A landmark reversal on consumer class actions
Argentina's highest court has annulled a ruling that held the state-controlled oil company YPF liable for allegedly excessive prices on liquefied petroleum gas sold between 1993 and 1999, and it dismissed the collective claim brought by the Unión de Usuarios y Consumidores. The justices found that the consumer group had not described the affected buyers with enough precision, and that it was impossible to establish that every one of them had suffered an identical loss, given the many intermediaries involved in selling the product. The original complaint argued that YPF had exploited its dominant position in the domestic market to set prices that were both excessive and discriminatory.[S1]
A federal appeals court in La Plata had partly upheld the claim, recognizing damages exceeding 173 million pesos for the 1993-1997 and 1997-1999 periods. The Supreme Court concluded instead that the case did not meet the conditions required to proceed as a collective action. It granted YPF's extraordinary appeal, set aside the appeals court's judgment and rejected the claim outright.[S1][S2]
Why the court found the consumer class too vague
The decisive issue was the absence of a concrete definition of the universe of consumers said to have been harmed. The association had maintained that it spoke for a very large number of users across the country, for whom organizing individually to recover overpayments would have been extremely difficult. The court found that description inadequate, recalling that a collective action can only proceed when the group being represented is identified with precision.[S1]
The opinion of the federal prosecutor's office, whose reasoning the justices adopted, held that the loose wording of the complaint made it impossible to identify the affected group or class and therefore to establish what common effects the alleged conduct had produced. It also observed that the consumer universe being claimed was excessively broad and heterogeneous, since it covered people who may have bought the gas from retailers anywhere in the country over a six-year span. Determining who belongs to the collective, the opinion added, is what establishes who is bound by the proceedings and by the judgment.[S1][S2]
Understand this article deeper
The role of intermediaries in the sales chain
The court also examined how the product reached buyers. YPF did not sell LPG directly to end users; it sold into the wholesale market, after which bottlers, distributors, retailers and service stations entered the chain. In the tribunal's view, that structure made it impossible to conclude that every consumer had absorbed the same economic impact from the prices set by the oil company. The prosecutor's opinion stated that the differing sales strategies each intermediary may have adopted ruled out any finding that the conduct attributed to the defendant had identical consequences for all the consumers the suit sought to represent.[S1]
The opinion further noted that buyers had purchased the product on different dates and at different points of sale, and that YPF was not the only supplier of LPG in the domestic wholesale market. Those circumstances, it concluded, cast doubt on the existence of the so-called homogeneous individual interests, one of the requirements for this kind of proceeding. The ruling does not deny that consumer associations may bring collective actions to defend economic rights, and it recalled that the court has recognized that standing in earlier cases, including Halabi and PADEC. But it stressed that this does not relieve such groups of showing that an identifiable class exists and that its members share a common injury.[S1]
On those grounds the court found there was no minimum certainty of a shared harm that would justify resolving the claim through a single collective suit. The judgment was signed by justices Horacio Rosatti, Ricardo Lorenzetti, Rocío Alcalá, Richard Gallego and Aníbal Pineda. It set aside the La Plata federal appeals court's decision and dismissed the claim in full.[S1][S2]
