The Private Competition Enforcement Review: Argentina
Overview of recent private antitrust litigation activity
On 30 November 2020, a new bill for the amendment of certain sections of the Antitrust Law2 was included within the set of bills to be addressed by the Argentine National Congress. On 4 February 2021, the Senate approved the bill with several modifications. However, the bill must still be approved by the House of Representatives. The proposed bill includes several relevant changes to the structure of the National Competition Authority as well as to both the merger control and anticompetitive conduct regimes.
One of the key amendments proposed by the bill is the elimination of the procedure for the appointment of members of the National Competition Authority. The proposal establishes that these members will be appointed by the Executive Power, with the prior recommendation of the Ministry of Productive Development. It also states that the latter will act under the scope of the Secretary of Domestic Trade. Moreover, when approving the bill, the Senate included certain requirements that members of the National Competition Authority have to meet to hold office.
In terms of the merger control system, the most significant change the bill proposes is to expedite the entry into force of the suspensive regime in Argentina. The new bill establishes that the pre-closing system for the notification of economic concentrations will become effective 90 days after its publication in the Official Gazette. Also, the Senate eliminates the possibility of tacit approval of transactions after the deadline has passed without a decision by the authority.
In relation to the anticompetitive conduct regime, the bill proposes to eliminate Section 29 of the current Antitrust Law, which enables the Antitrust Tribunal to grant authorisation for the execution of agreements that may be considered as restrictive to competition if they are not detrimental to the general economic interest.
With regard to sanctions, the Senate version establishes that resolutions applying sanctions must contain a mandatory order to be published through all mass dissemination channels (the press, radio, TV).
Finally, the Senate version eliminates the leniency programme as well as the settlement process. Both these changes would significantly impact the manner in which investigations are conducted in Argentina.
General introduction to the legislative framework for private antitrust enforcement
Private competition enforcement in Argentina is based on the general tort law provisions of the Argentine Civil and Commercial Code in combination with the specific competition law provisions set out by the Antitrust Law.
Pursuant to Section 1 of the Antitrust Law, certain acts relating to the production and exchange of goods and services are prohibited if they restrict, falsify or distort competition, or if they constitute an abuse of dominant position, and provided that, in either case, they cause or may cause harm to the general economic interest. This behaviour or conduct is not unlawful as such, and nor must it cause actual damage: it is sufficient that the conduct is likely to cause harm to the general economic interest.
Likewise, Section 2 of the Antitrust Law sets out that certain collusive conduct is considered anticompetitive per se and harmful to the general economic interest without further analysis.
Section 3 of the Antitrust Law provides a non-exhaustive list of the practices that, provided they meet the requirements set forth under Article 1, would be forbidden by the Antitrust Law, including:
- price-fixing or resale price maintenance;
- practices that restrict or control technical development or the production of goods and services;
- practices that establish minimum quantities or the horizontal allocation of zones, markets, customers or sources of supply;
- exclusion or obstruction of one or more competitors from entering a market;
- practices that affect goods and services markets through agreements to limit or control the investigation or development of new technologies, or goods production or the provision of services; or practices that hamper investment into the production of goods or the provision of services;
- conditions that tie the sale of goods to the purchase of other goods or to the use of a service, and conditions that tie the provision of a service to the use of another service or the purchase of goods;
- conditions that tie a purchase or sale to an undertaking not to use, purchase, sell or supply goods or services produced, processed, distributed or commercially exploited by third parties;
- imposition of discriminatory conditions for the purchase or sale of goods or services not based upon existing commercial practices;
- unwarranted refusal to fulfil purchase or sale orders of goods or services submitted in existing market conditions;
- suspension of the provision of a dominant monopolistic service in the market to a provider of public services or services that are of public interest;
- predatory pricing; and
- the simultaneous participation of a person in relevant management positions in two or more companies that are competitors.
Pursuant to Section 62 of the Antitrust Law, any individual or legal entity suffering damage from any conduct or act prohibited under the Antitrust Law has the right to file a private action for damages in accordance with the civil law provisions.
Damages can be requested pursuant to Article 1716 of the Civil and Commercial Code, which states that a violation of the duty of not causing damage to another person gives rise to compensation for such damage.
