PACX South America S.A. presented an inquiry regarding the legitimacy of its decision of not selling its product “Alfalfa Cubes” to Compañía Agropecuaria Copeval S.A., a distributor of agricultural inputs, because the latter will, in the short run, become a competitor in the production of food for equines.
The Competition Tribunal stated that, in order to consider refusal to sell as a contrary to free competition conduct, three circumstances must concur: i) the capacity of a firm to participate in the market must be significantly hindered, because of the impossibility of obtaining necessary inputs in normal economic conditions; ii) said impossibility must be caused by insufficient competition between providers of the input, so that refusal to sell is feasible, and iii) the affected party must be willing to accept the usual commercial conditions that the provider established.
The Tribunal stated that, in this case, the first and second requisites do not concur; therefore it declared that PACX South America S.A. is under no obligation to sell the referred product to Compañía Agropecuaria Copeval S.A. or its related firms. This, since this conduct does not affect substantially Copeval’s activity, its effects are limited in time and, consequently, does not hinder free competition in the market of food for equines significantly.