Court of appeals revokes highest cartel fine ever imposed by Argentina's Antitrust Authority

On August 18, 2015, the Federal Court of Appeals of Comodoro Rivadavia (the “Court of Appeals”) revoked Resolution No. 271/2014 (the “Resolution”) issued by the Secretariat of Trade (“ST”), which imposed the highest fine ever imposed in the Argentina’s antitrust history in a cartel case against automobile companies.

Originally on December 12, 2014, the ST -based on a recommendation report issued by the Comision Nacional de Defensa de la Competencia (CNDC)- imposed fines to eight automobile companies for allegedly entering into a collusive agreement in the sale of cars in the Argentine Province of Tierra del Fuego (a tax-exempted zone) at higher prices than those charged by the same companies in the continental territory of the country. The global economic sanctions imposed on the companies amounted to AR$1,060M (approx. US$124M), and were imposed to the following automobile companies: Toyota Argentina S.A, Volkswagen Argentina S.A., General Motors Argentina S.R.L., Renault Argentina S.A, Ford Argentina S.C.A., Fiat Auto Argentina S.A., Peugeot-Citroën Argentina S.A., and Honda Motor de Argentina S.A.

The sanctioned automobile companies appealed the ST’s Resolution, and were expressly exempted from paying in advance the fines by the ST, which since a September 2014 amendment to the Antitrust Law is now the applicable rule for antitrust fines.

The arguments set forth by the Court of Appeals for revoking the fines, were, among others, as follows: 

(i) the reports submitted by the accounting expert witnesses clearly demonstrated that in the tax-exempted Province of Tierra del Fuego, automobile companies did not charge their vehicles with VAT, contrary to what the ST stated in its Resolution; 

(ii) the automobiles sold in the tax-exempted Province of Tierra del Fuego were neither charged with import tariffs nor with domestic tariffs; 

(iii) the Antitrust Authority’s analysis of the information and evidence gathered in the investigation was inaccurate, since it was not considered as a whole, but, on the contrary, each piece of evidence was analyzed separately; 

(iv) the evidence collected throughout the investigation was not correctly assessed by the Antitrust Authority in accordance with the applicable standards; and

(v) the Antitrust Authority ignored the lack of motive the companies had to enter into a collusive agreement since their sales in the investigated geographic market –the Province of Tierra del Fuego- represented only 1% of their total sales in Argentina, therefore, the benefits obtained from the alleged anticompetitive practice were immaterial when compared to the risks faced by the companies by entering into a collusive agreement.

In light of the above arguments, the Court of Appeals concluded that there was no collusive agreement among the automobile companies, and therefore revoked the fines imposed by the ST.

The ST has appealed the Court of Appeals’ decision, and the latter will now have to decide whether the appeal has the merits to be heard by the Supreme Court of Justice. 

This is the first time a court revokes a major cartel fine imposed by the Antitrust Authority, since the other two most important cartel fines imposed (i.e., both in 2005 against the medicinal oxygen and cement cartels, respectively) have been upheld by the Supreme Court of Justice.

For further information on this topic please contact Julián Peña