Opinion: Defense of Competition during the Kirchner Administrations

By: Diego Petrecolla, U. de San Andrés

Argentina’s Defense of Competition Law 25156 (DCL) was approved in 1999. It has never been properly enforced, since the National Competition Defense Tribunal which (NCDT) it established was never assembled. The NCDT was conceived as an independent agency, free from political power and isolated from private sector interests. The Kirchner couple, however, never showed the slightest interest in actually forming the NCDT. Instead, competition regulation continued under the Secretariat for Trade, which issued “non-binding” resolutions through its National Commission for Competition Defense (NCCD). This choice made ensured that decisions over competition matters would focus on “political” objectives, rather than “economic” ones. This was all laid bare last year (2014) with the passing of the new “Supply legislation”, which eliminates all of the NCDT’s powers and formally transfers them to the Trade Secretary.

In recent years the Kirchner-Fernandez administration has used the DCL as an instrument for fighting inflation. The law’s original intent, of course, was to protect the wellbeing of consumers and the efficient workings of the market. It is not the right tool to fight inflation. This kind of legislation should be applied to specific sectors, and is therefore best suited to solving microeconomic problems, rather than macroeconomic ones. Inflation, as is well known, is best controlled through proper use of monetary and fiscal policy.

The DCL’s powers include: M&A regulation, sanctioning anti-competitive behavior (particularly cartel formation and abuse of market share cases). The administration has not used either of these effectively: No major sanctions have been imposed for anti-competitive behavior in over three years, and the time taken to review mergers and acquisitions has tripled with the NCCD’s involvement.

The law should be applied primarily on particular sectors. I would suggest starting with Mass-consumption products and goods, particularly foodstuffs, as well as industrial goods. The first group is important because competition issues in this sector directly affect the poorest citizens, who will devote a large part of their income to food. The second group is singled out because of its importance for the competitiveness of the economy as a whole. Both issues are of great importance these days.

It is a shame that the Administration has used this intriguing tool for political ends. It is even more worrying that they should try to wield it to battle inflation- a problem it was never designed for.

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