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The Bariloche Nightclubs Cartel: Has Leniency Finally Arrived in Argentina?

Miguel del Pino and Santiago Del Rio

The Bariloche Nightclubs Cartel: Has Leniency Finally Arrived in Argentina?
Yana Iskayeva via Getty Images

The enforcement of a leniency program has been long overdue in Argentina. While the leniency program was first set out in the current Antitrust Law enacted in May 2018 (which follows international standards with a full and partial reduction of the fine based on a run-to-the-door system), there have been no cases which make a reference to leniency applicants or reductions in sanctions generated by the program.

This has now changed, arising from the unlikeliest of places: the dance clubs of the Bariloche ski resort city located in the Argentine Patagonia.

The Bariloche Nightclubs Cartel investigation began in 2018 following a complaint by the managing partner of Powerlink, a company dedicated to organising shows and meetings of an artistic and cultural nature in the establishment called “Puerto Rock Bariloche” and which, for student tourists visiting the city of Bariloche, organises the so-called “welcome party” and other parties aimed at this public. The companies investigated, Alliance and Grisú, offer discotheque services in the city of Bariloche and, specifically, offer this type of service to tourist agencies that market student travel packages for high school leavers throughout the country.

The investigated companies established an agreement for the joint price fixing of tickets in their discotheques issuing a single price, periodically sent to the tourist agencies, including the percentage increase. Though in some cases there were negotiations with the tourist agencies regarding price and payment conditions, these were based on the single price list. Likewise, a market-division agreement by time slot was verified between the companies denounced and the complainant, Powerlink. This agreement was implemented by means of a “Memorandum of Understanding” in force from 2004 to 2017 which was signed by both the defendants as well as the claimant. The market division scheme was based on two-time phases: the “Pre-Dancing” segment, from 5 p.m. to midnight, and the “Night Club” segment from midnight onwards.

The distribution of the market was organised as follows, the company Powerlink in the “Pre-Dancing” segment, offering the “welcome party” and other parties, and the companies Alliance and Grisú, in the “Night Club” segment, offering discotheque services in their dance establishments. Distribution of clients was corroborated so that, throughout the duration of the graduation trip, the students would attend at least one night at each discotheque (the “Night Club” segment), and to the parties provided in the “Pre-Dancing” segment.

These concerted practices generated a clear prejudice directly to student tourism agencies at a national level and indirectly to the students who ultimately choose the city of Bariloche as a destination for graduation trips. Indeed, these practices allowed the companies to charge higher prices allowing a better bargaining position with the tourist agencies and preventing final consumers from purchasing a different number of nights in discotheques than those established by the investigated firms.

Although the original claimant Powerlink was found responsible with Alliance and Grisú, the Commission considered that had the Memorandum not been signed, Powerlink would have been excluded not only from the “Night Club” segment, but also from the “Pre-Dancing” segment because of the coercion exercised by the dominant companies in the market.

In particular, the Commission referred to the leniency program and the power of penalty graduation established in Section 56 of Antitrust Law as “tools aimed at combating cartelization, encouraging the parties involved in the collusion to break the links between them and to provide sufficient evidence for its detection.”

Based on the above, the Commission decided to exempt Powerlink from fine imposition carrying out a first application of the leniency program while the remainder of the participants were fined.

This article was prepared by the Antitrust Law Section's Corporate Counseling Committee.