On November 25, 2022, the Secretariat of Trade issued Resolution 115/2022 (the “Resolution”), by means of which it sanctioned certain nightclubs of the city of Bariloche (Province of Rio Negro, Argentina) with fines totaling AR$240 million (approximately USD$1.5 million) for engaging in a price-fixing and market allocation cartel. In addition, the Resolution ordered some of the sanctioned companies the divestment of certain assets and exempted one of the companies that was a party to the cartel from sanctions despite not having filed for leniency.
As a result of a complaint filed in 2018 by Powerlink S.R.L. – a nightclub involved in the student parties’ market in the city of Bariloche- the National Commission for the Defense of Competition (CNDC) initiated an investigation against Alliance S.A. and Grisú S.R.L. for a potential abuse of a dominant position and cartelization. Within the framework of the investigation, the CNDC verified the existence of a price-fixing and market allocation agreement between the defendants to establish a single price for the tickets offered to student tourism agencies. The agreement, which was in place between 2004 and 2017, was implemented through a “Memorandum of Understanding” entered into by Powerlink, Alliance and Grisú, aimed at allocating the market between the signing parties.
The Secretariat of Trade issued a cease-and-desist order and imposed a fine against the offenders. Furthermore, following the recommendation from the CNDC, the Secretariat of Traded exempted Powerlink from a fine. Despite the latter company signing the “Memorandum of Understanding” and not having filed an application under the leniency program provided for in the Antitrust Law, the CNDC acknowledged that having filed the complaint that triggered the investigation and “based on the cooperation provided during the proceedings and the evidence provided” to the authorities, added to “the coercion exercised by the dominant companies” that led Powerlink to sign the Memorandum, there was sufficient merit to exempt that company from a fine.
The Resolution also compelled the disassociation between the company CADEHSUR S.A. and Alliance, ordering the latter to terminate the contracts through which it exercised control over CADEHSUR and prohibiting its shareholders and/or executives from any participation whatsoever in CADEHSUR. In that regard, the Resolution stated that “the removal of Alliance´s market power and allowing access to the market to other competitors is necessary to restore competition and neutralize the abuse of a dominant position exercised in violation to the Antitrust Law”, thus constituting an unprecedented divestment obligation in the framework of an anticompetitive conduct investigation in Argentina.
This report should not be considered as legal or any other type of advice by Allende & Brea.
