Historic Antitrust Pending Developments

One hundred years ago, Argentine legislators of the first antitrust law would have imagined a different outcome of antitrust practice in Argentina. Moreover, after 100 years of practice, Argentina should have been on the top of the podium of “worldwide champions” of antitrust law with such extensive legal experience in the matter. Unfortunately, reality shows something completely different.

It can be assumed that those who drafted the subsequent Argentine antitrust laws had the same idea. In the same way, one can assume that those who drafted the five-year-old Law No 27,442 imagined a fully functioning system. Despite the fact that many officials have made important efforts to achieve high standards in the field of antitrust, it would appear that those desired outcomes have not been fully achieved.

What are the reasons for this?

Firstly, there is a political misunderstanding about what antitrust law is for. For example, there have been decades of government presidents who invoke the application of antitrust as a mechanism of price control or inflation control, when clearly it is not its immediate goal.

There have also been presidents who “do the impossible” against the monopolies that they often publicly denounce, but who in practice do little to prosecute under the law.

Antitrust law is presented as a tool to fight issues that politicians often do not know or do not want to know how to fight or, what is worse, they do not want to fight.

More seriously, there have been cases where antitrust law was used as a tool for extortion, persecution or for the benefit of the “friends of those in power”.

On the whole, the problem is a lack of conviction about antitrust law, which is trivialised as a tool and public policy, distracting the authorities in their functions, often showing that the goal is none other than to appear on the front pages of the newspapers disguising a lack of action to supposedly make an expectant electorate happy, while it suffers from inaction disguised through incendiary speeches.

The situation becomes intolerable with the realisation that the Antitrust Law that is not applied, or is feigned to be applied, is constitutionally rooted in its Article 42.

This action, intentional or not, leads to a number of serious shortcomings:

• the enforcement authority has not yet been established;
• the enforcement authority is not independent as mandated by the National Constitution according to the interpretation of the Supreme Court of Justice of the Argentine Nation; 
• there is no extensive, conducive, frequent and coherent jurisprudential body responsible for sanctions;
• the jurisprudential body responsible for mergers and acquisitions and advisory opinions is often contradictory, to the point that the National Antitrust Commission (“CNDC” in its Spanish acronym) had to clarify that the request for advisory opinions suspends the deadlines for notifying an economic concentration operation;
• the amounts of the sanctions are, up to now, derisory as in the best of cases the maximum limit frozen in time established by Law No 25.156 has been applied;
• the leniency regime has not seen the light of day, and there is no single relevant antecedent;
• there is no prior control system for mergers and acquisitions;
• the deadlines for the resolution of complaints as well as the approval of mergers and acquisitions are extremely long; and
• the recursive regime does not respect the constitutional mandate, treaties of constitutional hierarchy and rulings of the Supreme Court of Justice of the Argentine Nation that impose sufficient judicial control and double instance in criminal matters.

These are a few failings that the authors believe are important, but there may be others that are just as relevant.

Having considered what the main problem is, one can also expect that there is a solution. But, how difficult is that solution? Is there an "almost magical" key that would unlock all these problems?

A Problem That is Not Difficult to Solve

Clearly, as seen above, the problem is the leadership, as in so many issues that afflict the country.

Argentina requires a leadership that stops looking at the polls and assumes the role that the society offers to provide solutions to the great problems of the country.

In brief, Argentina needs a leadership that is convinced that "the authorities will commit... to defend competition against all forms of market distortion, to control natural and legal monopolies..." as mandated by Article 42 of the National Constitution.

But, is that too difficult?

The authors genuinely believe that there is a key that would unlock most of the problems that are analysed in this article. That solution is to establish the enforcement authority imposed by Law No 27,442. All that is needed is a National Antitrust Authority that is especially selected for its suitability and is independent of political power, ie, an independent court.

Perhaps this reasoning appears overly simple, but if the Court is independent of political power, then it can focus on prosecuting monopolies that abuse their dominant position with technical and not political rigour. If it could make pro-competitive recommendations away from the heat of politics, antitrust would not be a tool that is suspected of favouring cronyism, facilitating "extortion" or persecution of circumstantial enemies of power, as so considered by the media in cases such as “Telecom” or “Clarín”.

