Law 27,442 (the "Law"), which entered into effect on May 24, 2018 along with its Implementing Regulation -Decree 480/2018- introduces sweeping changes in the competition law regime in Argentina.
We highlight those changes below.
NEW AGENCY AND SPECIALIZED COURT
A new independent agency, the Autoridad Nacional de Competencia (National Competition Authority, or "ANAC") will be created. Until then, the Secretariat of Trade will enforce the Law, with the aid of the Antitrust Commission (CNDC). The ANAC will be comprised by three agencies: the Tribunal de Defensa de la Competencia (Antitrust Tribunal), the Secretaría de Instrucción de Conductas Anticompetitivas (the Anticompetitive Conducts Trial Secretariat) and the Secretaría de Concentraciones Económicas (the Economic Concentrations Secretariat). The Tribunal will be comprised by five members -two of which shall be lawyers and two economics professionals- and will have adjudicatory powers. Both Secretariats will conduct the behavioural and merger control processes -as the case may be- and ultimately advise the Tribunal on the suggested course of action. The term of office of all ANAC members will be of five years. The members of the Tribunal and the heads of the two Secretariats will be appointed through a public merit-based selection process, by a jury formed by representatives of the Government, the Attorney's General Office and legal and economics academies. The appointments must be ratified by the Senate. During the selection process, the Executive is empowered to make temporary appointments to the ANAC. Appeals made in the city of Buenos Aires will be heard by a specialized competition law chamber within the Federal Civil and Commercial Court. MERGER CONTROL
Increased jurisdictional threshold of 100 million Unidades Móviles, a coefficient updated by the inflation index on a yearly basis. The initial value of the Unidad Móvil is set at ARS 20. As of the date of this newsletter, 1 Unidad Móvil is equal to approximately USD 0.83. Increased thresholds for the de minimis asset/ transaction value exemption of (i) 20 million Unidades Móviles for the transaction to be implemented; and (ii) 20 million and 60 million Unidades Móviles for transactions in the same market which took place in the 12 or 36 months, respectively, preceding the transaction to be implemented. Merger fillings can be made only by the buyer. Corporate mergers, on the other hand, still need to be reported by both merging parties. The exemption to notification that applied to acquisitions where the acquirer already had more than 50% of the shares of the target now also requires that no change of control takes place as a consequence of the acquisition. The first landing exemption, which applied to acquisitions of a single undertaking by a single foreign undertaking with no prior assets or shares in other undertakings in Argentina, now allows the acquirer to have prior to the transaction assets used for residential purposes, but requires the same not to have sales into Argentina that could be considered substantial and made on a regular basis in the 36 months preceding the acquisition. The exemption to notification that applied to acquisitions of undertakings that had no activity in Argentina in the 12 months preceding the transaction now also requires the lack of overlap in the activities of the acquiror and target. Merger filings must be reported pre-closing. The change from the current post-closing system will take place one year after the creation of the ANAC. Gun jumping will be subject to daily fines of up to 0.1% of the consolidated annual turnover in Argentina of the notifying companies, or if such criterion could not be used, daily fines of currently up to 750,000 Unidades Móviles. Filing fees will range between 5,000 and 20,000 Unidades Móviles. Merger filings will be made public within five business days or their notification and any third party may file objections, although the agency will not be required to consider them. Mergers shall be decided within 45 business days, unless the agency were of the view that the merger restricts competition, in which case it will communicate its objections to the parties in written form (said objections also made public) and will call them for a hearing to examine possible mitigating measures. In such case, the review can extend for an additional period of 120 business days. The new treshold will not apply to mergers notified under the former Competition Law. ANTICOMPETITIVE PRACTICES
Fines will be increased to up to the higher of (i) 30% of the turnover of the business associated with the infringement in the last fiscal year, multiplied by the number of years of the infringement (with a cap of 30% of the total Argentine consolidated turnover of the infringing parties in the last fiscal year); or (ii) double the amount of the economic benefit caused by the infringement. If the foregoing criteria cannot be applied, fines will be imposed by the Tribunal with a cap of 200 million Uni dades Móviles. Fines may even be doubled in the case of repeat offenders in the 10 years preceding the most current sanction. Sanctions also include a bar on contracting with the Public Administration for up to eight years. Cartel practices are considered per se illegal and no longer subject to rule of reason analysis. . Interlocking directorates can, under a rule of reason approach, be found illegal. The Antitrust Tribunal will be authorized to issue decisions declaring agreements not entailing economic concentrations or prohibited practices in compliance with the Law, insofar as those agreements contribute to improving the production or distribution of goods or to promoting technical or economic progress, while generating concrete benefits for consumers and which does not impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives and afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question. A leniency program for cartel practices is created, granting (i) immunity to the first applicant; (ii) a 50% to 20% reduction in the fine to other applicants; and (iii) a "leniency plus" reduction of one third in the sanction applied in the first conduct. A leniency application will be admitted even if an investigation is in progress, insofar as the relevant party has still no served with a formal accusation. The Implementing Regulation provides for the creation of a marker registration system. Informal communications may be made by an applicant before formally applying for a marker. New provisions allowing for a faster, more efficient private enforcement of antitrust violations, namely: (i) should parties file the claim once the administrative decision imposing a sanction (if existent) is final, such decision will be binding on the civil judge, and the case will be heard under expedited procedural rules; and (ii) parties that benefitted from leniency applications will be exempted from civil liability, as the case may be, with the exception of liability stemming from (a) claims by defendants' purchasers or their direct and indirect suppliers; and (b) cases where defendants could not obtain complete redress of their claim by parties not benefitted by leniency applications The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.