In relation to the applicable statute of limitations, the Antitrust Law sets out that the prescription term of five years applies, commencing from the generation of the harm itself. For cases of ongoing conduct, the term is deemed to commence as of the moment the anticompetitive conduct under analysis concludes.
Regarding damages, the Antitrust Law sets out a three-year term that commences on the date the conduct takes place or finishes, or when the victim becomes aware or could reasonably have become aware of the conduct; or a two-year term from the issuance of the antitrust authority's condemnatory resolution.
In addition, the Antitrust Law determines that the action's limitation period will be interrupted by:
- the filing of the claim;
- the performance of another action sanctioned by the Antitrust Law;
- the submission of a request for the application of the leniency programme or a reduction of the fine;
- the transfer of the claim regarding the performance of anticompetitive conduct; or
- indictment for anticompetitive conduct.
Furthermore, the action's limitation period will be suspended once the antitrust authority initiates the investigation or the procedure to determine the existence of an anticompetitive conduct and will remain so until a final decision of the antitrust authority is confirmed by the courts.
One of the most important changes introduced by the Antitrust Law was the chapter devoted to damages.
Section 63 of the Antitrust Law sets out that once a resolution is issued by the antitrust authority, follow-on damages litigation will be carried out by means of an executive summary proceeding and that the court will base its decision on the antitrust authority's decision. In addition to damages, Section 64 sets out that a civil fine in favour of the injured party may also be granted. Where more than one person or company has carried out the action, they will all be jointly liable for the payment of the damages or fines, as per Section 65.
Likewise, the Antitrust Commission issued Guidelines for the Analysis of Cases of Exclusionary Abuse of Dominance in 2019. These relate only to unilateral exclusionary abuses of dominance, the most frequent ones, with the aim of providing guidelines for what may be considered as infringement of the Antitrust Law.
The Antitrust Commission held that there were preliminary indications that Facebook holds a dominant position in those markets through its social networks Facebook, Instagram and WhatsApp. If the exchange of user information was verified, a user database would be created with a level of detail that could not be replicated by other companies, giving rise to potential exclusionary and exploitative conduct. Thus, the Antitrust Commission adopted an interim injunction under the terms of Section 44 of the Antitrust Law to order Facebook's Argentinian subsidiary, which provides messaging services through the WhatsApp application, to refrain from implementing the update of the terms of service for a period of 180 days or until the completion of the investigation in the present case, whichever is earlier. At the time of writing, the investigation is ongoing.
In another case decided in August 2021, the Antitrust Commission imposed a fine of 150 million pesos and a series of corrective measures on the biggest beer manufacturer in Argentina, Quilmes, as a result of a complaint filed by competitors CICSA and CCU in 2016 for alleged violation of the former4 Antitrust Law.5 In their submissions, CICSA and CCU denounced an abuse of dominant position of an exclusive nature in the Argentine beer market, executed by Quilmes, which would manifest itself through exclusivity agreements, advertising and discounts or rewards under the condition of offering the public only its own products, and indicated that the conduct was prevalent across the country.
Thus, in addition to the fine, the Commission ordered that: (1) Quilmes must not enter into any commercial agreement that has the object or effect of generating vertical restrictions on marketing channels; (2) Quilmes must maintain a marketing strategy for its beer brands independently from the rest of the beverages it distributes; (3) the exclusive advertising and promotion agreements for Quilmes' beer brands must comply with various conditions; and (4) Quilmes must communicate the new marketing conditions – in a reliable and unequivocal manner – to all outlets with which it has formal or informal agreements.
In 2019, the Antitrust Commission also initiated a series of high-profile investigations involving different companies. Among these is the Notebook case, a scandal that was unveiled during 2018 and entailed an organised corruption scheme that included the delivery of bribes to several people.
An investigation was initiated against 52 construction companies and two chambers for allegedly committing anticompetitive conduct by entering into and coordinating public bids related to public works between 2005 and 2015. In June 2021, the Antitrust Commission started summary proceedings after the involved companies and professional associations had provided their explanations. The Antitrust Commission did not consider the explanations satisfactory and decided to continue with the procedure, deepening the investigation.
After the health emergency was declared following the covid-19 outbreak in Argentina, the Executive Power mandated the maximum prices for over 2,300 food and personal health products. This Resolution6 was in force until June 2021. In October 2021, the Executive Power issued a new Resolution7 setting maximum prices for 1,432 food, cleaning and hygiene and personal health products until 7 January 2022.
