Argentina: New Decision Regarding Damages In An Anticompetitive Claim

Last Updated: 10 August 2012
Article by Alfredo M. O'Farrell and Miguel Del Pino

The Commercial Court of Appeals upheld a decision which rejected a claim brought for damages arising from an alleged abuse of dominant position. It sets the stage for the filing of damages claims without the prior intervention of the Antitrust Commission.

Pursuant to the decision issued on February 28, 2012 the Commercial Court of Appeals (the "Court of Appeals") upheld the decision of the First Instance Court in re "Martinez Irma y otro c/ Cervecería y Maltería Quilmes S.A.I.C. Y G. s/ ordinario", which rejected the claim brought by the owners of the beer distribution company "Distribuidora Rodeo" ("Rodeo") against Cervecería y Maltería Quilmes S.A.I.C. ("Quilmes"), Argentina's largest beer company, requesting compensation for damages arising from an alleged abuse of dominant position.

The original lawsuit brought by the distribution company stated that during a twelve-year period it had been involved in the distribution of the products of Embotelladora Los Andes S.A. ("Andes"). According to plaintiff's statements, in 1995 it entered into a distribution agreement with Quilmes, which requested that Rodeo would no longer continue to distribute the products under the "Andes" brand (the "Distribution Agreement"). Furthermore, plaintiff stated that as a consequence of Quilmes's products failure to gain market share it suffered from loss of sales that caused it to become indebted. Also, although plaintiff acknowledged that Quilmes was entitled to impose among its distributors the commercial policies it thought to be most beneficial for its own interests, plaintiff argued that by doing so Quilmes should have not affected the "acquired rights" of years of commercial practices.

The First Instance Court rejected the lawsuit in all its terms since it concluded that plaintiff failed to provide evidence that would otherwise prove the existence of an abusive conduct carried out by Quilmes. Furthermore, the decision stated that plaintiff failed to provide evidence that would indicate that it had suffered from loss of sales since it was a household fact that Quilmes was a well known brand and also no evidence towards demonstrating the inferiority of Quilmes's products as opposed to Andes' products had been provided.

Pursuant to the analysis of the Court of Appeals, notwithstanding the commercial importance of Quilmes, it could not be concluded that Rodeo had been forced to enter into an exclusive distribution agreement with Quilmes. According to the Court of Appeals it was a well-known fact that it is a matter of necessity for the businessman to pursue a vertical integration among its different distributors and for that purpose it was necessary to have a centralized decision-making unit that would be obtained by uniform conditions. The Court of Appeals considered that the distributed company designs a uniform brand, image and products commercial policy that would deem reasonable to benefit a certain brand or product over others.

Another issue raised by the Court of Appeals for rejecting the appeal was that, although Quilmes and Rodeo were companies of different magnitude, in a joint business the concept of subordination should not be automatically assimilated with that of dominance, especially when the parties' commercial expertise demands the assessment of the contractual conditions to be entered into as would be required from any businessman.

This case is another example of the increasing number of complaints for damages currently being analyzed by the Courts for anticompetitive practices forbidden by Law No. 25,156 (the "Antitrust Law").

As of today, there has only been one other major private damages claim that stemmed from an antitrust investigation that concluded the conduct harmed the general economic interest, namely the Auto Gas case.

This private claim case was initiated by Auto Gas S.A. ("Auto Gas"), a company that claimed it had been affected by an anticompetitive conduct carried out by YPF which has been sanctioned by the Antitrust Commission. Auto Gas requested the sum of A$ 117,113,962 (approximately US$ 20 million). Finally, the Judge ordered YPF to pay A$ 13,094,457 (approximately US$ 2.5 million) to Auto Gas in damages.

The key difference is that, as opposed to the Auto Gas case, the Rodeo case was analyzed by the Court without the intervention of the Antitrust Commission, which paves the road for more antitrust litigation in Argentina.

This case is another example of the increasing number of claims for damages brought before the Courts for anticompetitive practices that would be subject to sanction pursuant to the provisions of the Antitrust Law, provided there would be evidence of harm to the general economic interest. The main feature of this case is that it sets the stage for those cases that are analyzed by the Courts without the intervention of the Antitrust Commission.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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