New Statement of Objections Issued by the Antitrust Commission

Background and a clear trend

Whilst the Antitrust Law sets out the possibility of issuing a Statement of Objections since its entry into effect in 2018, it is worth noting that this instrument has only found practical application in recent years. Currently, the CNDC has issued Statements of Objections in the cases Disney/Fox (2020), Syngenta/Nidera (2021), Mirgor/Brightstar (2021), Linde/Praxair (2021) and the most recent Arcor/Ingredion (2022). In this regard, a clear trend can be observed in the implementation of Statements of Objections within those transactions in which the CNDC considers the possibility of raising competitive concerns.

The Statement of Objections in ARCOR / INGREDION 

The transaction under analysis consisted in a joint venture whereby ARCOR S.A.I.C. ("ARCOR") and INGREDION ARGENTINA S.R.L. ("INGREDION") acquired joint control over the activities related to wet corn milling and the commercialization of related products that, prior to the transaction, each of them carried out separately.

ARCOR is a multinational group that specializes in three business divisions: (i) mass consumption foods; (ii) agribusiness and (iii) packaging. INGREDION is a multinational ingredient supplier that in Argentina is engaged in the production and marketing of ingredients, especially those based on wet corn milling and its byproducts. According to the CNDC, ARCOR and INGREDION held 76% of the wet corn milling capacity. Jointly, the CNDC considered that the companies had a market share of over 59% and after the transaction, INGREAR HOLDING S.A., the joint venture, would concentrate more than 85% of the wet milling capacity in Argentina. As a result of the transaction the Commission considered that there would be a reduction in the number of offerors (from four to three) as well as the strengthening of a dominant position that entails 85% of the production capacity market share.

In addition, the authority considered that the wet corn milling activity in Argentina was highly concentrated with an HHI above 3,600 points prior to this transaction and a rise to 6,276 points post-transaction. In sum, the high barriers to entry in the market together with the absence of imports that could play a disciplining role and the lack of competitive capacity of the other players in the wet corn milling market were deemed sufficient for the CNDC to consider that the transaction had a high potential to harm the general economic interest

As a result of the foregoing, the Secretariat of Domestic Trade ("SCI"), following a Statement of Objections issued by the CNDC, decided to (i) issue an injunction aimed at preserving the inalterability of the situation of the companies that are part of the transaction without change; and (ii) grant a fifteen-day term for the involved companies to make the allegations they deem appropriate or offer solutions that may mitigate the potential effects on competition arising from the Statement of Objections.

Conclusion

In view of the foregoing, Statements of Objections have lately gained key role in the analysis of economic concentrations. As such, both the CNDC and the SCI have shown a clear trend towards the application of this tool set out in Section 14 of the Antitrust Law to assess the potential effects on competition they may have on the analyzed markets.