And Competition Law: Global Principles, Local Challenges, An Argentine Perspective

PABLO TREVISAN* Comisión Nacional de Defensa de la Competencia

ABSTRACT: The right to due process is one of the fundamental guarantees on which the entire system of protection and respect for human rights is built. Due process plays a key role on competition enforcement proceedings. In this regard, competition authorities shall operate within a framework that ensures that fundamental due process rights of the parties concerned are respected. In this regard, when assessing the performance of authorities as well as of general antitrust law policy and enforcement in a specific country or region, the level in which due process is respected is fundamental. Argentina is no exception to this rule. We hope the enactment of the New Competition Act, as well as the recent improvements introduced under a rejuvenated enforcement, would provide the final launch of a vigorous enforcement and long term antitrust policy in Argentina, which shall show a definitive respect to the right of due process.

All liberties are futile, if they cannot be claimed and defended in and if the order of this trial it is not based on respect for the human person Calamandrei1

I. Introduction: Concept of Due Process

The right to due process is one of the fundamental guarantees on which the entire system of protection and respect for human rights is built, through which the limits of state power are framed.

Due process of law is an inalienable guarantee enjoyed by all persons, since it establishes limits to the exercise of power by the various State bodies vis-à-vis natural persons, representing a fundamental protection for the respect of the rights of the individuals.

Various constitutional texts speak of “due process”. Many of these expressions are related, directly or indirectly, to certain terms contained in the English Magna Charta and

* Pablo Trevisan is a Commissioner at the Comisión Nacional de Defensa de la Competencia. The opinions expressed in this paper are the author’s opinions and not necessarily those of the CNDC. The author is extremely honored to participate in this tribute to Prof. Frederic Jenny. The author wishes to thank the editorial committee for giving him the chance of participating in this beautiful endeavor.

1 Piero Calamandrei, Processo e Giustizia, en Atti del Congresso Internazionale di Diritto Processuale Civile, Padova, 22 (1953).

1 its subsequent development in the United States. 2 More specifically, the Fifth Amendment introduced in 1791 to the Constitution of the United States, constitutes the direct antecedent of Section 18 3 of the Argentine National Constitution (National Constitution).

Due process plays a key role on competition enforcement proceedings. In this regard, competition authorities shall operate within a framework that ensures that fundamental due process rights of the parties concerned are respected, and that appropriate safeguards are established to ensure the enforceability of those rights by the parties concerned.

Throughout this paper, we will make a general approach to the topic of due process, its concept and the importance it has in all acts of the State. We will then examine this issue from the specific perspective of competition law. In the first place, we will consider what the main international organizations have said about due process in the area of competition law. Second, we will analyse the benefits and shortcomings of the different types of authorities, agencies or institutions in charge of competition policies and how the design of the institutions can impact antitrust due process. Then, we will make a brief reference to the issues related to the judicial review of cases previously resolved by competition institutions. We shall finish with a brief account of the Argentine case, considering the improvements offered by the new Competition Act 27,442,4 which was enacted by the Argentine Congress on May 9, 2018 (New Competition Act).

II. Due Process and Proceedings

Traditionally, the North American conception of due process overflows the field of procedural law. Thus, due process could unfold in two fields: the substantive or material and the adjective or procedural.

All the organs of the State, both in the exercise of materially jurisdictional, administrative or legislative functions, must comply with legal due process.

In this sense, substantive due process, says Couture,5 becomes, in a broad sense, the guarantee that arises from a regular and correct elaboration of the law; but it is also the guarantee that this law elaborated by the Parliament or legislature is reasonable, fair and

2 The most cited antecedent of due process of law is the English Magna Charta (Magna Charta Libertatum), from King John (also known as John Lackland) of June 15, 1215, in which it was established that: “No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled, or deprived of his standing in any other way, nor will we proceed with force against him, or send others to do so, except by the lawful judgement of his equals or by the law of the land.” 3 Section 18, CONSTITUCIÓN NACIONAL [NATIONAL CONSTITUTION]: “No inhabitant of the Nation can be punished without prior trial based on law prior to the fact of the process, or judged by special commissions, or removed from the appointed by law before the fact of the case. No one can be forced to testify against himself . . . . The defence in the judgment of the person and of the rights is inviolable.”

4 Act 27,442: http://servicios.infoleg.gob.ar/infolegInternet/anexos/310000-314999/310241/norma.htm. 5 Eduardo J. Couture,, El Debido Proceso como Tutela de los Derechos Humanos, La Ley 72, Buenos Aires, 802.

2 within the terms enshrined in the National or Federal Constitution. For its part, the concept of the judicial process, does not have a merely literal meaning, but also means the judicial application of the law and, by extension, the judicial interpretation of it.

While substantive due process, as a guarantee of reasonableness, applies equally to decisions coming from any State organ, on the contrary, the determination of what due process guarantees of adjective due process—and with what scope—are applicable in the exercise of the different state functions, will depend on the particularities that are presented in each case and concrete process.6

For a process to satisfy this guarantee, it is necessary that it complies with the inescapable requirement of granting the individuals with the sufficient opportunity to participate with utility and sufficiency in said process.

The guarantees of the process can be violated when the legislator institutes a form of unreasonable procedure, or when it deprives the basic elements so that a process can properly fulfil its purposes.

Thus, a process will be due when it is fair in its development, ensuring the parties the broadest possible exercise of the defense. That is, this guarantee ensures that every individual—before the defines the fate of his claim (when he is a plaintiff) or the fate of the resistance to the claim of his opponent (when a )—be heard broadly, arrange of the opportunity to offer and produce his proof and control the offered by his opponent, to receive a sentence based on accredited facts and that is a consequence of the application of the current law.7

Currently, both in the Anglo-Saxon system and in the continental-European system, due process is considered a meeting point between and procedural law. A fundamental human right and, also, an essential guarantee that opposes the abuse of power of the authorities, as well as the equalitarian contradiction in every type of process and enables the control of the constitutionality of lower ’ rulings, of laws enacted by the legislative power and decisions of the administrator.

In this sense, the constitutional support of substantive due process is found in Section 28 of the National Constitution, with respect to the laws, and in Section 18 of the same, in what refers to judicial decisions.

