More Use of Preliminary Diligences to Detect Lack of Filings

1) Legal Framework and Procedure

Although not specifically contemplated by Law 25.156 (the “Antitrust Law”) or its regulatory decrees, Preliminary Diligences (“PDs”) have become an investigative mechanism used increasingly by the Argentine Antitrust Commission (“AAC”) in order to establish whether or not an economic transaction with effect in Argentina should have been notified according to the terms of Section 8 of the Antitrust Law.

Using all the information sources at its disposal, the AAC constantly monitors the articles published in newspapers and on Internet, seeking data about economic transactions carried out both in Argentina and abroad.

Notwithstanding the AAC’s own capacity to initiate a PD “ex officio”, this may also be initiated in response to a complaint made by a person or entity before the AAC regarding a specific transaction.

Any time that a PD does not stipulate the process due, it is carried out on the basis of requests for information from the parties involved in the economic transaction in question, issued by the AAC To this end, the parties involved (upon notification by the AAC) should present themselves before the AAC and join the proceedings.

Following the conclusions reached on the basis of the investigation, the AAC may:

1. Consider that the parties involved in the economic transaction were under no obligation to notify the Commission in the terms given in Section 8 of the Antitrust Law, or
   
   
2. Urge the parties involved to notify the economic transaction under investigation.

In the latter case, the AAC may also impose a fine on the parties involved in the economic transaction of up to one million pesos (AR$ 1,000,000) a day for not complying with the terms of notification given in Section 8 of the Antitrust Law. The fine for tardy notification is given in Section 46, paragraph d) of the Antitrust Law.

2) Examples of cases

Even though there are several PDs under way, two cases in particular can be used as an example of the possible outcomes mentioned above:

1. Telecom / Telefónica¹: the AAC concluded that the economic transaction should have been notified and both parties were thus fined a total of two hundred and forty one million pesos (AR$ 241,000,000);
   
   
2. Perdigão / Sadia²: the AAC initiated a PD on the basis of press reports. After a period of a few months, the parties were able to prove that the economic transaction should not have been notified in Argentina as the total business volume of the companies involved did not exceed the threshold stipulated in the Antitrust Law. The AAC thus resolved the closure of the investigation.

3) Conclusion

During the last years, PDs have been used by the AAC as a key tool in the investigation of economic transactions (both national and foreign) that should have been notified according to the AAC.

To conclude from the cases mentioned above, if the AAC finds out that a transaction should have been notified according to Section 8 of the Antitrust Law, the fine imposed could be substantial, reaching as much as one million pesos (AR$ 1,000,000) a day as from the date on which the notification given in Section 8 of the Antitrust Law should have been made, until the date the transaction was actually notified.

Thus, if the parties have any doubts as to their obligation to notify the AAC of an economic transaction, they should file an Advisory Opinion (“AO”) with this body.

According to Resolution No. 26/2006 passed by the Secretary of Technical Coordination, when applying for an AO, the parties must describe the economic transaction and explain why they believe that the transaction is exempt from prior antitrust control. The application must be filed with the AAC.

The AAC must analyze the information filed by the parties and may if necessary request additional information. If no additional information is requested, or if the parties comply with presentation requirements, the AAC must issue its opinion, and advise the Secretary of Domestic Trade (responsible for issuing the final resolution), as to whether the economic transaction should be notified in the terms of Section 8 of the Antitrust Law.

The request for an AO means that the AAC is responsible for determining the obligation (or the lack of it) on the parties to notify the economic transaction.
It also provides the parties with a degree of reassurance as otherwise they would be at risk of being fined for not filing the notification in time.