Argentina: project to pass new Competition Law.
Competition & Antitrust Department Report | Argentina: project to pass new Competition Law
The project called “Law of Bases and Starting Points for the Freedom of Argentines”, submitted to the Parliament on December 27th, 2023, includes the derogation of the current Antitrust Law No. 27,442 and the passing of a new antitrust law. The main changes introduced by the project are the following:
1. Creates two autonomous and decentralized agencies (that will administer their budgets) within the National Executive Branch.
· The Market and Competition Agency (for its acronym in Spanish “AMC”), to be headed by a Secretary [1].
In merger control proceedings, the Secretary will have the power to decide whether the notified transactions should be authorized, subordinated to the adoption of remedies, or whether the authorization should be denied. In proceedings investigating potential infringements, the Secretary will have prosecutorial powers to conduct the investigation and may request the Antitrust Court (for its acronym in Spanish TDC) to produce certain evidence. The Secretary may also recommend to the TDC to issue statements of objections (“imputaciones”), the application of penalties for infringing the law, the adoption of precautionary measures, and the adoption of settlements terminating an investigation, and may grant the benefits that are part of the leniency program ad referendum of the TDC’s confirmation. The Secretary will also have the power to challenge laws and regulations that affect competition before the courts.
· The Antitrust Court which will be composed of five members and fifteen external members [2].
The main powers of the TDC will include the admission of evidence proposed by the AMC, the issuance of statements of objections, the application of penalties, the issuance of precautionary measures (at the request of the AMC or ex officio), the approval of settlements that terminate an investigation, confirming the grant of the benefits that are part of the leniency program, and the resolution of appeals of the AMC’s decision to approve an economic concentration, to subordinate the authorization or to deny it.
2. Introduces changes to potential infringements:
· Includes boycotts as a practice “absolutely restrictive” of competition.
· Expressly establishes that “unilateral” conduct that may be restrictive of competition are only those adopted by companies with a dominant position.
· Includes the abuse of judicial or administrative proceedings (sham litigation) against a competitor to expel it from a market, preventing entry, dissuading it from adopting competitive strategies, or affecting its reputation as conduct that may be restrictive of competition.
· Eliminates exchanges of sensitive information between competitors as possible “stand-alone” infringements.
· Eliminates the reference to obtaining competitive advantages by infringing other regulations as a potential infringement.
3. Introduces changes to the merger control regime.
· Prohibits concentrations whose purpose or effect is to create, protect, or strengthen a dominant position.
· Establishes a mandatory “ex-ante” suspensory notification and approval regime with immediate effect for transactions that meet certain thresholds.
· Modifies the thresholds that trigger the obligation to notify [3].
· Establishes a voluntary “ex-post” notification and approval regime for transactions that are not subject to the mandatory notification and approval regime.
· Gives the AMC the powers to require the notification of transactions that are not subject to the mandatory notification and approval regime within 180 days of their implementation when there is reasonable indication that they may constitute, protect, or strengthen a dominant position.
· Gives the AMC powers to object to transactions not subject to the mandatory notification and approval regime within 180 days of its implementation and powers to determine that a transaction is subject to the obligation to notify.
· Grants the AMC powers to authorize, condition, or deny concentrations subject to approval [4], and establishes that such decisions are subject to appeal before the TDC.
4. Introduces changes to the penalties for infringement of the provisions of the Law [5].
5. Introduces minor changes to proceedings [6].
6. Eliminates the tool established in Article 29 of Law No. 27,442, which allowed submitting contracts with certain characteristics to the TDC for approval.
7. Eliminates the creation of the specialized Antitrust Chamber (within the Federal Civil and Commercial Courts) created by Law No. 27,442.
8. Introduces amendments concerning appeals:
· Establishes that appeals filed against fines will stay the appealed decision, whereas the rest of the appeals shall not.
· Expressly includes within the resolutions subject to appeal “those that cause irreparable damage to the appellant”.
· Grants the AMC the possibility of appealing resolutions of the TDC that close an investigation without a finding of infringement.
· Expressly establishes that the TDC shall not rule on whether a decision is subject to appeal.
· It clarifies that, in the case of risk of inability to pay a fine, the TDC may request a precautionary measure in court to ensure payment.
9. Introduces changes involving the leniency program [7].
10. Introduces changes involving liability for damages resulting from antitrust infringements [8].
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Notes
[1] He/she shall be appointed by the National Executive Branch. The appointment shall follow a public, open and transparent selection proceeding that shall allow interested third parties to object, and shall include a public hearing. It shall not require the approval of the Senate of the Nation. He/she may only be removed in limited scenarios after a binding opinion of a commission composed of members of both Chambers of the Congress of the Nation is issued.
[2] Three of these members shall be appointed by the National Executive Branch and the remaining two shall be appointed by the President of the Senate. Their term of office shall be five years and they may be reelected only once. The renewal shall be staggered. Also in this case, the appointment must follow a public, open and transparent selection proceeding that will allow interested third parties to object, and will include a public hearing. It shall not require the approval of the Senate of the Nation. The members of the TDC may only be removed in limited scenarios after a binding opinion of a commission composed of members of both Chambers of the National Congress is issued. The court will also have fifteen “external” members who must provide advice concerning certain decisions.
[3] The threshold of “combined” local revenue (of acquiring group and target) during the last fiscal year increases from 100,000,000 to 500,000,000 Variable Units. The exception under which a transaction is not subject to merger control, applicable when both the value of the local assets acquired and the transaction price attributable to Argentina, remains in 20 million Variable Units. Concerning scenarios where the transaction in question, together with other transactions would have reached the same threshold within 12 months, the project eliminates the requirement that only acquisitions involving the same markets should be considered relevant. Regarding scenarios where the transaction in question, together with other transactions reaches another threshold, the amount increases from 36,000,000 to 45,000,000,000 Mobile Units.
[4] The deadline for adopting this decision increases from 45 to 60 business days, may be extended for another 120 business days and can be suspended.
[5] The project eliminates a) the yearly multiplier (for the duration of the infringement) of the fines for infringement, which continues to be limited to 30% of the sales related to the products involved in the infringement during the last fiscal year (although in this case the maximum of 30% of the national sales of the economic group to which the infringers belong is eliminated), twice the profit obtained or up to 200, 000,000 Variable Units and b) the penalty of inability to trade from 1 to 10 years for legal persons, directors, managers, administrators, members of the Supervisory Board, agents or legal representatives who may be sanctioned jointly and severally with the person charged.
[6] The deadline for companies investigated for potential infringements to submit their explanations and their defenses to statements of objections increased to 25 business days. The deadline to submit closing statements was extended to 15 business days.
[7] The project a): eliminates the possibility that those potential beneficiaries of leniency apply together with those persons that may be potentially joint severally liable for the infringement (board members, managers, administrators, or members of the Supervisory Board, agents or legal representatives) and b) establishes that the TDC may not impose a fine greater than the fine requested by the AMC to the AMC, on anyone who has been identified as a beneficiary of a reduction under the clemency program.
[8] The project eliminates the “civil fine” established in Article 64 of Law No. 27,442. The project also narrows the limit of the liability for damages of those beneficiaries of the leniency regime: while Law No. 27,442 provided that “the beneficiary of the leniency program established in Chapter VIII shall be jointly and severally liable vis a vis (i) direct and indirect purchasers or suppliers; and (ii) other injured parties when it is impossible to obtain full reparation of the damage caused from the other companies that have been involved in the same infringement, the project limits the exception to liability vis a vis “direct purchasers or suppliers”.
Should you require any further information on this matter, please do not hesitate to contact us.
Sincerely,
Agustín Waisman