The Argentine Supreme of Justice (CSJN, for its Spanish acronym) has stated that certain constitutional and conventional norms 8 “safeguard the right to effective

6 Federico G. Thea,, Las Garantías del Debido Proceso en la Toma de Decisiones Públicas, La Ley, SUPLEMENTO ADMINISTRATIVO, June 2009, 11 y ss. 7 Carlos Botassi, Debido Proceso, Fuentes Supranacionales y Procedimiento Administrativo, La Ley 2015- B, Buenos Aires, 41. 8 Certain conventional rules have been incorporated to the Argentine internal rules, being applicable to any situation that may be reached by them, after the National Constitutional reform of 1994.

3 administrative and judicial protection”, considering a guarantee that “supposes the possibility of occurring before the courts of justice and obtain a useful decision or decision from them”.9

In 1897, Joaquín V. González10 said that Section 18 of the National Constitution, as it contains all the guarantees in favour of the person, is the bulwark of individual liberty. This guarantee, in some way, constitutes a derivation of the principle of legality provided under Section 19 of the National Constitution, establishing that “no inhabitant of the Nation will be forced to do what the law does not mandate, nor deprived of what it does not prohibit”.11

The CSJN has said that “the guarantees of the natural judge, due process and defence in court demand that the court be established by law prior to the fact of the case” and that it be decided in a reasonable time, since “if the judgments could be delayed without a term, the rights may remain indefinitely without their proper application, with grave and unjustified prejudice of those who invoke it.”12

Likewise, it is important to highlight that in our country the sources of due process have been extended after the constitutional reform of 1994 that incorporated a series of human rights treaties into the National Constitution. The CSJN, in this line, has decided that the jurisprudence of the Inter-American Court should serve as a guide for the interpretation of conventional precepts.13

Consequently, the provisions of the American Convention, also known as the Pact of San José, Costa Rica of 1969, obtained constitutional status in our country after the 1994 reform. Thus, in relation to the subject of this work, the importance of Section 8 of said Convention, which on Judicial Guarantees says:

1. Every person has the right to a hearing, with due guarantees and within a reasonable time, by a competent, independent, and impartial tribunal, previously established by law, in the substantiation of any accusation of a criminal nature made against him or for the determination of his rights and obligations of a civil, labor, fiscal, or any other nature.

2. Every person accused of a criminal offense has the right to be presumed innocent so long as his guilt has not been proven according to law. During the proceedings, every person is entitled, with full equality, to the following minimum guarantees:

a. the right of the accused to be assisted without charge by a translator or interpreter, if he does not understand or does not speak the language of the tribunal or court;

9 CSJN, Astorga Bracht, Sergio y otro c/COMFER-Decreto 310/98 s/Amparo Ley 16.986, Oct. 14 2004, Fallos T. 327, 4185, La Ley T. 2005-B, 673. 10 Joaquín V. González,, Manual de la Constitución Argentina, Buenos Aires, Ed. Estrada, 183, 1983. 11 Gelli, María Angélica, Constitución de la Nación Argentina Comentada y Concordada, La Ley, 4ta. Edición, Buenos Aires, T. I, 278 (2008). 12 CSJN, Staib y otros s/acción de amparo, May 6, 1986, Fallos T 308, 694. 13 CSJN, Giroldi, Horacio, Apr. 7 1995, Fallos T. 318, 514.

4 b. prior notification in detail to the accused of the charges against him;

c. adequate time and means for the preparation of his defense;

d. the right of the accused to defend himself personally or to be assisted by legal counsel of his own choosing, and to communicate freely and privately with his counsel;

e. the inalienable right to be assisted by counsel provided by the state, paid or not as the domestic law provides, if the accused does not defend himself personally or engage his own counsel within the time period established by law;

f. the right of the defense to examine witnesses present in the court and to obtain the appearance, as witnesses, of experts or other persons who may throw light on the facts;

g. the right not to be compelled to be a witness against himself or to plead guilty; and

h. the right to appeal the judgment to a higher court.

3. A confession of guilt by the accused shall be valid only if it is made without coercion of any kind.

4. An accused person acquitted by a non appealable judgment shall not be subjected to a new trial for the same cause.

5. Criminal proceedings shall be public, except insofar as may be necessary to protect the interests of justice.

The breadth and conceptual richness of Section 8 of the American Convention14 merit a detailed treatment of each one of the guarantees provided for therein, which would far exceed the object of the present work.

Considering that Section 75, Sub-Section 22, of the National Constitution establishes the complementarity of these treaties and conventions with the guaranties and rights recognized under the National Constitution’s first section, we may conclude that all the guaranties enumerated under Section 8 of the American Convention shall be part of the minimum requirements of legal due process.

Finally, it will not escape the reader that, in the system of protection of the rights of individuals, the guarantee of due process plays a fundamental role, being required to all State bodies. In a State of Law, only through respect for due process of law is the process of making public decisions fully valid.

14 It is important to stress that other treaties and conventions also establish minimum guaranties of due process. To name a few of such conventions, we may mention the American Declaration of Human Rights and Obligations (Section XVIII), the Universal Declaration of Human Rights (Sections 8–11), among others.

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III. Due Process and Competition Law

All competition policy and enforcement systems consist of essentially two components: the legal instruments or rules governing substance, competence and procedure, and the administrative or judicial structures and processes through which said rules are implemented.

Each of these is necessary for the success of the system as a whole. Good rules remain a dead letter if there is no efficiently run organization with processes to implement them. Conversely, an efficiently managed authority cannot compensate for fundamental flaws in the rules that it is to implement.15

a. International Organizations: What they have said about Due Process in the Area of Competition Law

Enforcement proceedings conducted by competition authorities should operate within a framework that ensures that fundamental due process rights of the parties concerned are respected, and that appropriate safeguards are established to ensure the enforceability of those rights by the parties concerned.

During the different international forums of competition law specialists, authorities, professionals and academics, there is a constant debate on how antitrust procedures should be adjusted.

