New Merger Control Review Regulation in Argentina

Given that more than twenty years have passed since said resolution was issued, the Secretary of Trade deemed it appropriate and necessary to update it. Therefore, it passed Resolution No. 905/2023, establishing the Regulation for Notifying Economic Concentration Transactions[1]. This regulation aims at regulating the procedure for notifying the economic concentration transactions in article 7 of the Law No. 27442 (LDC).

 

The regulation brings novelties and greater clarity regarding various instances of the notification process, such as the parties’ obligation to provide complete, sufficient, and truthful information; the consequences of delay or failure to submit information; the computation and interruption of deadlines; the manner in which the notification should be made; the parties required to notify; the possibility of contacting the National Antitrust Commission (CNDC) prior to notifying a transaction; the notification procedures; and other instructional measures.

 

Notification Procedures. The regulation regulates both the Summary Procedure (PROSUM) and the Ordinary Procedure. The Summary Procedure is for those economic concentrations with lower probabilities of being subject to the prohibition in article 8 of the LDC. Parties may choose this procedure by submitting form F0. If the CNDC deems it necessary, it will request the parties to adjust form F0 within a period of 20 days. If the CNDC considers that the transaction does not qualify for the Summary Procedure, it will request the parties to submit form F1, and the process will continue according to the rules of the Ordinary Procedure. If the CNDC considers it necessary to further analyze the transaction, it will request the parties to submit form F2 within 30 days. The CNDC may also request additional information from the parties. Such requests suspend the deadlines in article 14 of the LDC.

 

Obligation to provide complete, sufficient, and truthful information. Article 3 of the regulation establishes the obligation to provide complete, sufficient, and truthful information in all submissions made by the parties and third parties. The information provided through forms and other means will be considered sworn statements, so the falsity of their contents will cause the competent authorities to intervene and, possibly, issue sanctions. Authorities may implement measures regarding the declarations on the lack of information in certain markets. The novelty here lies on the fact that management bodies of notifying companies or certain attorneys-in-fact with sufficient powers will be requested an express sworn statement to that effect.

 

Consequences of the delay or failure to submit information. If the information in the F1 and/or F2 forms is incomplete and the reasons are insufficient, the parties will be requested to correct the forms within 30 days as of the corresponding order. If they fail to comply, or if the additional information submitted is incomplete or defective, they will be given a maximum of 5 days to provide the missing information. If they fail to meet this deadline, the CNDC may consider that the transaction has not been notified, which may result in fines for late notification.

 

Computing and interruption of deadlines. The regulation provides more clarity regarding the computation and interruption of deadlines. All deadlines will be counted in business days. Once the submission is made, the 45-day period in article 14 of the LDC will not begin until the parties have proven their invoked legal capacity, submitted translated documents formalizing the transaction, or committed to providing information on any aspect of Form F1 or F2. Once the CNDC requests the submission of Form F1 or F2, the deadline will be interrupted, and computation will restart once the parties submit the required form. Deadlines will be suspended when the CNDC requests additional information, as well as when determined by a grounded administrative act. Spontaneous submissions the parties make without prior request of the CNDC  will also interrupt the computation of deadlines.

 

Method for notifying an economic concentration transaction. Notifications of economic concentration transactions will still be given through the Remote Procedures Platform (TAD). All forms and accompanying documents must be submitted there. All documents submitted must be digitized and allow search criteria. Their format will depend on whether they contain quantitative or qualitative information. Any document written in a language other than Spanish must be submitted with its corresponding sworn translation. There are exceptions to the translation requirement for specific sections of the documents. Additionally, public instruments granted abroad must be legalized or apostilled, as appropriate.

 

Pre-notification. One of the main novelties is that its article 8 establishes that parties may communicate in advance with the CNDC before submitting the notification of their transaction. This allows them to prepare the necessary information and address any doubts related to the notification procedures. However, the information provided during this stage does not prevent the CNDC to final review the submission at the end, to ensure that the submission of information and background meets the notification requirements established by law. The CNDC is not obligated to accept or endorse the opinions expressed during this stage, as it serves for informational purposes only. The final decision on how to proceed with the process rests solely upon the involved parties.

 

The resolution includes Forms F0, F1, and F2 for notifying economic concentrations.

