Juntos

Welcome to Juntos, our bulletin that explores antitrust and competition developments across US-Latin America. In this issue, we look at key headlines from throughout 2024.

Argentina’s leniency regime goes live. In May, Argentina’s National Commission for Competition Defense (CNDC) announced the implementation of its leniency regime – six years after it was introduced in the country’s antitrust law. Considered some of the strongest tools in the enforcers’ arsenal, leniency programs have been implemented by jurisdictions around the world to bolster regulators’ ability to detect and prosecute anticompetitive cartels, while providing strong incentives for cooperation with government enforcers and internal compliance by companies. The CNDC regime provides full immunity to the first applicant to blow the whistle on their own participation in cartel activity and submit sufficient evidence to prove that the conspiracy existed. Subsequent applicants can secure penalty reductions between 20 percent to 50 percent of the maximum fine (which is 30 percent of the company’s domestic turnover). More details about Argentina’s program can be found here.

Brazil’s CADE publishes new report on data, market power, and potential competition in merger reviews. In April, Brazil’s Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica, or CADE) released a new report produced by the working group on mergers of the International Competition Network (ICN). The ICN advocates for the adoption of improved standards and procedures in competition policy around the world, and increased convergence and cooperation. The report focuses on merger reviews in digital markets and the challenges of applying traditional antitrust principles to novel markets that bring new issues related to data control, market power, and potential competition. The goal of the report is to analyze the tools and methods needed to evaluate these new markets in the context of the merger review process. It leverages international research carried out with competition authorities around the world. The full text of the report can be found here.

Chilean Competition Court issues its highest-ever fine in a football abuse of dominance case. In May, the Chilean Competition Court (Tribunal de Defensa de la Libre Competencia, or TDLC) upheld a 2020 complaint filed by the National Economic Prosecutor’s Office (FNE) against a Chilean football channel (Canal de Fútbol or CDF – currently, TNT Sports). According to the FNE’s complaint, the defendant abused its monopoly on rights to broadcast Chilean football matches to impose abusive commercial conditions on TV operators, including minimum guaranteed payments. The TDLC found that the practice created differences in prices across TV operators that had no justification in costs. The TDLC also ruled that CDF exercised control over discounts that operators could offer to subscribers, which amounted to unlawful resale price maintenance that harmed consumers. The fine, equivalent to USD27.6 million, is the highest ever imposed by the TDLC, which is empowered to impose fines up to twice the gain obtained from the infringement or up to 30 percent of the sales linked to the offense.

Gas and diesel retailers fined for failure to notify deals. In May, Mexico’s competition authority (COFECE) fined six gasoline and diesel retailers a collective total of USD3.4 million for failing to notify two transactions. These are the first fines in COFECE’s history for failing to notify transactions subject to mandatory merger control processes. In Mexico, as in the other jurisdictions, companies are required to conduct their own analyses of whether transactions meet relevant thresholds.

Mexico threatens to break up vertical monopolies in the bus transportation sector. In May 2024, after a market study flagged multiple competition concerns, COFECE threatened to force divestitures in the bus transportation industry. COFECE argued that vertical relationships in this industry increase barriers to entry for new competitors and entrench incumbents. In addition, major bus carriers were alleged to have horizontal relationships such as partnerships, joint ventures, and interlocking directorates, according to the preliminary report. The report also suggested the relaxation of regulations requiring bus operators to use passenger terminals, which would allow passengers to be picked up outside of established terminals and increase market differentiation.

Peru’s INDECOPI blocks a business combination for the first time. For the first time in Peru’s history of antitrust enforcement, in July 2024, a Peru’s National Institute for the Defense of Competition and the Protection of Intellectual Property (INDECOPI) rejected a proposed business combination. INDECOPI said that the transaction, a proposed acquisition in the sugar industry, would have a negative impact on the country’s markets for wholesale sugar cane acquisition and domestic sugar commercialization. In blocking the acquisition, INDECOPI found that the proposed acquirer proposed insufficient commitments to mitigate the potential anticompetitive impact of the transaction. Enforcers throughout the world have become more skeptical of so-called behavioral remedies that would prohibit specific practices and require government oversight. Acceptance of these kinds of commitments to allay competitive concerns is now rare, especially in the US.

The Commission for the Defense of Competition adopted INDECOPI’s decision. As such, INDECOPI’s Chamber for the Defense of Competition may appeal it. More information on INDECOPI’s decision can be found in their press release.

INDECOPI launches investigation into pharmaceutical market. In July 2024, INDECOPI initiated an administrative sanctioning procedure against 15 entities – most medical laboratories and drug distributors – and five individuals for their participation in an alleged cartel aimed at coordinating proposals and abstentions in auctions by the Ministry of Health and the Peruvian National Social Insurance (ESSALUD) to win bids for the purchase of medicines for both institutions. Generally known as bid-rigging, the practice can carry criminal penalties in some jurisdictions. According to INDECOPI, the cartel distorted competition and prevented several medicines from being acquired by the Peruvian State at lower prices.

Court halts FTC’s ban on noncompete restrictions nationwide. Earlier this year, the FTC finalized a rule banning any new and most existing noncompete restrictions for US workers. The rule was scheduled to take effect on September 4, but on August 20, 2024, a federal court struck down the rule after finding that the FTC did not have the authority to issue the substantive rule and additionally had enacted it after an arbitrary and capricious process. As a result, the rule will not go into effect, unless an appeals court reverses the lower court’s order. Despite this decision setting aside the FTC’s federal rule, however, employers in the US remain subject to a wide range of state and local laws governing – and in some cases, banning – noncompete provisions for workers. For more, see our Noncompetes and Competition Enforcement Hub.

DOJ and state attorneys general sue software maker for antitrust violations related to its AI-driven product. In a first-of-its-kind enforcement action, an August 2024 lawsuit against RealPage, Inc. by the US Department of Justice (DOJ) and multiple state attorneys general alleges that the company’s pricing algorithms and AI-driven software for commercial residential landlords facilitate unlawful information sharing between landlords, leading to higher prices for renters, in violation of federal antitrust law. The enforcers further allege that RealPage unlawfully monopolized the market for commercial revenue management software for multifamily housing rentals by “amassing a massive reservoir of competitively sensitive data” from customers and using its “self-reinforcing data and scale advantages,” to the exclusion of potential rival software providers. This is the first time that the DOJ will litigate claims based on so-called “algorithmic collusion,” and the case stands as a potential bellwether for government enforcement against the use of algorithm- and AI-driven pricing tools.