The onerous transfer of companies to public bodies requires merger control approval

1.  Background  

By means of an onerous transfer of shares, Impregilo International Infrastructures N.V. (“Impregilo”) agreed on transferring its shareholding that exercised control over Caminos de las Sierras S.A. (“CASISA”) to the Province of Córdoba (the “Transfer”). 

The target company in the abovementioned transaction, CASISA, is the concessionaire of the toll booths of the access routes to the Province of Córdoba. After the Transfer is performed, the Province of Córdoba would exercise an exclusive control over CASISA. 

The parties to the economic concentration transaction may request to the Argentine Antirust Commission (“CNDC”) the issuance of an advisory opinion in order to determine whether said transaction needs to be notified. In this particular case, said request was filed before the CNDC on February 10, 2010.

Impregilo claimed that the Transfer was non-notifiable since the entity acquiring the control of the company was a Provincial State and, therefore, said change of control could not affect the general economic interest. 

To justify its statements, Impregilo quoted Section 8 of Decree Law No. 89/2001 (“Decree Law 89”), which incorporated to Law No. 25,156 (“Antitrust Law”) an exemption to the notification requirement. Said exemption stipulated that any transfer to the Federal State or its governmental bodies, Provinces, City Halls and the City of Buenos Aires shall be exempted of notification as long as the transfers to the aforementioned are performed in a gratuitous manner. 

When analyzing the request for the issuance of the advisory opinion, the CNDC claimed, first of all, that the Transfer was an economic concentration under the terms of Section 6 of the Antitrust Law. 

The CNDC stressed that the parties involved were subject to the regulations of the Antitrust Law since Section 3 sets out as follows: “Any and all individuals or legal entities, private or public, with or without profit, that perform economic activities within the national territory or part of it are subject to this Law”.

The CNDC also noted that the Transfer was performed in an onerous manner. Thus, it considered that the exemption set out in Section 8 of Decree Law 89 invoked by Impregilo in the request for the issuance of an advisory opinion was not applicable. 

On April 6, 2010, the CNDC issued decision N° 791 by means of which it ordered the notification of the Transfer. On April 13, 2010 the Secretary of Domestic Trade, based on the decision of the CNDC, issued Resolution SCI Nº 130 in which stipulated that the Transfer was to be notified in accordance with Section 8 of the Antitrust Law.

In view of the analysis performed by the CNDC, any change of control over a company carried out in an onerous manner to the Federal State or its governmental bodies, Provinces, City Halls and the City of Buenos Aires shall be subject to the mandatory notification set out in Section 8 of the Antitrust Law. 

Only the gratuitous transfer of assets to the Federal State or its governmental agencies, Provinces, City Halls and the City of Buenos Aires shall be exempted from mandatory notification.