Sanofi / Aventis transaction fined in Argentina for late filing

Under Resolution No 21/2006, a fine of Argentine Pesos 832,500 (approximately US$ 268,548) was imposed on Sanofi Aventis S.A., for its late filing of the transaction with the National Commission for the Defense of Competition (the “Antitrust Commission”).

In its decision the Antitrust Commission stated that the parties had filed the notification 185 days late. Not following the parameters of previous cases, the Commission imposed a fine of Argentine Pesos 4,500 (approximately US$ 1,451) for each day of delay, a penalty higher than the ones previously imposed so far but much lesser than the total amount provided in Antitrust Law No 25,156.

The mitigating circumstances considered by the Antitrust Commission to asses the amount were: (a) the fact that the transaction consisted of a hostile takeover, and consequently access to the target’s information and documentation was difficult for the buyer; (b) the resulting group after the takeover had a presence in more than eighteen jurisdictions, with mandatory notification to antitrust authorities; and (iii) the difficulty for the buyer to assess the volume of business of the resulting group.

However, the following were considered as aggravating circumstances: (a) that the transaction was closed eight months before notice to the Antitrust Commission, which does not show good faith in submitting to the local jurisdiction, provided that the transaction was previously notified in several other jurisdictions; (b) had the transaction been notified in due time, some competition issues may have been raised; (c) the volume of business of the parties in Argentina during the year 2003 (the year before the transaction occurred) was over Argentine Pesos 270,000,000 (approximately US$87,096,774).

Based on this decision, and other decisions on late filings sanctions, the parameters used by the Antitrust Commission to calculate sanctions are: (i) effects of the transaction on competition; (ii) net assets and financial situation of the merging parties; (iii) period of delay; (iv) liability of each of the parties for non-compliance with the notification obligation; (v) awareness of the administrative proceedings and regularity with which parties the perform filings with the Commission; (vi) existence of a preliminary presentation (i.e., the request of an advisory opinion in the event of doubts about the filing obligation or preliminary investigations carried out by the Commission to assess the reasons for failing to notify); (vii) total net business value of the merging parties, price of the transaction and/or value of the assets involved; and (viii) specific economic situation of the industry or the relevant market.

This fine, as well as the other imposed, shows the intention of the Antitrust Commission to strictly apply the terms of the Antitrust Law in connection with periods to file notice by merging parties. On the other side, the amount provided does not exceed the outstanding maximum provided by the Antitrust Law. Additionally, the Antitrust Commission stated the parameters for calculating the amount of the sanction and this fact gives some level of certainty on the calculation of a potential sanction.