In addition, several international organizations have carried out various projects with the aim of improving antitrust procedures. For example, shortly after being formed, the International Competition Network (ICN) launched an important project that allowed the adoption of consensus in “Recommended Practices for Merger Notification and Review Procedures”16 and, more recently, the same ICN adopted the “Guidance on Investigative Process”(ICN Guidance),17 which have just been complemented this year with the “ICN Guiding Principles for Procedural Fairness in Competition Agency Enforcement.”18

Similar initiatives were also carried out by the Organization for Economic Cooperation and Development (OECD),19 the International Chamber of Commerce's Competition

15 Philip Lowe, The Design of Competition Policy Institutions for the 21st Century – The Experience of the European Commission and DG Competition, Competition Policy International (2008). 16 ICN, Recommended Practices for Merger Notification and Review Procedures, http://www.internationalcompetitionnetwork.org/uploads/library/doc588.pdf. 17 ICN, ICN Guidance on Procedural Fairness, http://www.internationalcompetitionnetwork.org/uploads/library/doc1028.pdf. 18 ICN, ICN Guiding Principles for Procedural Fairness in Competition Agency Enforcement, http://www.icn2018delhi.in/images/AEWG-Guiding-Principles-4PF.pdf. 19 OECD, Transparency and Procedural Fairness (2012), http://www.oecd.org/competition/mergers/proceduralfairnessandtransparency-2012.htm.

6 Commission (ICC Competition Commission) 20 and the American Bar Association (ABA), through its International Task Force (ITF), which took note of the issue on its report on best practices for antitrust procedures.21

While new laws and new competition agencies have been emerging, different methods and models of institutions have also been implemented for competition law issues. This offers both opportunities and challenges, since—on the one hand—this diversity allows different processes to be compared, which can help identify those rules, institutions and other mechanisms that allow for greater impartiality, efficiency and precision in the execution of the applicable rules. However, on the other hand, the increase in the variety of systems creates new challenges.

Adopting procedures that promote the impartiality, efficiency and accuracy of antitrust decisions can help achieve basic competition goals. Procedures that allow agencies to obtain and test relevant evidence as well as the legal and economic approaches and analyses that inform their decisions regarding infringement and remedy can enhance significantly the overall quality of enforcement decisions. This facilitates vigorous competition within established legal constraints and ultimately enhances productivity and consumer welfare.

The ICN Guidance states that fair and effective investigative process is essential to sound competition law enforcement; this includes the availability and use of effective agency investigative tools, transparency and engagement with the parties during an investigation, and protection of confidential information. Effective enforcement tools, procedural safeguards, and consistency of process and procedures within an agency contribute to efficient, accurate and predictable enforcement by competition agencies.

The credibility of a competition agency and, more broadly, of the overall mission of competition enforcement are closely tied to the integrity of the agency’s investigative process and public understanding of such process.

While ICN’s Guidance is limited to the investigation phase, ITF’s proposed best practices’ report is divided into five stages of antitrust proceedings: (i) investigation, (ii) asserting contentions of infringement, (iii) assessing such contentions of infringement, (iv) first-instance decisions and (v) review.

ITF’s report also brings a short list of some best practices that are applicable to all phases of antitrust proceedings, such as: (i) officials involved in all steps of an antitrust proceeding should possess sufficient expertise in competition law, economics and/or

20 ICC Competition Commission, Effective Procedural Safeguards in Competition Law Enforcement Proceedings, (June 2017), which complements ICC’s previous Recommended Framework for International Best Practices in Competition Law Enforcement Proceedings (Aug. 2010), http://www.iccwbo.org/Advocacy-Codes-and-Rules/Document-centre/2010/Recommended-framework-for- international-best-practices-in-competition-law-enforcement-proceedings/. 21 ITF, Best Practices for Antitrust Procedure, Report of the ABA Section of Antitrust Law International Task Force, May 22, 2015.

7 other relevant disciplines to enable them to conduct their duties in a disinterested, efficient and accurate fashion, (ii) all rules and practices governing proceedings should be clearly disclosed and made publicly accessible in advance of proceedings, and (iii) officials should provide for an effective system to prevent unnecessary delay at any stage of proceedings.

A similar criteria is adopted by ICC Competition Commission’s policy statement when it states that in order to ensure that agency decisions are objectively grounded in the facts, the agency staff conducting investigations should possess, or have available to it, resources sufficient to understand the nature of the conduct under investigation and the competitive impact of such conduct.

Depending on the subject matter being investigated, agencies should consider the need for expertise in a variety of areas, not only economics, but also technology, industry expertise, and accounting.

b. Institutional Design Models for Effective and Procedurally Fair Systems

The first competition law was passed in Canada, in 1889, followed shortly by the United States, in 1890. At the beginning the expansion was slow, until the Treaty of Rome in 1957, when the European Union established a competition policy. Since then, a steady growth followed, to reach about 130 competition laws worldwide today.

Despite this proliferation, 22 there is no consensus on the optimal structure for an authority. While most competition laws can trace their inspiration back to the United States ( system) or the European Union ( system), laws still widely vary, as do the structure of the authorities created to enforce them, reflecting diverse cultural, legal, and political regimes.

This growing number of competition institutions reflects the need for public institutions to safeguard and promote competition in an economy that is becoming increasingly global.

In order to fulfil their role effectively, as Philip Lowe23 says, these institutions must constantly assess and re-assess their mission, objectives, structures, processes and performance. It is only through realising and adapting to changes in their environment and through carrying out the corresponding improvements that their competences power, budget and ultimately existence can be justified before a wider public.

We concur with Hyman and Kovacic 24 when they consider that matters such as

22 David Evans, Institutional Design for Competition Authorities, COMPETITION POL’Y INTE’L ix (2014). 23 Lowe, supra note 15. 24 David A. Hyman & William E. Kovacic, Institutional Design, Agency Life Cycle, and the Goals of Competition Law, 81 FORDHAM L. REV. 2163 (2013).

8 competition institutions design should play a larger role than they previously have in assessing the performance of those agencies and of antitrust law more broadly. These might not be as glamorous as other substantial matters around antitrust and competition law and policy, but they are as important as those other issues.

