On September 17th, 2018, the Secretary of Commerce directed the National Commission for the Defence of Competition (CNDC, for its acronym in Spanish) to launch an investigation into alleged collusive activities in public procurement.
The CNDC served 52 businesses as part of the investigation for alleged coordinated bidding in public tenders for construction and development, such as roads, electricity, and transportation infrastructure.
The investigation covered the years 2003 through at least 2015. It also involved industry associations, specifically the Argentine Chamber of Construction and the Argentine Chamber of Road Companies,
who were investigated as possible facilitators of the alleged cartel.
CNDC found no direct evidence of an agreement, its participants, or its execution.
Without direct evidence, the CNDC examined potential indicators drawn from specific testimonies, spreadsheets, and e-mail exchanges documented in court case records concerning a possible agreement on distributing public works in the construction sector. Following the jurisprudence on the issue and under the law applicable to the case, the CNDC determined that these indicators were isolated and did not fulfil the attributes of accuracy, seriousness, and congruence.
The CNDC also examined potential indicators derived from the structure and functioning of those markets associated to public procurement. This research revealed that the market structure, involvement in the alleged collusive agreement, and the number of competitors not participating in such agreement made its establishment and continuation implausible. Indeed, product differentiation makes allocating bids problematic, particularly regarding compensatory mechanisms (i.e. compensating companies that lose some tenders with other works), making it difficult to sustain this collusive behaviour over time.
The CNDC, determined that the market's characteristics are not conducive to collusion because (i) there is a large number and heterogeneity of bidders, (ii) the market is deconcentrated with approximately 150 participants, (iii) the market affected by the alleged conduct is of differentiated products, which significantly reduces repeated interaction between market participants; (iv) there is a lack of demand stability; and (v) the existence of a high number of actors external to the alleged agreement.
As part of the economic analysis, the CNDC considered the possible harm of the behaviour under examination to the general economic interest (GEI), using "overpricing" as an acceptable proxy for the GEI. This analysis found no evidence of an overpricing pattern in the tenders. According to the investigation, some tenders were awarded under budget, while others were awarded at similar levels.
Furthermore, a review of the depositions, declarations, and documentary evidence found several contradictions and inconsistencies, and some of the material has limitations regarding its legal validity.
Among the anomalies discovered were at least four distinct interpretations of the role of particular companies in the claimed plan of tender distribution in separate testimonies of the same person. Similarly, testimonies of several collaborating defendants in the context of court cases reveal discrepancies concerning the role assumed by the alleged cartel organizer.
A defendant's spreadsheet displayed contradictions with the significance of some works based on his feedback, which, along with the absence of correspondence with official material, cast doubt on its validity as the foundation for the supposed agreement.
Furthermore, the Argentine Chamber of Construction and the Argentine Chamber of Road Companies do not appear to have participated as facilitators of the alleged collusive arrangement based on the proceedings, and not all companies investigated were affiliated with the sectoral associations.
Finally, and given the evaluation of certain pieces of evidence, the CNDC considered it necessary to formulate a pro-competitive recommendation to the Argentine Chamber of Road Companies under the terms of section 28, paragraph i) of Act No. 27. 442, so that this entity and its members consider adopting the following measures: (i) to report to the enforcement authority any practices that have the purpose or effect of limiting, restricting, falsifying or distorting competition or market access, or that constitute abuse of dominant position, in a way that may result in damage to the general economic interest; (ii) to establish internal policies and compliance programmes and promote the adoption of these policies among members; (iii) at the time of holding meetings: (a) to record meetings and keep records; (b) to keep a detailed agenda of the topics to be discussed at meetings, a record of attendance, minutes and agreements reached; (c) to leave a meeting if they believe that any discussion or topic discussed could give rise to violations of the competition regime; and (d) to maintain the same principles for virtual and face-to-face meetings; (iv) to avoid purchases, sales, management, collections and other similar activities on behalf of the associate members (each member must maintain complete independence to set its own price and decide when and with whom to contract and under what conditions); (v) to avoid exchanging sensitive commercial information (information on prices, turnover, production costs and volumes, customers, advertising expenses, etc.), in particular when this information is recent or refers to future projections; and (vi) not to discuss, agree, limit or condition, directly or indirectly, the commercial policy of partners or competitors, both in terms of pricing and of discounts or promotions or other competitive variables, such as the quality of goods or services offered.