The Supreme Court Denies Certiorari Review of Rulings That Revoked Fines Imposed on Consultancy Firms for Providing Inflation Estimates

On October 8, 2013, by unanimous decision, the Federal Supreme Court (the “Supreme Court”) decided to dismiss three extraordinary appeals (i.e. petitions for certiorari review) filed by the Government, through which it sought to review judgments rendered by different panels of the Federal Court of Appeals on Administrative Law Matters (the “Court of Appeals”). (1)

The judgments rendered by the Court of Appeals quashed fines of AR$ 500,000 imposed by the National Direction on Domestic Trade (the “DNCI”, after its Spanish acronym) on these consultancy firms (as well as on other private consulting firms) that produced reports on retail prices’ variation which differed from the indexes published by the Government Statistics Agency (the “INDEC”).

These sanctions were imposed based on provisions of the Fair Trade Law No. 22,802 (the “Fair Trade Law”). The Court of Appeals held that the provisions invoked by the DNCI were not applicable to the facts of these cases, and consequently ordered to revoke the fines. Against these rulings, the Government filed an extraordinary appeal and upon its denial by the Court of Appeals, direct appeals were filed, which have been now been dismissed by the Supreme Court.

Thus, the rulings rendered by the Court of Appeals that revoked the fines imposed by the DNCI have become final and can no longer be reviewed.

The judgments rendered by the Supreme Court in these cases seem to anticipate the approach that could be followed in other legal proceedings instituted as a result of fines imposed on private consultancy firms for providing estimates on the evolution of the price index. (2)

1. The fines imposed by the DNCI

In the first months of 2011, the DNCI began to make formal requests for information and then initiated proceedings against a number of private consultancy firms that produced reports on retail prices’ variation differing from the indexes published by the INDEC, and that were made public by the press.

These proceedings were grounded on the allegation that the reports produced by the private consultancy firms were inaccurate and, as a result of that, they misled businessmen and consumers on the price of goods and services.

After an expedited administrative proceeding and without admitting any evidence other than reports of the INDEC on the accuracy of the methodology followed by these consultancy firms, the DNCI considered that they had violated the Fair Trade Law and imposed on each of them the maximum penalty of fine provided in the law: AR$ 500,000 (around USD 125,000 at that time).

Most of the penalties were based on the alleged violation of section 9 of the Fair Trade Law. The other penalties were based on the alleged reluctance to provide the information required by the DNCI by invoking section 14, subsection c) of the Fair Trade Law. All these penalties were appealed to the Court of Appeals.

2. The revocation of the fines by the Court of Appeals

When ruling on the appeals filed by consultancy firms, different panels of the Court of Appeals concluded that the provisions of the Fair Trade Law invoked by the DNCI were not applicable to the activities of the consultancy firms that gave rise to the commencement of these proceedings.

In these judgments, the Court of Appeals took into consideration precedents of the Supreme Court and its own case law according to which the purpose of the Fair Trade Law is to preserve good faith in commercial activities and to protect the right of consumers to accurate information, in order to avoid being misled or deceived when acquiring products or goods, or contracting services.

It was pointed out that the advertising activity regulated by the Fair Trade Law is conducted with the purpose of fostering the consumption of certain goods and services, that is to say, the activity aimed at drawing the attention and willingness of potential consumers.

In this understanding, it was considered that the activity of the consultancy firms, which consisted of producing reports on the variation of prices and letting them be known, did not fall within the scope of these provisions of the Fair Trade Law, since this activity:

1. does not have the purpose of stimulating, promoting or deviating the use, demand or acquisition of certain goods or services, nor to influence the opinion of consumers in respect to the characteristics of those goods or services; and
2. is not carried out with the purpose of providing information on the characteristics of the services provided by the consultancy firms, nor to attract a greater number of clients.

In the rulings rendered by the Court of Appeals it was explained that the activity of the consultancy firms consisted of gathering data on products and services marketed by third parties and in processing this data according to their criteria, in order to produce the reports required by sponsors or clients.

In light of these reasons, it was concluded that the fact that these reports were made public does not involve a “consumer relation”, nor does it constitute “presentations”, “commercial advertising”, or “propaganda” within the terms of the Fair Trade Law. Instead, these reports involve public and technical information that may not mislead or create confusion in consumers or interested parties with respect to the characteristics or marketing conditions of certain goods or services.

On these grounds, the revocation of the fines imposed in each case was ordered.

3. The extraordinary appeals brought by the Government and the judgments rendered by the Supreme Court

The rulings of Court of Appeals were challenged by the Government through an extraordinary federal appeal, in order for these judgments to be reviewed by the Supreme Court.

Several panels of the Court of Appeals have denied the extraordinary federal appeal. In those cases, the Government filed direct appeals to the Supreme Court.

These filings resulted in the judgments discussed herein, in which by unanimous decision the Supreme Court decided to dismiss the appeals filed by the Government.

In the three cases, the Supreme Court dismissed the appeals by invoking Section 280 of the Federal Civil and Commercial Procedure Code (“CPCCN” after its Spanish acronym).

This provision allows the Supreme Court to dismiss the extraordinary appeal through the single invocation of this rule, as a result of lack of sufficient federal grievance or when the issues raised are not substantial or lack importance.

It should be noted that in the “Latin Eco S.A. c/ DNCI s/ disp. 179/11” case, there is a concurring opinion signed by Mr. Enrique Petracchi who, instead of invoking Section 280 of the CPCCN, explained the reasons why the appeal was inadmissible.

Among other arguments, Mr. Petracchi held that:

• The Government’s claims did not rebut the conclusion of the Court of Appeals as to the fact that the inaccuracies attributed to the consulting firm related to an average of prices rather than to one or more products or specific services.
• It is not enough to argue that by means of the conduct challenged, the consultancy firm created a “state of uncertainty and confusion” in the consuming public, when the Government has not explained what would be the consequences of the alleged “uncertainty and confusion” regarding the procurement of specified goods and services, nor why should the publishing of the price index should be qualified as advertising communication in the terms of Section 9 of the Fair Trade Law.
• The Government has not proven that the publication of the estimates of price indexes are suitable to deceive and, as a consequence, to induce the hiring of the consultancy firm.
• The degree of accuracy of the estimates or the extent of their adjustment to what happens in reality is, as a rule, irrelevant for the purposes of Section 9 of the Fair Trade Law due to its lack of suitability for deceiving potential contractors of the consultancy firm.

4. Final Comments

The judgments rendered in the discussed cases seem to anticipate that the Supreme Court will not review the rulings of the Court of Appeals which revoked the fines imposed by the DNCI. Given the substantial characteristics that all of these cases have, it is expected that the Supreme Court will follow a uniform approach.

If the Supreme Court decides not to review the rulings of the Court of Appeals, this will reaffirm the conclusion that the provisions of the Fair Trade Law cannot be invoked to regulate or restrict activities that involve in essence the production of estimates and opinions on matters of public interest.