Because it is the substantive merits of policy proposals that almost always dominates public debates, not the often invisible, mundane processes of public administration. Even political scientists, who should know better, tend to relegate public administration to a relatively obscure corner of their profession. Whereas the substance of policy design is considered sexy, the process of policy administration is usually seen as, well, boring.25

Competition law assuredly presents fascinating questions of doctrine and high theory, but as Kovacic noted:

to affect policy, theory cannot be suspended in air. If theory is not grounded in the engineering of effective institutions, it will not work in practice. The engineering of policy making involves basic questions of implementation. It is one thing for the policymaking aerodynamicist to conceive a new variety of aircraft. It is another for the policy engineer to design and build it. To have elegant physics without excellent engineering is a formula for policy failure.26

As Professors Fox and Trebilcock27 explain, there shall be no preconceptions of a best model for effective and procedurally fair systems of antitrust enforcement. Fundamental design choices are, to an important extent, a function of a country’s history and legal, political, and economic culture.

But there are some specific shortfalls, common to certain institutional designs, which provide ground to identify other choices that may contribute to improve the performance and sense of legitimacy. We will try now to deal with some of the main specific matters, following the criteria used by Fox and Trebilcock.

Some of the problems traceable to institutional design manifest themselves in due process and institutional performance.

In general terms, we may say that there are mainly three basic models of competition agencies around the globe: (i) the bifurcated judicial model, where the competition authority has to go to court for antitrust enforcement (e.g., US Department of Justice), (ii) the bifurcated agency-tribunal model, where the authority goes to a specialized tribunal for enforcement (e.g., Canada, South Africa and Chile), and (iii) the integrated agency model, where a commission within the agency makes the first-level adjudication (e.g.,

25 Peter H. Schuck, Is a Competent Federal Government Becoming Oxymoronic?, 77 GEO. WASH. L. REV. 973, 975 (2009). 26 William E. Kovacic, The Institutions of Antitrust Law: How Structure Shapes Substance, 110 MICH. L. REV. 1019, 1042–43(2012). 27 ELEANOR M. FOX & MICHAEL J. TREBILCOCK, THE DESIGN OF COMPETITION LAW INSTITUTIONS 4 (2013).

9 EU Commission, US Federal Trade Commission, Argentina, Japan, China, among others).

Fox and Trebilcock say that studies reveal that, where courts are weak, the bifurcated or integrated agency-tribunal models have some significant advantages. On the other hand, where courts are strong, independent, honest, and efficient, the bifurcated judicial model has some significant advantages. Whichever model is chosen, cases go to court, whether immediately or ultimately.

Integrated institutions, such as the EU, US’s FTC, Japan, China and Argentina, raise systematic concerns that the integration of investigation, enforcement, and adjudicative functions create bias or lack of objectivity, or the appearance of it, in the discharge of the adjudicatory functions vested in such agencies. Integration of these functions may render the agencies “judges in their own cause.”

There are avenues by which these concerns can be and have been addressed. For example, Argentina’s New Competition Act, offers separate investigative and enforcement functions from the adjudicative functions through the creation of two separate Secretariats, which shall investigate conducts and concentrations, respectively, and a Tribunal, which shall decide the cases.

Ideally, the decision-maker in a competition agency must be legally independent from the investigator. Without a layer of separation maintaining distance between the investigative and adjudicatory functions, the official that undertakes the investigation is asked to determine whether its efforts have borne product or whether its existence is justified.

As Judge Ginsburg has observed, competition cases brought by an enforcement agency in which the same official(s) direct or authorize the staff to undertake the investigation, direct or authorize the staff to prosecute a case based upon the evidence turned up in that investigation, and then decide whether the evidence is sufficient to show an infringement, might reasonably be thought to have an interest in the outcome; for them to say the evidence is insufficient is to say the entire undertaking was a waste of resources in which they are responsible. The potential of unfairness is self-evident.28

This increases the risk that antitrust authorities may emphasize ends over means, especially where the ends are measured in the aggregate total of yearly fines accruing to the government.29

In the European Union, the officials who investigate a case also determine if a violation has occurred. Ian Forrester has observed that the procedures of the European Commission

28 Douglas H. Ginsburg & Taylor M. Owings, Due Process in Competition Proceedings, 11 COMPETITION L. INT’L 39, 44 (2015). 29 J. Mark Gidley & Maxwell J. Hyman, The Emergence of Due Process following the Growth of International Antitrust Enforcement, CONCURRENCES CONFERENCE ON ANTITRUST IN EMERGING AND DEVELOPING COUNTRIES, NYU (Oct. 2015).

10 in determining guilt or innocence under the competition rules, and in imposing sanctions, manifestly do not correspond to the standards established by the European Convention on Human Rights. The adjudicatory panel is staffed with political appointees who do not attend hearings and do not participate in drafting the order.

Similar issues apply under Argentine current applicable law, although it is expected that this situation will change within the framework of the New Competition Act.

The EU Human Rights Court thus far has upheld the consistency with human rights of systems featuring integrated agencies at least where the system offers robust appellate court review in cases that are not hard-core criminal cases.30

A pending proposal would mandate more thorough rights of review in the European courts. Adversarial models of adjudication may guarantee certain other rights of defence, such as the right to cross-examination of witnesses and the right to a full trial, which inquisitorial systems, common in civil law countries, do not normally offer.31

As for agency performance, we must say that excessive delays, lack of predictability, and lack of consistency in decision-making are weaknesses that agencies must avoid. Same applies to lack of legal and economic expertise and lack of reasoned decision-making, lack of publication of decisions, and lack of independence from political interference at some or all stages.

Finally, as Fox and Trebilcock observed, jurisdictions make many and different trade- offs. The US, in enforcement by the DOJ, generally prefers more expansive rights of defence to more expeditious investigations and prosecution. The EU, in the context of an inquisitorial rather than an adversarial system, strikes a different balance.

c. Judicial Review: Appellate Tribunals and Courts

Right of appeal is one of the universal rights of defence. The courts can undo what the agencies and tribunals have done, for better or for worse32.

Scope of review of fact-finding differs. While some courts have only limited review jurisdiction, such as manifest error, other courts may have an almost unlimited review jurisdiction, with capacity to make a de novo review.

While reversals may sometimes be justified, it is common cause that agency decisions should never be compromised by excessive and unreasonable delay or corruption in the courts. Court ineffectiveness unravels agency effectiveness. In this regard, it is important to stress that where there is a lack of separation between investigation and adjudication, an in-depth review seems more appropriate.