In several markets in which prices were increased beyond these established maximum prices (such as the medical liquid oxygen,8 beef,9 pharmaceuticals markets10 and basic materials used in the manufacture of packaging for the distribution of industrial mass consumption products, such as, aluminium, cardboard, glass and Tetra Brik),11 the Secretary of Domestic Trade ordered the Antitrust Commission to initiate market investigations into whether the increases were the result of illegal practices and possible infractions of the Antitrust Law. The Antitrust Commission has not yet issued any public decisions in this regard.
Pursuant to Section 4 of the Antitrust Law, all of its provisions are applicable to all individuals and entities that carry out business activities within Argentina, and those carrying out business activities abroad to the extent that their acts, activities or agreements may affect the Argentine market (the effects theory).
While there are no specific precedents regarding extraterritorial private antitrust litigation, analysis of the effects in merger control cases could be used as a guideline.
In that regard, the Antitrust Commission has established a special test to measure the effects that the parties to a foreign-to-foreign transaction have in Argentina. This test may be applied only if the parties involved in the foreign-to-foreign transaction have sales or imports into Argentina. According to this test, the effects in the local market of a foreign-to-foreign transaction must be substantial, normal and regular, but there is no precise rule to determine such matter. The Antitrust Commission has decided several cases12 based on the market participation of the products imported by the parties of a foreign-to-foreign transaction, and the regularity of the imports over a certain period of time (the immediately preceding three years). The effects have been considered substantial if the exports into Argentina represent a significant percentage of the total relevant market in Argentina of that specific product. The effects are regular and normal if the imports have been constant during the preceding three years. However, the matter must be analysed on a case-by-case basis.
Applied to anticompetitive practices, acts carried out abroad, but with substantial, normal and regular effects in Argentina, could be investigated and punished by the Antitrust Law.
According to Argentine civil legislation, any person who has suffered damage arising from anticompetitive practices prohibited by the Antitrust Law is entitled to file a suit for damages before the competent court.
To be entitled to file a suit for damages arising from anticompetitive practices, the prior intervention of the Antitrust Commission is not necessary as it is not part of the proceedings generated by the private action unless expressly requested by the court. If, however, the Antitrust Commission has investigated the anticompetitive practice and issued an opinion, courts have relied on the findings of the regulator, and have only focused on the link between the already proven conduct and the claim for damages rather than retracing the investigation.
Pursuant to Section 43 of the Argentine Constitution, class actions may be submitted by the affected person, the ombudsman and associations authorised by law.
The process of discovery
In the current civil Argentine procedure, there is no preliminary stage. Thus, a claimant cannot request from a counterparty information related to facts that are essential to develop the purpose and characteristics of his or her claim.
Sections 325 and 326 of the Argentine Civil and Commercial Procedural Code provide that, in certain cases, those who are or will be part of a discovery process, and who have reasonable grounds to believe that the production of their evidence during the evidence period may be impossible or very difficult, may request the production of the following evidence:
- witness testimonies of an old or sick person, or a person who is going to be absent from the country;
- an expert report to register the existence of documents, and the state, quality or condition of goods or places;
- reports from public entities or private individuals or companies; or
- the exhibition, protection or seizure of documentation related to the purpose of the trial.
Without reasonable justification for not doing so, evidence must be produced before the judge during a trial. Parties must produce all relevant documentary evidence upon submitting their claim or their answer, and a list of specific documents that they want to have the court order produced from the opposing party or from a third party. They must also indicate all other means of evidence they intend to rely upon.
The procedure for the discovery of documents is unfamiliar to the Argentine legal system. Parties are under no obligation to produce documents other than those upon which they wish to rely. However, a party may request from its opponent (or a third party) the submission of one or more specifically identified documents that are relevant to the resolution of the dispute.
The burden of evidence lies on the party that asserts the existence of a controverted fact that that party raises as the basis for its claim or defence. However, Section 1735 of the Argentine Civil and Commercial Code states that the court may modify this principle to impose the burden on the party in the best position to produce such evidence.
The Antitrust Law introduced a leniency programme and sets out that the identity and depositions of applicants will remain confidential: judges who intervene in any follow-on litigation regarding an antitrust offence may not unveil the identity of the applicants or require the evidence provided by them. However, as explained above, the bill amended by the Senate eliminates the leniency programme.
