On 29 July, the Competition Defence Tribunal (TDC) of the National Competition Authority (ANC) determined the existence of a practice that is absolutely restrictive of competition, in breach of Section 2 of Act No. 27442 on the Defence of Competition (LDC), carried out by producers of river sand for construction based in the province of Chaco and organised within a cooperative, from 2019 until at least 8 May 2024, which marked the end of the period under investigation in the proceedings.

The sand extracted from the bed of the River Paraná is an essential raw material in the construction industry for traditional civil engineering works using mortar and concrete, in both public and private projects in that province.
The investigation began following a complaint received by the (former) National Commission for the Defence of Competition (CNDC), which revealed that these sand producers were operating through a cooperative – the Cooperativa Minera de Productores de Arena y Piedra del Noreste LTA – through which they marketed and jointly set the price of the sand produced individually by the member companies.

The Secretariat for the Investigation of Anti-Competitive Conduct (SICA) of the ANC, in a ruling dated 8 May this year, concluded that a fine should be imposed on the cooperative and the members who participated in the anti-competitive practice, as well as the amendment of the cooperative’s articles of association so that, in future, it does not engage in joint marketing nor serve as a means for its members to carry out practices that restrict competition, and it recommended this to the TDC.

The aforementioned cooperative did not own any assets of its own relating to the sand production process or its marketing, such as sand extraction and storage sites, dredging vessels, or permits to extract sand from the bed of the River Paraná, all of which were carried out individually by the member companies, whilst the aforementioned organisation confined itself to marketing the sand produced individually by its members, thereby standardising the selling price and other commercial terms.

Under these circumstances, the cooperative’s practice of jointly marketing sand eliminated competition on price and other commercial terms amongst the member sand-producing companies and, at the same time, was not justified on the grounds of production efficiencies or any other factors that might promote competition and the general economic interest. Consequently, the conduct was classified by SICA and the TDC under the legal category of ‘practices that absolutely restrict competition’ as set out in Section 2 of the LDC, which are subject to a categorical prohibition.

This categorical prohibition on cartel agreements implies that proving a specific potential threat to the general economic interest is not a necessary element of the infringement; such a threat is presumed directly and unconditionally by section 2. Notwithstanding this, the actual possession of market power by the infringers plays an important role when determining the level of the penalty. In this regard, the investigation found that the cooperative’s selling price for sand had doubled compared with the sand price indices published by INDEC (an acronym for National Institute of Statistics and Censuses in Spanish).

The measures imposed consisted of an order to cease the practice and the imposition of fines on the offenders, which included the cooperative and thirteen members who participated in the conduct during the period under investigation. It should be noted that, although this was a cartel agreement constituting a serious breach of competition law, given that the companies involved were mostly small in size and had operated in unfavourable circumstances due to weather conditions and the pandemic, the TDC took particular account of the proportionality of the fine in relation to the economic capacity of the offenders.

Furthermore, the TDC ordered the cooperative to amend its articles of association so that, in future, they do not provide for the joint marketing of its members’ sand production.

The infringers have the right to appeal against the TDC’s decision within fifteen (15) working days of being notified of the measure, in accordance with Section 67 of the Competition Act.