30 See A. Menarini Diagnostics, European Court of Human Rights (Sept. 2011). 31 FOX & TREBILCOCK, supra note 27, at 8. 32 FOX & TREBILCOCK, supra note 27, at 11.

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Appeals may lie either on specialized courts or general courts. While at a first glance specialized courts might seem convenient, reality shows that although specialized courts can add expertise, the may also breed bias. Fox and Trebilcock state that in many jurisdictions, both small and large, few cases reach the specialized tribunals and, consequently, the members of those courts develop virtually no expertise on the job.

In some jurisdictions the defendant has access to nearly endless appeals. This may also go against legal due process, as justice delayed may be justice denied.

IV. Due Process under Argentine Competition Policy and Enforcement

Competition law has constitutional status in Argentina, as Section 42 of its National Constitution establishes that the federal authorities shall provide for “the defense of competition against any kind of market distortions” and “the control of natural and legal monopolies.”

Argentina has had some sort of competition law for almost a century. In 1923, the first anti-monopoly law was enacted following the model of the US Sherman Act. Such law was reformed in 1946. Neither of both had a significant application.

In 1980, the first comprehensive law on competition was introduced through Act 22,262, which created the Argentine Competition Commission (CNDC) and established criminal sanctions.

A significant reform took place in 1999, through Act 25,156, which created an independent Competition Tribunal—which was never put into place—and introduced a merger control system in Argentina.

An unfortunate reform took place in 2014, which abolished the Competition Tribunal and introduced some unreasonable, overdue and improper reforms to Act 25,156.

A change of Government took place in December 2015. Since then, the current Administration has made important efforts in order to fulfil the constitutional mandate that establishes the defence of competition as one of the main bedrocks of the whole economic system.33

In January 2016, the CNDC was given the responsibility of drafting a new bill on competition law, making public its final draft (Bill) in August 2016. During the drafting sessions, various legislators, academics and professionals provided comments and suggestions. The Bill had two main goals in mind: (i) return Argentina to best international practices; and (ii) take into consideration local experiences and poor enforcement of competition rules during the last decade in Argentina.

33 NATIONAL CONSTITUTION, Section 42.

12 Also in August 2016, the CNDC launched a public consultation, both locally and internationally, from which it received valuable comments and proposals that, once reviewed and analysed, allowed the CNDC to improve the Bill.

On 27 September 2016, the Bill was finally submitted to the Congress. The Lower Chamber approved the Bill on 22 November 2017. On 18 April 2018, the Senate approved the Bill. As the Senate included some minor changes, it returned to the Lower Chamber, which finally passed the Bill, enacting the New Competition Act 27,442 on 9 May 2018.

Commissioners of the CNDC participated in many of these discussions, explaining the main changes proposed, both at the Lower Chamber34 and the Senate35.

It is important to stress that the New Competition Act tackles all the recommendations included in the conclusions of OECD’s peer review of Argentine competition law and policy of 200636 as well as those of UNCTAD’s Voluntary Peer Review of 201637.

In a nutshell, the New Competition Act proposes the following main amendments: (i) the creation of an independent authority with sufficient powers to make its own decisions, control its budget, and function without interference from political authorities; (ii) an increase in deterrence for anticompetitive practices, by significantly increasing applicable sanctions; (iii) the creation of a modern and effective leniency program; (iv) the implementation of an ex-ante merger control system; (v) the reinforcement of rules applicable to private damages actions; and (vi) the creation of a specialized Court of Appeals to review decisions of the antitrust authority.38

a. General and Specific Guarantees for Argentine Antitrust Due Process

As mentioned earlier, for a process to satisfy the guarantee of due process, it is necessary that it comply with the inescapable requirement of granting the individuals with the sufficient opportunity to participate with utility and sufficiency in said process.

We consider there are some general or minimum guarantees and some more specific guarantees that may help to ensure due process under Argentine Competition Law.

34 Analizaron el proyecto de ley de Defensa de la Competencia, ÁMBITO (May 30, 2017), http://www.ambito.com/884759-analizaron-el-proyecto-de-ley-de-defensa-de-la-competencia. 35 Pablo Trevisan (@pabstw), TWITTER (Mar. 22, 2018, 10:41 AM), https://twitter.com/pabstw/status/976876577299550210; Pablo Trevisan (@pabstw), TWITTER (Apr. 7, 2018, 6:27 AM), https://twitter.com/pabstw/status/982610742452113408. 36 Country Studies, Argentina – Peer Review of Competition Law and Policy, 43-51 OECD and IADB (2006). 37 Luis Berenguer, Voluntary Peer Review of Competition Law and Policy – Argentina, UNCTAD 28, 2017. 38 The text of the Bill can be found on the CNDC’s website, https://www.argentina.gob.ar/defensadelacompetencia.

13 i. General Guarantees

Let us now analyse the two minimum guarantees, such as the right to an impartial process and the right to a speedy process.

1. Right to an Impartial Process

The right to an impartial process is one of the main guarantees of due process39. This imposes on the authority the scrupulous respect of the contradiction in the instructional activity, and the strict observance of the duty to motivate its decisions, through careful analysis of the evidence produced and the indication of the reasons for their conviction about the facts.

The treaties and conventions mentioned above in this paper point out the importance of the process as a guarantee to sustain and argue rights. This process must meet at least two essential principles: to promote the effectiveness of the jurisdictional service through an unrestricted process and to ensure that the prosecution arrives in due time.

2. Right to a Speedy Process

The right to a speedy process refers to establishing a reasonable time, appropriate to the circumstances of each conflict, but always associated with the principle of procedural economy and effectiveness of the institution.

Accordingly, the obligation of celerity is assumed both as a duty of the jurisdiction, as well as a power of the justiciable. In short, the result of a process must be pronounced within a period of time compatible with the nature of the litigious object; otherwise, the judicial protection would be illusory, making certain aphorism that says "unjust the sentence that judges when it should no longer judge".

ii. Specific Guarantees

1. Standing

The right of access implies both the right to access without restrictions and the right to a useful process, therefore, we think about resolving the controversy in a fair process, that does not have sterile rejections supported by ritual provisions, or that procedural norms act on purely formal operations40.

