products not to resell the products in certain territories?

The restriction of the territory into which a buyer may resell contract products is analysed under the rule of reason. In practice, only once has a party been sanctioned in a case of territorial restriction, where this conduct occurred as part of a broader practice. In 1999, the Authorities imposed a US$109 million fine on YPF on the basis of an exploitative abuse of a dominant position. YPF was selling liquid gas abroad at a lower price than the liquid gas it sold in Argentina. Among the documents the Authorities used to prove the existence of this anticompetitive practice were prohibitions on re-importing the product into Argentina in all of the export agreements signed by YPF. Therefore, the Authorities would most likely have a flexible approach to a restriction of the territory into which a buyer may resell contract products. There is no known difference between the assessment of restrictions on ‘active’ sales and restrictions on ‘passive’ sales.

Have decisions or guidance on vertical restraints dealt in any way with restrictions on the territory into which a buyer selling via the internet may resell contract products?

The Antitrust Law does not specify how a restriction on the territory into which a buyer selling via internet may resell contract products should be assessed besides the general rule that such agreement must not affect the general economic interest. There are no known cases in which the Authorities have sanctioned such conduct.

Restrictions on customers

Explain how restricting the customers to whom a buyer may resell contract products is assessed. In what circumstances may a supplier require a buyer not to resell products to certain resellers or end-consumers?

The issue of the restriction of the customers to whom a buyer may resell contract products was dealt with in the Igarreta-Acfor case in 1983. In this case, the distributors of Ford vehicles who had the contractual right to exclusive geographic distribution were sanctioned by the Authorities because they did not allow the governmental agencies located within their territories to acquire vehicles directly from Ford. The Court of Appeals revoked this decision, arguing that the supplier had the right to choose the way it sold its products and, since it participated in a competitive market, the practice was not deemed to be unlawful. Therefore, the Authorities would most likely adopt a flexible approach to a restriction on the customers to whom a buyer may resell contract products. There is no known difference between the assessment of restrictions on ‘active’ sales and restrictions on ‘passive’ sales.

Restrictions on use

How is restricting the uses to which a buyer puts the contract products assessed?

The Antitrust Law does not provide any limits on the uses to which a buyer or a subsequent buyer puts the contract products besides the general rule that it may not affect the general economic interest. There are no known cases in which the Authorities have sanctioned such a restriction. The Authorities would most likely adopt a flexible approach regarding a restriction on the use to which a buyer or a subsequent buyer puts the contract products.

Restrictions on online sales

How is restricting the buyer’s ability to generate or effect sales via the internet assessed?

There are no specific rules or guidelines for sales made on the internet in the Antitrust Law, nor are there are any known cases in which the Authorities have treated internet commerce in a manner different from conventional commerce.

Have decisions or guidelines on vertical restraints dealt in any way with the differential treatment of different types of internet sales channel? In particular, have there been any developments in relation to ‘platform bans’?

There are no specific rules or guidelines for sales made on the internet in the Antitrust Law, nor are there are any known cases in which the Authorities have given internet commerce a different treatment from the one given to conventional commerce.

Selective distribution systems

Briefly explain how agreements establishing ‘selective’ distribution systems are assessed. Must the criteria for selection be published?

Agreements establishing ‘selective’ distribution systems are considered legal unless they have the potential to harm the general economic interest. There are no known cases where this practice has been sanctioned by the Authorities.

Are selective distribution systems more likely to be lawful where they relate to certain types of product? If so, which types of product and why?

Neither the Antitrust Law nor the Authorities’ case law distinguishes between types of products when assessing the legality of selective distribution systems.

In selective distribution systems, what kinds of restrictions on internet sales by approved distributors are permitted and in what circumstances? To what extent must internet sales criteria mirror offline sales criteria?

There are no specific rules or guidelines for sales made on the internet in the Antitrust Law, nor are there are any known cases in which the authority has treated internet commerce differently from conventional commerce.

Has the authority taken any decisions in relation to actions by suppliers to enforce the terms of selective distribution agreements where such actions are aimed at preventing sales by unauthorised buyers or sales by authorised buyers in an unauthorised manner?

