Argentina’s first case on antitrust private enforcement

For the first time, a Court granted compensation for the damages caused by the infringement of the Antitrust Law. Until this ruling, antitrust in Argentina had only been enforced by the Antitrust Authorities, since individual and corporate antitrust actions were systematically dismissed by the courts, except for some injunctions in the framework of merger control cases.

In the recently decided case Autogas, a commercial judge ordered YPF -the major local producer and distributor of liquefied petroleum gas (“LPG”)- to pay Autogas -a LPG distributor- a compensation of roughly USD 3.5 million plus interests for the damages caused by the abuse of YPF’s dominant position.

YPF was sanctioned by the National Antitrust Commission (“CNDC”) in 1999 for abuse of its dominant position in the LPG market, in which it had a 53% market share. The fine was later confirmed by the Supreme Court in 2002. YPF was fined with about USD 109 million (which as the result of the devaluation was reduced at the time of payment to approximately USD 35 million). According to the CNDC, YPF sold LPG in the local market at a higher price than it did in foreign markets, and banned its foreign LPG purchasers’ from re-exporting the product into Argentina. YPF’s behavior raised the local price of LPG through the supply shortage of the local market. At the same time, since YPF was active both at the production and distribution levels, it increased its market share in the latter from 10% to 40%, by driving many distributors -such as Autogas- out of business.

Prior to filing an action in the Court, Autogas filed a complaint in the CNDC, which was dismissed in 2000 on the grounds that the rise in LPG prices was passed on by distributors to end consumers, which were the only ones harmed by YPF’s behavior. Subsequently, based on the 1999 precedent and on the facts proved in the case by the CNDC, Autogas sued YPF seeking compensation for the damages caused by its anti-competitive conduct and grounded its claim on civil law principles. The judge understood that prices were partially passed on to end consumers, and awarded damages to the plaintiff based on the overcharge that had not been passed on to consumers.

The judge exempted Autogas from paying the legal costs of the judicial procedure (3% of the amount claimed), which is considered to be one of the main obstacles for private litigation in Argentina, together with the difficulty for Courts to prove anti-competitive practices due to their limited resources and the lack of expertise in this field.

This ruling should have a positive effect on antitrust enforcement in Argentina because it opened a new path for companies to seek compensation at the courts for the damages caused by infringements to the Antitrust Law and should have a deterrent effect on firms engaged in anti-competitive practices.

For further information on this topic please contact Julián Peña