There is also a new right here: that the action initiated does not only have the effects of initial movement, but that it moves and is projected to all the instances that lead to the

39 Osvaldo A. Gozaíni, El Debido Proceso Constitucional. Reglas para el Control de los Poderes desde la Magistratura Constitucional, Cuestiones Constitucionales, Nbr. 7, (Jul-Dec 2002), 60–75, UNAM, City of Mexico, Mexico. 40 Id. at 76.

14 sentence: this is the sense of the right to the process, or of effective judicial protection that proclaim other fundamental norms41.

Argentina, after the reform of its National Constitution in 1994, adopted the same philosophy, based on the rights and guarantees established in Sections 36 to 43, and especially, through the right of protection (i.e., right of “amparo”).

What distinguishes our right to defence through this guarantee, the right to an "effective judicial protection" recognized by Spanish law (Section 24, Spanish Constitution), Italian constitutional law (Section 24, Italian Constitution) or the Basic Law of Bonn (Section 19.4, German Constitution), comes from a natural fact such as the absence of a specific body for constitutional control as they have in these countries, in such a way that the Argentine norm thinks more about ensuring a quick and safe type of response to the crisis of rights, rather than to safeguard the internal supremacy of the fundamental construction.

After a minimum accreditation of the interest to be protected, this right (or procedural guarantee) allows the interested party, to open a process that facilitates the discussion of the conflict, preventing any chances of taking decisions without the possibility of having heard such process.

2. Right to Proof

Accompanying the proof in its mission to verify and clarify to arrive at the truth, there is a constitutional right to proof. Because of its essential nature, based on the right to due process (since it is a vital part of exercising the right of defence), it raises its premises on the solemnities of the procedure to consecrate a “right to evidence”.

The right to proof is a part of due process, as underlined by the jurisprudence of the CSJN. It is important to abandon the idea of the proof as an act of the process, to included within the guarantees of the right of defence and, as such, a reassurance of the adjective due process.

3. Right of Appeal

The right of appeal implies the access to an instance review that opens a new stage in the process, by which the sentence can be modified or revoked.

The aggrieved party (that is, the party that has received with the sentence substantially less of what it claimed) can challenge it and reopen the contradictory, to the extent that the procedural order allows it.

Since the San José Pact of Costa Rica,42 and more specifically since the reform of Argentina’s National Constitution of 1994, the right to appeal the ruling before a judge or higher court has been reinforced in Argentina.

41 SPANISH CONSTITUTION, Sect. 24.

15

The right to appeal is a projection of the principle of procedural equality, from which the bilateralism and contradiction necessary for the balance in the debate begin. Obviously, giving the parties equal possibilities and charges of allegation, evidence and challenge solves any instability.

4. Institutional Design

The mere existence of an antitrust regime does not ensure effective application of antitrust policy43 (i.e., application of antitrust law as a means to promote efficiency and consumer welfare).

First of all, it should be clarified that the jurisdictional activity of the administration, as held by the CSJN,44 is one in which the organs or officials of the Administration exercise judicial powers, which, in the normal order of the institutions, would correspond to the judges of the Judicial Power.

In the issuance of jurisdictional acts, the judicial body uses the process, while the administrative body uses the procedure, with the obvious basic differences between these types of actions.

In this regard, regarding the jurisdictional content of the administrative act, it should be remembered that the CSJN admitted the action of “administrative bodies” with “jurisdictional powers”, after establishing with particular emphasis that the validity of the proceedings of said bodies was subject to the requirement that the relevant laws “leave expedited the subsequent judicial instance”,45 thus avoiding the objection that may arise from Section 109 of the National Constitution. The appropriate means to obtain that the respective judicial organ review the resolution of the administrative jurisdictional body, is the appeal.

Argentine competition institutional design requires total reengineering, since the national competition authority has continuously lacked of certain basic attributes.

As previously mentioned, Argentina has a long tradition of antitrust legislation, although it has a long debt related with the vigorous enforcement of its policies. One of the main causes of this situation is due to the lack of impartiality and independence of its authority.

Integrated institutions, such as the Argentine case, raise concerns that the integration of investigation, enforcement, and adjudicative functions may create bias or lack of

42 See Sect. 8.2 h) of the San José Pact of Costa Rica. 43 Michal Gal, The Ecology of Antitrust – Preconditions for Competition Law Enforcement in Developing Countries, in COMPETITION, COMPETITIVENESS AND DEVELPMENT 20–58, 21 (UNCTAD, 2004). 44 Fallos, T. 248, pp. 516-518, in re “Martín Aberg Cobo”, among others. 45 Fallos, T. 247, pp. 646 y ss., par. 17, in re “Elena Fernández Arias y otros c/José Poggio”.

16 objectivity, or the appearance of it, in the discharge of the adjudicatory functions vested in such agencies.

When we refer to an independent authority, we mean an authority with greater autonomy of the central power, own budget, stability of its members−who must be eminently technical and suitable for the position−and, definitely, with sufficient powers and essential capabilities that allow it to combat anticompetitive conducts and to promote the benefits of free competition.

The proposed institutional system is one of the main innovations of the New Competition Act, as UNCTAD’s Voluntary Peer Review of 2016 stated recently. 46 The New Competition Act creates the National Competition Authority (NCA), which is expected to replace the current authority (i.e., CNDC and Secretary of Commerce) soon.

The NCA will be formed by two Secretariats, one for conducts and one for concentrations, who will investigate the cases, and the Tribunal for the Defence of Competition, as a collegiate decision-making body. Through this institutional design, a clear separation of the investigative and enforcement functions from the adjudicative functions is guaranteed, tackling also one of the main criticisms the current applicable framework presents.

The system by which the members of the NCA must be elected is transparent and contains all necessary elements to preclude the possibility of arbitrary appointments or appointments of members that may be considered to be accommodating to political power.

The New Competition Act also proposes the creation of a System of Competition Promotion, within the area of the Executive Power that shall contribute with the NCA in the enforcement of competition rules. The authors of the New Competition Act took special attention to the Strategic Steer that supports the Competition and Markets Authority (CMA) of the United Kingdom, while drafting the characteristics and objectives of having the System of Competition Promotion as part of the proposed institutional framework for Argentina.

