Interaction Between RIGI and Competition Law

The Executive Branch published Decree 749/2024 on August 23, 2024,  regulating Title VII of the Law of Bases and Starting Points for the Freedom of the Argentine People 27742. This Title establishes the Incentive Regime for Large Investments (RIGI).

The RIGI introduces an innovative incentive mechanism into Argentina’s legal framework, offering tax, foreign exchange, and customs benefits, as well as guarantees and stability. It applies to investment projects in sectors such as forestry, tourism, infrastructure, mining, technology, oil and gas, energy, and steel. These projects must qualify as "large investments" under the following criteria:

1. they must involve a long-term investment,
2. they must commit a minimum investment of USD 200,000,000 in eligible assets,
3. They must allocate a percentage of the minimum investment within the first two years from de date the application was approved.

The RIGI’s regulatory decree includes specific provisions related to the Competition Law regime under Law 27442 (LDC). These provisions require parties involved in an investment project to account for competition-related submissions and potential involvement by the Argentine Commission for the Defense of Competition (CNDC).

The LDC governs anti-competitive practices and economic concentration controls. Regarding anti-competitive practices, article 1 prohibits agreements between competitors, economic concentrations, and acts or behaviors in any form related to the production and exchange of goods or services that aim or result in limiting, restricting, distorting, or falsifying competition or market access, or that constitute abuse of a dominant market position, causing harm to general economic interest. Articles 2 and 3 further prohibit specific bilateral (cartels) and unilateral (abuse of dominant position) behaviors. Regarding economic concentration control, article 8 prohibits concentrations whose purpose or effect is to restrict or distort competition, causing harm to general economic interest. Article 9 subjects concentrations exceeding a business volume threshold of 100,000,000 mobile units (currently, ARS 50,619,000,000) to the CNDC’s posterior approval.

In this context, article 52 of the RIGI regulation establishes that adhering to this regime neither exempts nor imposes obligations beyond those outlined in the LDC for both anti-competitive practices and economic concentrations:

• “v) Participation of a Unique Investment Project (VPU) in RIGI does not exempt it from compliance with the obligations established under Law No. 27,442 on Competition Law.
• “vi) VPUs adhering to RIGI will not be subject to special, greater, or different obligations or requirements beyond those applicable to non-adherents under competition law.”

The RIGI regulation also includes an analysis of the potential impact of the transaction on the local market, requiring information similar to that the CNDC requests but applicable to scenarios not included in the LDC. Article 47 requires that the RIGI application includes a Declaration of No Distortion of the Local Market. This declaration involves submitting of a sworn statement stating that the RIGI project will not distort the local market. This statement must be supported by a technical study conducted by a lawyer or economist specializing in competition law, and must include at least:

1. 1. a description of the product or service to be offered,
   2. a definition and projected evolution of the relevant market,
   3. identification of market participants potentially affected by the single investment project,
   4. an analysis of the projected investment’s positive and negative effects on actors within the relevant market.

According to article 52, failure to include any of the required elements in the declaration and study will result in the RIGI application being summarily rejected.

Given the CNDC's experience in analyzing economic concentrations, article 52 stipulates that the RIGI Authority may, upon submission of the sworn declaration and corresponding technical study, request a non-binding opinion from the CNDC (or the agency that replaces it in the future) to assess the project’s potential market impact.

This provision implies CNDC involvement in cases outside those contemplated under the LDC, allowing for ex ante participation, even when the investment does not meet mandatory notification thresholds under the LDC. This creates a new regime where RIGI adherents may undergo a process similar to those before the CNDC, even if the investment does not fulfill the LDC’s requirements. In such cases, aligning with CNDC precedents and proposing relevant market definitions consistent with those used in past transactions will be critical to ensuring coherence and minimizing implications for future proceedings.

However, there is a key distinction between the two regimes: under RIGI, the RIGI Authority’s request for a CNDC opinion is discretionary, and the CNDC’s opinion is non-binding. In contrast, under the economic concentration control regime, notification to the CNDC is mandatory for transactions meeting LDC thresholds, and the CNDC’s intervention is binding.