The Essential Facilities Doctrine

Introduction

The Argentine Antitrust Commission (the “Commission”) has issued two more decisions in which it continues to build upon its essential facilities doctrine. While this conduct is not expressly described by the Antitrust Law, the Commission has built upon the general prohibition on abuse of dominance in order to construct an essential facilities doctrine.

In the first case concerning a potential essential facilities claim, “A. Savant v. Matadero Vera”, the Antitrust Commission held that the granting of a public authorization (in this case, the running of a slaughterhouse in a small town) created a responsibility to satisfy demand of all sorts, even from competitors in the downstream market and that any denial to supply would have to be based on objective grounds.

Other similar cases have entailed a wide range of industries, such as access to ski resorts, the certification for the welding of metal coffins, and credit card network systems. Remedies have entailed access by the complaining firm as well as the setting of moderate fines in some cases.

The new resolutions

In “Terminal Salta S.A. and La Veloz del Norte” certain transport companies (Empresa Almirante Guillermo Brown S.R.L., Atahualpa S.R.L., and Nueva Chevallier S.A) filed a claim before the Commission against Terminal de Salta S.A. (which had obtained the concession to manage the bus terminal of the City of Salta) and La Veloz del Norte S.A. (a transport company owner of Terminal de Salta S.A.).

When Terminal de Salta S.A. became the new concessionaire of the bus terminal of Salta, it tried to impose on the transport companies the execution of a new contract regarding the ticket offices. This contract contained abusive clauses; thus, the claimants refused to execute it due to the fact that, among other clauses, it imposed the possibility for the concessionaire of modifying the setup of the ticket offices at any time or the imposition of a fee for the regular running of the bus terminal.

As a consequence, all transport companies were evicted from their original ticket offices, the sole exception being La Veloz del Norte S.A. (namely, the company that owned Terminal de Salta S.A.), which remained operating on-site since it was the only company that had executed the new contract.

The claimants stated that they found themselves in a disadvantageous position, since they were not able to offer their services adequately.

The Commission considered that the respondents were responsible for creating incentives to spread the upstream power they held as exclusive operators of the bus terminal, causing harm to the general economic interest through the restriction of competition.

The Commission decided that the respondents were responsible and imposed several sanctions, including a joint fine of AR$ 1,800,000 (approximately US$ 349,500 under the current exchange rate) to La Veloz del Norte S.A. and AR$ 200,000 (approximately US$ 38,800 under the current exchange rate) to Terminal Salta S.A. Furthermore, the Commission recommended the Province of Salta to implement a more transparent regulation in this market, so as to ensure an open access to the services to be rendered within the bus terminal.

A similar analysis was also carried out in “Catedral Alta Patagonia S.A.”, in which a professional photographer filed a claim before the Commission against Catedral Alta Patagonia S.A. (“CAPSA”), a company that had been awarded with the concession of the ski lifts in Cerro Catedral (a famous ski resort), located in Bariloche, Province of Río Negro. The claimant argued that, since he had refused to execute a contract with abusive clauses regarding access to the mountain, CAPSA did not allow him to perform his job as a photographer. In said location, CAPSA had executed a contract with photography company DEFOTOS.COM, regarding this type of activities, with some exclusivity characteristics.

The Commission considered that the ski lift was an essential facility as the photographer needed this service to perform his activities in the mountain. As such, it determined that CAPSA abused of its position in the upstream market to determine and affect the photographers’ activities in the downstream market.

Finally, the Commission imposed several sanctions on CAPSA, including the withdrawal of the restrictions and the imposition of a fine of AR$ 150,000 (approximately US$ 29,000 under the current exchange rate).

Conclusion

These new cases show the furtherance of the Commission’s point of view regarding the essential facilities doctrine in Argentina. As such, all undertakings with certain degree of dominant positions in upstream markets will need to take into account this analysis regarding access to downstream competitors since the Commission is increasingly analyzing this type of conducts in a rigorous manner.