 

Form F0 - Parties opting for the Summary Procedure must submit form F0 for economic concentrations that may have a lower likelihood of falling under the prohibition in article 8 of the LDC. The form F0 requests:

 

1. Identification of the Parties: identity of the Parties involved, contact information, and legal representatives.
2. Integrity Program: whether the companies have implemented an integrity program in accordance with Law No. 27401, both in general and regarding antitrust.
3. Framing of the notified economic concentration in the summary procedure: which criteria established by the CNDC the operation fits into for processing under the Summary Procedure, and grounds for such framing.
4. The notified transaction: a legal and economic description of the concentration, including details of the legal acts involved, copies of relevant documents, information about shareholder agreements, and documents proving the closing date of the transaction.
5. Information on the affected companies: control structure of the companies before and after the transaction, including details of holdings and economic activities carried out.
6. Information on the relevant markets of the transaction: identification of the economic relationships involved in the transaction and definition of the relevant markets for each product.
7. Market shares: market size, the shares of the companies involved and their competitors in the relevant markets, and the methodology used to measure those shares.
8. Other procedural issues: it is possible to request confidential treatment for certain documents and information, and a non-confidential summary is required.

 

Form F1 - For those concentrations that do not qualify for the Summary Procedure, parties must submit Form F1, and the process will continue according to the rules of the Ordinary Procedure. This form requests:

 

1. Information about the involved companies: analysis, reports, studies, and surveys related to the involved companies that are useful for assessing the impact of the economic concentration on competition, competitors, and market conditions.
2. Information on the relevant markets of the transaction: identification and description of the included products, specifying their type, brand, and main characteristics. It should also indicate the geographic areas in Argentina where these products are offered. It includes both demand-side and supply-side substitution.
3. Quantitative market information: competitors with more than 5% market share in each relevant market and their contact information; chambers or business associations they belong to.
4. Information on the production process: a brief description of the production process of the involved products and substitute products, indicating whether the involved companies produce them for third parties or outsource part of their manufacturing.
5. Other aspects of market functioning: whether new competitors have entered, new product launches, or repositioning of existing products in the past three years; market evolution in terms of size, prices, new products, technologies, among other variables.
6. Authorizations to exchange information with foreign competition authorities: if the operation has been notified in other jurisdictions, parties must attach the corresponding authorizations to exchange information with the competition authorities of those jurisdictions.

 

Form F2 - When the CNDC deems it necessary to deepen the analysis of the economic concentration, it will require the parties to submit Form F2. This form requests:

 

1. Relevant product / geographical market: including both demand-side substitution and supply-side substitution.
2. Qualitative and quantitative market information: volume of sales for the products involved, exports, imports, pricing policies, as well as factors influencing these decisions.
3. Production capacity: maximum production capacity of the products involved in the last 3 years and potential projects to increase such capacity.
4. Countervailing purchasing power: important suppliers of inputs and raw materials, as well as the most relevant customers in terms of billing.
5. Differentiated products: the percentage of demand that would shift to other products involved in case of price increases and the degree of product differentiation.
6. Production costs: the average unit cost structure for the products involved, including fixed and variable costs.
7. Market entry and exit: entry of significant competitors in the last 5 years and estimation of their current market share; probability of future market entries and estimation of the timeframe in which they could occur; key factors influencing market entry.
8. Research and development: research and development activities carried out by the companies involved in the relevant markets; analysis of trends in these markets, technological evolution, companies’ planning and priorities for the next three years.
9. Benefits of the transaction to the general economic interest: expected efficiency gains resulting from the concentration; identification of benefits such as job creation, income, import substitution, investments, environmental care, and gender policies, establishing parameters and measures to evaluate their long-term sustainability, and specifying the geographic and productive areas where they will have an impact.
10. Information and internal documentation regarding the notified operation: provision of documents on the notified operation and its effects in Argentina, such as reports, minutes, presentations, internal or external reports, business programs, and business plans.

 

The resolution also instructs the CNDC to establish technical criteria within 15 days to determine in which cases the economic concentrations notified under the terms provided in article 9 of the LDC may qualify for the Summary Procedure (PROSUM) in the last paragraph of article. The deadline is June 12, 2023.