The investigation was commissioned by the former Secretariat of Domestic Trade with the objective of ruling out possible competition concerns in the markets for disposable diapers and tissue paper products in Argentina. Previously, certain companies in these sectors had been investigated for alleged anti-competitive conducts by the National Commission for the Defence of Competition (CNDC, for its acronym in Spanish), based on regional precedents in which companies of these markets operating in Argentina were sanctioned in other countries for participating in collusive agreements.
In the framework of this market investigation, the CNDC concluded that the tissue paper products markets which includes toilet paper, kitchen paper towel, napkins and disposable tissues have a moderate level of concentration, while the disposable diapers market is highly concentrated, although now with a lower level of concentration than that observed at the beginning of the period under study.
As with other mass consumption products, these are mainly sold to final consumers through retail and wholesale supermarkets, self-service stores and other specialised proximity shops such as pharmacies, perfumery shops and diapers shops, among others.
Practically all of the products consumed in Argentina are produced in the country; however, the cost matrix has a high correlation with the exchange rate because most of the inputs are imported, the most important input in both production chains being cellulose fibre.
In the case of tissue paper products, the supply structure is composed of a multinational company alongside several national small and medium-sized enterprises (SMEs). On the other hand, the production of diapers is mainly explained by three multinational companies, with SMEs playing a marginal role. However, a recent market entrant exhibits growth potential.
A key distinction between the two sectors lies in the market share of own brands of retail and wholesale chains. Own brands hold significant relevance in the tissue products sector, whereas their presence in the diapers market is minimal and sporadic. Nevertheless, this scenario could change due to the entry of SME companies to the diapers market with production capacity to manufacture products for third parties.
Finally, although none of the markets have specific regulations, some of the companies consulted throughout the investigation expressed difficulties in the purchase of inputs from abroad due to the conditions of access to foreign currency for the payment of imports. This scenario could have affected the productive capacity and therefore the competitive performance of the different competitors. This difficulty might have had a stronger impact on those companies with greater limitations to access external financing.