We consider that the institutional design created by the New Competition addresses all nine choices proposed under Kovacic and Hyman’s “menu” on the implementation of competition agency.47

b. Judicial Review

Competition Agencies’ decisions around the world are subject to judicial control. Judges’

46 Berenguer, supra note 37.

47 William E. Kovacic & Hyman, David A., Competition Agengy Design: What’s on the Menu?, GW LAW FACULTY PUBLICATIONS AND OTHER WORKS, Paper 628 (2012).

17 degree of specialization in economic matters is a key element towards an optimal system of competition enforcement in every country.

In Argentina, the relationship between the Competition Authority48 and the power has always been under debate. Since the enactment of Act 25,156 in 1999, jurisprudence has been ambiguous and contradictory. This circumstance has led to an unclear legal structure in which the private sector cannot foresee the branch of the judiciary that shall analyse a case, which results in a lack of predictability when considering which court of appeals shall understand on competition matters.

Under Act 25,156, the relationship between the Courts and the Competition Authority worked as a very illustrative example of the uncertainty referred above, and it has a direct linkage to the appeals matter. Over the last two decades, the discussion has focused on whether the Federal Court of Appeals on Civil and Commercial Matters or the Criminal Court of Appeals on Economic Matters shall intervene as an appeals court in antitrust issues. Since then, both judicial bodies have issued resolutions on matters arising from Act 25,156.

Argentina is a federal country and, consequently, provincial and federal courts coexist. Therefore, defining the court that has jurisdiction on appeals against resolutions from the Competition Authority has been beyond the scope of Act 25,156 and this was tackled with certain provisions of the organization of the Judiciary and the National Constitution.

During the following lines, we will explore the interaction between the Competition Authority and the judicial Courts in Argentina during the last 35 years, and the future challenges faced towards the enactment of the New Competition Act, which pretends to bring light to the subject matter49.

c. 1980’s Act 22,262

Antitrust legislation in Argentina has been in force since the beginning of the 20th century50. One of the landmark steps towards the development of antitrust practice in Argentina was the enactment of Act 22,262 in 1980. This Act, which mimicked some European concepts of competition law in the Treaty of Rome, created the CNDC and made violations of competition law a criminal offense that would be tried before a criminal court.

48 Under the former system of Act 25,156 and pursuant to Decree 718/2016, the Secretary of Commerce of the Ministry of Production acted as the enforcement authority of Argentine Competition Act 25,156, while the CNDC was a technical body under the purview of the Secretary of Commerce of the Ministry of Production. Since the enactment of the New Competition Act and until the new NCA is finally put in place and operational, the competition authority will follow the same previous scheme (i.e., CNDC and Secretary of Commerce). 49 OECD, Independence of Competition Authorities - Contribution from Argentina, OECD GLOBAL FORUM ON COMPETITION, 1–2 (Dec. 2016). 50 As mentioned earlier in this paper, Argentina’s first competition law was enacted in 1923.

18 While having criminal sanctions, the jurisdiction of the criminal courts in the events of violation of antitrust laws was not questioned. In that sense, Act 22,262 stipulated that the Criminal Court of Appeals on Economic Matters shall have jurisdiction to decide in antitrust matters in the City of Buenos Aires as well as Federal Judges in the provinces, depending on the place where the offence was committed.51

i. The regime established by Act 25,156 in 1999

Act 25,156, enacted in 1999, in addition to other reforms, eliminated criminal charges among the sanctions for violation of the law and consequently replaced the court which shall review the decisions rendered by the Competition Authority.

Under Section 53, Act 25,156 established that appeals to the decisions held by the Competition Tribunal, should be filed before the same body, which within five days after the file of such recourse should raise it before the Federal Court of Appeals for Civil and Commercial Matters or before the corresponding Federal Chamber of a given province of the country52.

ii. The enactment of Act 26,993 in 2014

Act 26,993, enacted in September 2014, modified certain aspects of Act 25,156. Among others, Act 26,993 eliminated the Competition Tribunal as the Competition Authority, although such Tribunal we never put in place since its creation in 1999.

Instead of establishing another Competition Authority to replace the abolished Competition Tribunal, Act 26,993 empowered the Executive to determine the competition law enforcement authority and established that all provisions referring to the TDC shall be understood as referring to such enforcement authority.

Said Act, also modified Section 53, stipulating that the appeal to the decisions held by the Competition Authority should be filed before the same body, within ten days after the file of the appeal, and the Competition Authority shall raise it before the National Court of Appeals in Consumer Relations Matters or before the “Competent Court of Appeals”.

Act 26,993, Section 41, created the National Court of Appeals in Consumer Relations Matters. However, said Court of Appeals has not been put in place yet. As a consequence, pursuant to Section 76 of Act 26,993, until said Court of Appeals is appointed, the relevant Courts currently dealing with the subject matter shall exercise the jurisdiction conferred to the National Court of Appeals in Consumer Relations Matters. This created some additional confusion both to the Competition Authority and the parties involved in the administrative procedures, as a third potential court, the National Court of

51 Sect. 34, Act 22,262. 52 This was afterwards regulated and further clarified by some specific Decrees such as 1019/99 and 89/2001.

19 Appeals in Administrative Matters, was considered to have jurisdiction to deal with competition and antitrust matters.

iii. Judicial Precedents

The CSJN intervened in several occasions, trying to put an end to the jurisdictional concern and to determine which court shall intervene on antitrust related matters on appeals.

In re Imagen Satelital S.A,53 the CSJN named the Criminal Court in Economic Matters as having jurisdiction to decide the matters concerning the case, thus maintaining the guidelines set forth by Act 22,262. The position of the CSJN was that a correct interpretation of Decree 1019/99 indicated that its intention was to maintain the competition assigned by Act 22,262 to the Criminal Court in Economic Matters.54

When deciding on case Surcor TV SA c/Multicanal SA,55 the CSJN followed the wording of Section 53 of Act 25,156 (prior to its reform by Act 26,993), and determined that the ruling framework envisaged an appeal “before the respective Federal Chamber.” While deciding on said case, the CSJN recalled a principle that stipulates that whenever laws establish jurisdiction to a particular court in certain matters, they indicate the specialization given by the legal order, which constitutes a relevant circumstance to take into account when there are no legal provisions imposing a different attribution of powers.