Use of experts
Experts' reports are among the types of admissible evidence regulated by the Argentine Civil and Commercial Procedural Code.
Parties may request that the court appoint an expert. Additionally, courts may appoint experts even when the parties have not requested. Experts must provide their opinion on the questions put to them by the courts. In practice, each party prepares a list of the questions they want the expert to answer, then the court reviews these questions and puts them to the expert. The judge may, however, decide to change the questions, eliminate some or all of them, or add further questions. Once the expert has produced his or her report, the parties are given the opportunity to question all or parts of the report. Parties may also be assisted by party-appointed experts.
Pursuant to Section 43 of the Argentine Constitution, the affected person, ombudsman and associations authorised by law are entitled to file a class action.
Considering the lack of a law regulating this kind of action, the Argentine Supreme Court, in a leading case13, held that there are three categories of rights: individual rights, rights with a collective impact that concern collective assets, and rights with a collective impact that concern individual but homogeneous assets.
The third category – rights with a collective impact that concern individual but homogeneous assets – is constituted by personal or property damage resulting from conduct that damages the environment or competition, or the rights of users and consumers and those of discriminated persons, consisting of a single or continuous act that causes harm to all the members of the group.
The Argentine Supreme Court further identified the requirements that must be met to bring a collective action: the existence of a common factual cause that causes injury to a significant number of individual rights; the claim must be focused on the collective effects of the cause and not on what each individual might seek; and a demonstration that individual actions are not justified, which could affect access to justice.
However, even in the presence of typically individual rights, class actions will also be available when there is a strong state interest in their protection, whether this is because of their social relevance or because of the special features of the affected parties.
The Prisma case14 is an example of this. On 9 September 2020, the Association for the Defence of the Insured, Consumers and Users (ADACU), an association for the protection of consumer rights, initiated a collective action against a number of banks that own Prisma Medios de Pago SA (Prisma) for alleged economic damage caused by the use of Visa credit cards, basing the action on an abuse of the economic interests and rights of consumers. The claim was based on the conclusions of an ex officio investigation carried out by the National Commission for the Defence of Competition, which was initiated on 29 August 2016 and closed without sanctions when the banks offered to sell all their shares in Prisma to a third party.
ADACU claimed that the banks had carried out unlawful conduct consisting of collusion to fix prices in discount and interchange rates for the use of Visa credit cards, in accordance with the specific technical opinions of the Antitrust Commission (where it was noted that the defendant banks, inter alia: were shareholders of Prisma and avoided competition in consumer credit; jointly fixed the discount rate; harmed consumers; and achieved prices scandalously above those of other countries).
Thus, the banks allegedly committed a violation of the Antitrust Law for which the complainants claimed material and punitive damages. With regard to the legal standing, ADACU argued that the class was perfectly individualised: consumers who were holders of Visa cards issued by the defendant banks and who made transactions with these in the contested period.
The affected parties of illegal conduct under the Antitrust Law may request three types of damages that are not mutually exclusive: actual damages, recovery for loss of goodwill and moral hardship.
If the injured party can prove that the damage arose from an offence against it and from conduct expressly prohibited by law, the victim can claim for compensation for actual injuries. The injured party is entitled to claim for actual profits during a given preceding period to be taken for the calculation of the average or normal profit of the injured party. Once the court has determined the monthly or yearly average profit, this figure will be projected over a period to be determined by the court (six months or one year). The length of time lies within the discretion of the court.
Furthermore, recovery for loss of goodwill can also be requested. Success in obtaining this type of compensation will more likely depend on whether the injured party has suffered an injury to its commercial prestige or credibility. In assessing the damages, a variety of circumstances should be considered, such as the nature of the business, the quantity and importance of the injured party's clients, its prestige and experience in the market, and the volume of gross sales.
Finally, other possible damages could be those related to moral hardship, pursuant to which the injured party can recover additional compensation on the grounds that the unlawful conduct has substantial emotional disturbance.
Although the Antitrust Law does not expressly regulate the existence of pass-on defences, the matter has been analysed by the courts. In that regard, when analysing YPF/Auto Gas (discussed in depth in Section X), the appellate court contemplated the pass-on defences invoked by the accused party and only accepted 30 per cent of the alleged damages regarding that specific matter, as it considered that the remainder had been borne by the final customers.