In this scenario, if a political official or an opposition leader denounces the existence of a monopoly through the media, they must file the corresponding complaint and present the evidence that supports it. The vain denunciation from the lectern will no longer work.

It would also be known that in order to limit inflation, the tool is not antitrust, but other more appropriate public policies that are used successfully around the world.

In this way, there will be a jurisprudential body with technical rigour that grants legal certainty, gives real sanctions, and the merger control regime will finally enter into force after one year.

Article 84 of Law No 27,442 provided that the prior control of mergers and acquisitions would enter into force one year after of the establishment of the Court, this is in order for the system to be orderly, stripped of all political conditioning and reaching the terms that are glimpsed in other jurisdictions.

Logical deadlines both for the control of mergers and acquisitions and for the investigation of anti-competitive behaviours seem easier to achieve if the authority concentrates on technical issues and moves away from the agenda set by circumstantial politics.

In the same way, the recursive regime will be guided by the legal understanding of those who make up the Court and not by the demands of politicians.

Along these lines, a reliable authority that investigates and sanctions will be eligible for a leniency regime. There is no other explanation for the current clear failure of this regime.

Therefore, a simple political conviction that endows the independence that the constitutional mandate and the legal regime impose creates a virtuous circle that can lead to a rapid development of antitrust. These changes would comply with the constitution achieving the goal set by the legislator 100 years ago.

The Pendulum is Always Moving: The Court is Always in Danger

The authors of this article view the formation of the Court as the key to unlocking Argentina's future in antitrust. The Court must be independent and respect the legal mandate of Law No 27,442. That is, it should not be established by a Decree that is far from the Law or only to meet goals agreed with international organisations.

Indeed, one of the virtues of Law No 25,156 was the creation of the National Antitrust Authority, which never saw the light of day. The aforementioned provision was modified in 2014, eliminating it from the administrative agenda.

A few years later, Law No 27,442 fortunately returns to the idea of ​​having an independent authority.

But, at the point when it started to look like a tangible reality, today the pendulum is swinging again. If history repeats itself, an independent Court may never be established.

The authors hope that if the decision to establish the Court is finally taken, it will be in compliance with the provisions of Law No 27,442 and its establishment will not be vitiated, which would have the potential to invalidate its decisions and enter into an eternal litigious spiral. The concern is that if the Tribunal is not established as the regulations impose, all its decisions will be weakened under the cloak of latent nullity.

At this point, it may be disputed whether an independent authority is really necessary. This doubt is not only reflected in the recent history of Argentina but has also been expressed by well-meaning experts.

Although Law No 27,442 already opted for the constitutional path of an independent authority, it is worth revalidating its need, especially if its formation by Decree may affect its independence.

Having already considered that the formation of the Court could be the key to the development of antitrust, the authors will now look at how this arrangement is consistent with Argentina's constitutional system. 

The Court Must be Independent, as Ordered by the Supreme Court

In order to understand whether there really is a need for the Tribunal to be independent, it is worth taking a quick look at what has happened in recent years.

Law No 22,262 created a dismembered authority. On the one hand, there is the National Antitrust Commission (CNDC), with investigative powers, and on the other, the Secretary of Commerce, with resolving powers; this has been recognised in numerous rulings by the Supreme Court of Justice of the Nation (some of which are cited above in relation to the enormous amount of litigation that the matter of authority has provoked). In brief, the Commission investigates, instructs and advises; and the Secretariat resolves by means of an administrative act.

This concept of the enforcement authority, which is still in force today, clearly keeps the antitrust policy tied to the political power of the moment, given that those who are responsible for investigating and those resolving antitrust issues are officials, appointed by the Government President.

Almost 24 years ago, Law No 25,156 tried to break with this methodology by recognising that the antitrust policy could not be left free or tied to the decisions and inclinations of the current government, which, as already discussed, represents a constitutional mandate. In other words, administrative criminal conduct that foresees important legal consequences, such as pecuniary and criminal, cannot be left to a political decision-maker.

In light of this, the concept of a National Tribunal for Antitrust was created. The Tribunal, which after some timid attempt to be constituted, never became a reality. Many presidents came and went between 1999 and 2014 and the Court was never constituted.