There are no known cases in relation to actions by suppliers to enforce the terms of selective distribution agreements where such actions are aimed at preventing sales by unauthorised buyers or sales by authorised buyers in an unauthorised manner.

Does the relevant authority take into account the possible cumulative restrictive effects of multiple selective distribution systems operating in the same market?

There are no known cases in which the Authorities have taken into account the possible cumulative restrictive effects of multiple selective distribution systems operating in the same market.

Has the authority taken decisions (or is there guidance) concerning distribution arrangements that combine selective distribution with restrictions on the territory into which approved buyers may resell the contract products?

There are no known cases in which the Authorities have taken decisions nor is there guidance concerning distribution arrangements that combine selective distribution with restrictions on the territory into which approved buyers may resell the contract products.

Other restrictions

How is restricting the buyer’s ability to obtain the supplier’s products from alternative sources assessed?

There are no known cases in which the Authorities have assessed a restriction on a buyer’s ability to obtain the supplier’s products from alternative sources.

How is restricting the buyer’s ability to sell non-competing products that the supplier deems ‘inappropriate’ assessed?

There are no known cases in which the Authorities have assessed a restriction on a buyer’s ability to sell non-competing products that the supplier deems ‘inappropriate’.

Explain how restricting the buyer’s ability to stock products competing with those supplied by the supplier under the agreement is assessed.

The Antitrust Law does not specify any restriction on the buyer’s ability to stock products competing with those supplied by the supplier under the agreement besides the general rule that such restriction must not affect the general economic interest. There are no known cases in which the Authorities have sanctioned such conduct.

How is requiring the buyer to purchase from the supplier a certain amount or minimum percentage of the contract products or a full range of the supplier’s products assessed?

The Antitrust Law does not specify how requiring the buyer to purchase from the supplier a certain amount, or minimum percentage of its requirements, of the contract products is to be assessed besides the general rule pursuant to which such requirement must not affect the general economic interest. There are no known cases in which the Authorities sanctioned such conduct.

Explain how restricting the supplier’s ability to supply to other buyers is assessed.

The Antitrust Law does not specify how restricting the supplier’s ability to supply to other buyers is to be assessed besides the general rule that such restriction must not affect the general economic interest. There are no known cases in which the Authorities have sanctioned such conduct.

Explain how restricting the supplier’s ability to sell directly to end-consumers is assessed.

The Antitrust Law does not specify how restricting the supplier’s ability to sell directly to end-consumers is to be assessed besides the general rule that such restriction must not affect the general economic interest. There are no known cases in which the Authorities have sanctioned such conduct.

Have guidelines or agency decisions in your jurisdiction dealt with the antitrust assessment of restrictions on suppliers other than those covered above? If so, what were the restrictions in question and how were they assessed?

There are no guidelines or known agency decisions in Argentina dealing with the antitrust assessment of restrictions on suppliers other than those covered above.

Notification

Notifying agreements

Outline any formal procedure for notifying agreements containing vertical restraints to the authority responsible for antitrust enforcement.

No formal procedure has been established by the Antitrust Law to notify agreements containing vertical restraints to the CNDC. Therefore, it is not necessary or advisable to notify any particular category of agreements.

Authority guidance

If there is no formal procedure for notification, is it possible to obtain guidance from the authority responsible for antitrust enforcement or a declaratory judgment from a court as to the assessment of a particular agreement in certain circumstances?

Neither the CNDC nor the Secretary gives guidance as to the antitrust assessment of a particular agreement in any circumstances.

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.

Other issues

Other issues

Is there any unique point relating to the assessment of vertical restraints in your jurisdiction that is not covered above?

There are no unique points relating to the assessment of vertical restraints in Argentina that have not been covered above.

Update and trends

Recent developments

What were the most significant two or three decisions or developments in this area in the last twelve months?

Recent developments

A new Antitrust Law entered into force on 24 May 2018. The new Law introduces substantial modifications to the prior regime; in particular, with regard to vertical restraints, including: (i) a reform in the institutional design; and (ii) a significant increase in the applicable fines for anticompetitive conducts.

Anticipated developments

The constitution of the new antitrust authority created by the new Antitrust Law, the National Antitrust Authority, is expected for mid-2019.