Even though civil claims regarding antitrust matters can be filed without a prior administrative procedure before the Antitrust Commission, in cases where the regulator has already analysed the matter, the resolution issued by the Antitrust Commission could have res judicata effect in terms of the conduct. This resolution would be used as a basis for the civil court's decision and as evidence for the parties.
The most relevant precedent for a private party seeking damage compensation results from an anticompetitive behaviour previously investigated and punished by the Antitrust Commission. Such was the situation in YPF/Auto Gas.15 The original conduct investigated by the Antitrust Commission was the practice of exporting a large amount of liquid petroleum gas (LPG) at prices that were lower than those charged for LPG in Argentina by YPF, the national gas company, which was controlled by private funds at the time of the alleged wrongful conduct. Further, YPF's export contracts prohibited the re-importing of LPG into Argentina. The Antitrust Commission concluded that this conduct was harmful to the general economic interest and ordered YPF to cease its price discrimination between the domestic and export markets and to eliminate the prohibition on the re-importing of LPG. Additionally, it imposed a fine of 109,644 million pesos on YPF. The decision was upheld by the Argentine Supreme Court.
Based on this case, a private company, Auto Gas, claimed that it had been affected by YPF's anticompetitive conduct. Auto Gas based its claim on the abuse of dominant position of YPF having had a twofold effect: an undue increase in prices and a decrease in the quantities of LPG that were commercialised by Auto Gas. When analysing the case, the court left on record that it would not analyse YPF's anticompetitive conduct because that had already been analysed and sanctioned by the Antitrust Commission and ratified by the Argentine Supreme Court. Thus, it considered that the existence of the conduct had already been proved, as well as the fact that it had been performed by means of deceit. The analysis was therefore focused on whether there had been damage to Auto Gas and whether it had been caused by the already proven act performed by YPF. Auto Gas was awarded 13,094,457 pesos.
In the Prisma case discussed in Section VII, ADACU initiated a collective action against a number of banks based on the conclusions of an ex officio investigation carried out by the National Commission for the Defence of Competition, which was closed without sanctions when the banks offered to sell all their shares in Prisma to a third party. ADACU differentiated between follow-on actions and stand-alone actions.16 Because the defendants were not sanctioned by the Antitrust Commission as they offered to cease the conduct and the investigation was therefore closed, this collective action was a stand-alone claim.
Section 13 of Regulatory Decree No. 480/2018 provides that a party may request the confidentiality of information submitted in a proceeding when its disclosure may cause damage to that party's interest. Although this provision is primarily applicable to the merger review process, the enforcement authority may apply it within claims or investigations carried out by the Antitrust Commission to safeguard commercial secrets of the involved parties.
When a private claim is filed before the courts, and the opinion of the Antitrust Commission is used, it should not contain sensitive information, and parties can request confidentiality if any trade secret or other confidential information is disclosed in the opinion. The request should provide the reasons for it, and a non-confidential version of the submitted information should be included. Likewise, all the dockets pending before the Antitrust Commission are secret, and only the parties can access them.
Finally, and pursuant to Section 6 of Law No. 23,187, it is a specific obligation of lawyers to preserve attorney–client privilege unless otherwise authorised by the interested party. Section 7 provides that it is a right of lawyers to keep confidential information protected under attorney–client privilege. Furthermore, Section 444 of the Argentine Civil and Commercial Procedural Code provides that a witness may refuse to answer a question if the answer would entail revealing information protected under a professional secret.
Under the Antitrust Law, until resolutions are issued, the allegedly responsible parties may commit to the immediate or gradual cessation of the investigated facts, subject to the approval of the defence of competition authorities in relation to suspending the investigation. Proceedings will be closed three years after an order to cease-and-desist is given. However, the Senate's amendments to the Antitrust Law amendment bill (discussed in Section I) deletes the article relating to this; therefore, if the bill is passed under the current wording, the alleged offender will not be subject to a cease-and-desist agreement.
On 4 July 2018, the National Congress enacted the International Commercial Arbitration Law, creating for the first time a legal framework for the resolution of international commercial conflicts in Argentina by means of a specific law. The Law adopts the main principles set out in the comparative legislation. Therefore, the application of the Law will be limited to international commercial arbitrations that are seated within the Argentine territory, while domestic arbitrations will continue to be regulated by the local procedural rules: the Argentine Civil and the Commercial Procedural Code.