Under the Repsol YPF56 case, the CSJN named again the Criminal Court in Economic Matters as having jurisdiction to decide the matters concerning the case. In this case, the CSJN agreed with the opinion issued by the before the Supreme Court of Justice, who considered that the question was similar to the one treated under the case Imagen Satelital, and said that Section 53 of Act 25,156 provided for appeal before the corresponding Federal Court.

However, scholars and practitioners interpreted that this decision gave jurisdiction to the Criminal Court on Economic Matters only on those cases that were not included on Sections 3557 and 5258 of the Act 25,156, being the Federal Court of Appeals on Civil and

53 CSJN, Imagen Satelital SA, 09/14/2000 (Fallos 323:2577). 54 Petre, Carlos A., Tribunal de alzada en la Defensa de la Competencia. Una polémica abierta, La Ley, 2009-D, 1997. 55 CSJN, Surcor TV SA c/Multicanal, 05/07/2002 (Fallos 325:957). 56 CSJN, Repsol YPF Envasado en la Ciudad de San Nicolás s/ Recurso de queja, 03/21/2006 (Fallos 329:860). 57 Sect. 35 of Act 25,156 stipulates: The Court at any stage of the proceedings, is empowered to impose the compliance of the conditions it establishes or order cessation or abstention of the damaging behavior. When serious damage could be caused to the competition regime the court shall be able to order the measures which were suitable according to the circumstances to prevent the damage. An appeal can be lodged against this resolution with returning effect, in the form and terms provided by sections 52 and 53. In the same way it shall be able to order, on the court´s own motion or upon request of the party, the suspension,

20 Commercial Matters competent on appeals against resolutions included under said Sections of Act 25,156.59

Finally, under Multicanal SA y otro60, the CSJN assigned jurisdiction to a Federal Chamber of Appeals of the province with subject matter jurisdiction. The jurisdiction matter was solved taking into account the geographic market affected by the conducts under investigation, where said conduct had prima facie anticompetitive effects. The CSJN agreed with the opinion issued by the Prosecutor Before the Supreme Court of Justice saying that Section 53, as enacted by Decree 89/2001, established that the Federal Court on Civil and Commercial Matters on the City of Buenos Aires, and the corresponding Federal Chamber in the interior of the country, shall understand on the appeals filed against antitrust enforcement authority decisions.

As previously mentioned, in 2014 Act 26,993 introduced several amendments to Act 25,156, including certain amendments on the appeal process of the decisions issued by the Competition Authority.

In 2014, after said amendments became into force, under case Clariant Participations LTD y otros61, the CNDC raised an appeal before the Federal Administrative Court of Appeals, which decided it had no jurisdiction on antitrust matters and forwarded the case to the Federal Court of Appeals on Civil and Commercial Matters. This was the first case after the enactment of Act 26,993, where judges dealt with jurisdictional matters regarding antitrust cases. This case was appealed to the CSJN, which decided not to analyse the case, thus confirming this criteria.

As seen, applicable laws have not provided absolute certainty as to which courts have competent jurisdiction to review antitrust cases. Likewise, the case law developed at the CSJN, although providing some clarity with its decisions, is yet to provide a clear-cut indication as to which court shall be entrusted with full powers to undertake judicial review on appeals of the decisions of the Competition Authority. iv. Future Changes - Competition Bill

The current status of the matter requires to address the issue bearing in mind which courts could be more suitable to handle antitrust cases based on the complexity and principles of economic and legal analysis that governed under Act 25,156. modification or reversal of the measures provided by virtue of occurring circumstances or which could not be known at the moment of their adoption. 58 Sect. 52 of Act 25,156(1999) stipulated: “. . . . Resolutions pronounced by the Tribunal on the following matters shall be subject to appeal a) application of fines; b) cessation or abstention of a practice; c) opposition or conditioning regarding acts provided in Chapter III; d) dismissal of the complaint by the Tribunal for the Defense of Competition. . . . .” 59 Cervio, Guillermo and Rópolo, Esteban, Ley 25.156 de Defensa de la Competencia: Comentada y Anotada, 1 Ed., Buenos Aires, La Ley, 2010. 60 CSJN, Multicanal SA y otro s/Denuncia Infracción Ley 22,262, 04/10/2007” (Fallos 330:1610). 61 CCivyComFed, Clariant Participations LTD y otros c/Defensa de la Competencia s/ Apelación Resolución CNDC, Causa 25.240/15/CA2, 2016

21

As mentioned above, during 2016 the CNDC proposed the Bill, which was designed aiming at achieving antitrust international best practices as well as OECD’s recommendations, together with Argentine experience and reality on competition policy and enforcement.

Following that premise the New Competition Act established the creation of a specialized court, the Court of Appeals on Competition Matters (“CAC”) with jurisdiction on antitrust controversies.

The creation of a specialized appellate body on competition matters provides a solution to the jurisdictional issue discussed above, intending to provide certainty to the relationship between the Competition Authority and the Judiciary.

Additionally, it is expected to lead to greater efficiency in the decision-making process as competition cases involve different disciplines, requiring legal and economic expertise to properly analyse existing evidence in any given case.

In addition, the establishment of a single Court, specialized in reviewing competition cases, will minimize the potential different interpretations and will avoid contradictory decisions. At the same time, it will improve the predictability of the Court for the benefit of the economic agents.

It is still too soon to reach final conclusions, as it is yet to be seen if this specialized court, once put in place, would receive sufficient cases to review and create specialization on the Judges of said court.

V. Conclusions

Throughout this paper, we have analysed the right to due process as one of the fundamental guarantees on which the entire system of protection of human rights is built, through which the limits of state power are framed.

We have also examined the specific reasons why due process plays a key role on competition enforcement proceedings. As we have observed, competition authorities shall operate within a framework that ensures that fundamental due process rights of the parties concerned are respected.

In this regard, when assessing the performance of authorities as well as of general antitrust law policy and enforcement in a specific country or region, the level in which due process is respected is fundamental.

Argentina is no exception to this rule. These will be the most daunting challenges that the authority and the courts will have to watch out for during the next years to come.

22 We hope the enactment of the New Competition Act, as well as the recent improvements introduced under a rejuvenated enforcement, would provide the final launch of a vigorous enforcement and long term antitrust policy in Argentina, which shall show a definitive respect to the right of due process.

23