The Secretariat of Domestic Trade – based on the investigation of the National Commission for the Defense of Competition (CNDC) imposed a sanction for cartel in the wheat flour market to Federación Argentina de la Industria Molinera (FAIM), Cámara de Industriales Molineros (CIM), Asociación de Pequeñas y Medianas Industrias Molineras de la República Argentina (APYMIMRA) and Molino Cañuelas S.A.. The fines imposed on all those responsible amounted to AR$445 million (approximately USD$4 million).
The investigation was initiated on April 4, 2017 due to the complaint filed by the firm IMPULSAR (Industrias Medianas y Pequeñas Unidas Locales Sociedad Argentina) before the CNDC against Molino Cañuelas, for alleged violation of the Antitrust Law No. 27,442 (“Antitrust Law”).
Within the framework of the investigation, the CNDC evidenced the existence of an agreement entered into by FAIM, CIM and APYMIMRA and Molino Cañuelas, for the fixing of minimum prices and the exchange of sensitive information, called “General Agreement for the Defense of Free Competition in the Milling Industry” (the “Agreement”). According to the CNDC, this type of agreements are highly anticompetitive as they suppress price competition and constitute an injury to the welfare of consumers, who are either forced or abstained from consuming the cartelized product, or else are forced to pay comparatively higher prices, thus generating a redistribution of resources in favor of the cartel.
The genesis of the Agreement took place at the so-called “Flour Festival”, where the three milling entities (FAIM, CIM and APYMIMRA) outlined the idea of its implementation. In turn, they were the ones who monitored its compliance, through audit schemes and sanctions for non-compliance. The Agreement was in force from October 2014 until at least April 2017, restricting the competition of wheat mills throughout the country and directly harming consumers.
Although CIM, FAIM and Molino Cañuelas offered commitments under the terms of Section 45 of the Antitrust Law, these were rejected by the CNDC on the grounds that they did not eliminate the damages generated to the general economic interest and that, consequently, the proposals made did not merit their acceptance. This corroborates the CNDC’s traditional jurisprudence that holds that commitments are not feasible in cartelization cases.
Finally, the Secretariat of Domestic Trade -following the recommendations of the CNDC- through the issuance of Resolution 332 dated April 1, 2022, imposed a fine of AR$150,000,000 (approximately USD$1,254,390) to Molino Cañuelas, of AR$150,000,000 (approximately USD$1,254,390) to FAIM, of AR$93,974,602 (approximately USD$785,872) to CIM and of AR$51,131,995 (approximately USD$427,596) to APYMIMRA, totaling a joint fine of AR$445,106,597 (approximately USD$3,722,249). Given that the infringement was committed prior to May 24, 2018 (date of entry into force of the current Antitrust Law), the penalties were applied in accordance with Law No. 25,156, which established a maximum fine of AR$150 million (approximately USD$1,254,390) per infringement.
Likewise, the Secretariat of Domestic Trade established behavioral obligations aimed at avoiding the repetition of this type of practices, particularly so that the offenders cease and refrain from making price fixing agreements and exchanging sensitive information in the wheat milling market and the commercialization of wheat flour. The offenders were also ordered to publish the CNDC’s “Guide on Antitrust for Business Associations and Chambers and Professional Associations and Colleges” in their own web pages and to communicate the measure to all their members or associates.
This report should not be considered as legal or any other type of advice by Allende & Brea.