Indemnification and contribution
In principle, the injured party is only able to request full compensation from the party that causes the damage by means of an anticompetitive practice. The link between the damage and the anticompetitive practice must be proved for compensation to be granted.
Despite the lack of precedent regarding joint and several liability in Argentina in terms of antitrust matters, pursuant to civil general principles,17 if the Antitrust Commission or the courts determine that several persons have jointly caused damage, they would be jointly and severally liable for damage to the injured party, and the latter would be enabled to assert a claim against one or all of the defendants.
However, under the Antitrust Law, all responsible companies will be jointly liable for the payment of the damages or fines, pursuant to Section 65. Furthermore, Section 64 sets out that a civil fine in favour of the injured party may also be granted, depending on the gravity and circumstances of the case.
Section 65 of the Antitrust Law also regulates the joint responsibility scenario posed in terms of leniency applicants, setting out that they 'may be exempted or their liability reduced' in relation to damages and fines. However, if the Antitrust Law amendment bill amended by the Senate is approved by the House of Representatives, the leniency programme will disappear, and even though the bill does not eliminate Section 65, it will no longer be applicable in practice.
Future developments and outlook
It remains to be seen whether the House of Representatives approves the draft bill amending the Antitrust Law. If it does, the new legislation will have a significant impact on the antitrust regime in Argentina as it includes substantial changes to the structure of the National Competition Authority as well as to both the merger control and anticompetitive conduct regimes.
1 Miguel del Pino and Santiago del Rio are partners at Marval, O'Farrell & Mairal. The authors would like to thank Amalia Pilar Bruno Asaf and Pilar Moreyra for their collaboration in the drafting of this chapter.
2 Law No. 27,442.
3 Resolution SCI dated 13 May 2021, C. 1767, WhatsApp Inc. s/ Infracción Ley No. 27.442.
4 Law No. 25,156.
5 Resolution SCI dated 24 August 2021, C. 1589, Compañía Industrial Cervecera S.A. y Compañía Cervecerías Unidas de Argentina S.A. contra Anheuser Busch Inbev N.V./S.A. y Cervecería y Maltería Quilmes S.A.I.C.A.A. y G. S/Infracción Ley 25.156.
6 Resolution No. 281/2021 issued by the Secretary of Domestic Trade, available at www.boletinoficial.gob.ar/detalleAviso/primera/242531/20210331.
7 Resolution No. 1050/2021 issued by the Secretary of Domestic Trade, available at http://servicios.infoleg.gob.ar/infolegInternet/anexos/355000-359999/355576/norma.htm.
8 Official press release available at www.argentina.gob.ar/noticias/empresa-de-oxigeno-liquido-debe-mantener-precios-y-aumentar-su-produccion.
9 Official press release available at www.argentina.gob.ar/noticias/los-frigorificos-deberan-informar-el-precio-de-la-carne-vacuna-y-derivados-para-evitar.
10 Resolution No. 202/2020 issued by the Secretary of Domestic Trade, available at www.boletinoficial.gob.ar/detalleAviso/primera/231517/20200701?busqueda=2.
11 Official press release available at www.argentina.gob.ar/noticias/investigacion-sectores-proveedores-de-insumos-para-consumo-masivo.
12 Advisory Opinion No. 52 dated 10 July 2000, 'Thompson CDF and Racal Electronics PLC re Request for an Advisory Opinion'; Advisory Opinion No. 68 dated 8 October 2000, 'Alcan Aluminum and Alusuisse Lozna Group AG re Request for an Advisory Opinion'.
13 Halabi, Ernesto v. PEN – Ley 25.873 – Dto 1563/04 s/ Amparo Ley 16.986.
14 Resolution SCI No. 463 dated September 2017, Investigación de oficio contra Prisma Medios de Pago S.A. y sus accionistas en los términos del artículo 1 y 2, inc. A), f), g), h), j), k) y l) de la ley 25156 (C. 1613).
15 Argentine Supreme Court of Justice, 11 October 2018, Auto Gas SA c/ YPF SA y otro s/ ordinario.
16 Both are recognised in Chapter IX of the Antitrust Law and in the Civil and Commercial Code.
17 Sections 827 et seq. and 1751 of the Civil and Commercial Code.