Then, in 2014, Law No 25,156 was modified and the provision for a National Tribunal for Antitrust was removed through a rule that was far from technically rigorous, without consultation, as confessed by CNDC members, and as a sign of the clear political desire to move antitrust away from the constitutional mandate and a faithful reflection of the whimsical way in which the country was governed at that time.

Finally, when the current antitrust law was drafted, this topic was discussed again. The editors, with good judgement, returned to a similar scheme, as far as independence from political power is concerned, as provided for by Law No 25,156. This was only possible by providing the enforcement authority with sufficient technical capacity and administrative independence that Law No 27,442 finally established.

Strictly speaking, beyond personal criteria or circumstantial political convenience, it is about complying with the National Constitution.

Indeed, Argentina's constitutional regime does not tolerate an administrative jurisdictional authority such as the one that currently governs the country.

It is worth noting that the Carta Magna provides in its Article 109 that the executive power cannot exercise judicial functions and that, for its part, Article 116 of the National Constitution grants jurisdictional power exclusively to the judiciary.

However, in an already distant unconstitutional turn (in the authors' opinion), the jurisdictional capacity of the power that was clearly prohibited was judicially recognised.

For this reason, the Court imposed a series of conditions that are worth remembering.

Moreover, the national doctrine peacefully maintains that the attribution of competence to entities in the administration that carry out jurisdictional activities requires that the entity be created by law, that its authorities be independent and impartial, that the objective of its creation by the legislator has been reasonable and that its decisions are subject to broad judicial control.

More recently, there have been the rulings in the Litoral Gas and Ángel Estrada y Cía cases. In the latter, dated 5 April 2005, the Supreme Court also held that: "No dispute can be validly referred to administrative bodies on the mere condition that their decisions are subject to subsequent judicial control. The reasons taken into account by the legislator to remove the matter in question from the jurisdiction of the ordinary judges must be reasonably justified, otherwise the administrative jurisdiction thus created would lack constitutional support, and would represent an undue advance on the provisions that Article 116 of the National Constitution defines as proper and exclusive of the Judicial Power of the Nation".

Therefore, the independence and impartiality of the entity that exercises jurisdictional functions are essential requirements for the exercise of administrative jurisdictional activity. Clearly, it cannot be maintained that a political official enjoys the independence and impartiality that the Court requires.

Therefore, continuing with the current scheme not only contradicts the mandate of Law No 27,442, but our National Constitution in the interpretation made by the country's highest court to ignore what is clearly provided in its Articles 109 and 116.

In other words, it is questionable that the Secretary of Commerce of any political persuasion can be the enforcement authority of Law No 27,442 and, therefore, their decisions could be nullified for not complying with the jurisprudence of the Supreme Court, putting into question all judicial actions and the antitrust regime.

In light of this, it is clear that the Tribunal must be independent.

Conclusion: An Independent Tribunal is Necessary for the Evolution of Antitrust

The aim of this article was to give some constructive criticism, while also providing some positive content. That positive content is to try, from the authors' humble place, to propose solutions so that the defence of competition becomes a full reality in Argentina and is inserted as an unquestionable policy.

With this in mind, the article highlights that it is essential for those who run the country to be convinced of the benefits that this type of regulation grants to the entire community.

This is a conviction that our legislators had 100 years ago and repeated on numerous occasions with the issuance of several of the regulations that followed. But it was also the conviction that Argentina's constituents had when they introduced Article 42 of the National Constitution imposing a clear mandate of "the authorities commit... to defend competition against all forms of market distortion, to have control over natural and legal monopolies…”.

This constitutional duty should lead to a simple government act being taken: establishing the National Antitrust Authority. This idea is as a solution that could gradually solve many of the problems that Argentina faces today.

Clearly, this decision must be in compliance with the Constitution, according to the interpretation of the Court, as set out in Law No 27,442.

Therefore, although it is essential that the Tribunal be made up of those most capable of carrying out a true transformation in the field of antitrust, its independent formation is a condition for a definitive step being taken to overcome the remaining important problems in the field of antitrust.