Scope of Antitrust Law Reduced

I. Economic Concentration

Argentine Antitrust Law No. 25,156, published in the B.O. on September 20, 1999 (the “Antitrust Law”), restricts any “Economic Concentration” which is intended to, or has the effect of, reducing, restricting or distorting competition in such a manner that could result in damage to the general economic interest.

“Economic Concentration” is defined as the takeover of one or more companies, which may be implemented by a variety of transactions, including among others mergers of companies, bulk of assets sale, purchase of shares or rights to subscribe or acquire shares when the purchaser gains control or significant influence on the company; and any other agreement or act whereby the assets of a company are transferred either legally or in fact to a person or economic group or that gives decision-making control over ordinary or extraordinary management decisions of a company.

II. New Scope of Reporting Requirements

Certain “Economic Concentration” transactions require to be subjected before execution or within one week from their execution to a notice and approval procedure before the Antitrust Committee.

The transaction which is required to be submitted to the Antitrust Committee will not be effective among the parties or vis-à-vis third parties until such transaction has been approved. Additionally, the Antitrust Committee may apply fines of up to $150 million; and daily fines of up to $1 million to those who violate the obligation to report relevant Economic Concentration transactions.

The scope of the “Economic Concentration” transactions that require to be reported has recently been reduced by National Executive Power Decree Nº 396/2001, published in the B.O. on April 5, 2001 (“Decree 396/2001”), which has modified the Antitrust Law.

Decree 396/2001 eliminated the requirement to report to the Antitrust Committee those “Economic Concentration” transactions which would result in the total worldwide volume of the business of the relevant group of companies exceeding the amount of $2,500 million.

Therefore, under the Antitrust Law currently the only “Economic Concentration” transactions which require approval of the Antitrust Committee are those which would result in the total volume of business in the Republic of Argentina of the relevant group of companies exceeding the amount of $200 million.

III. Exempted Transactions

Even in the event the “Economic Concentration” transaction falls within the $200 million threshold mentioned above, it would not require authorization from the Antitrust Committee if it falls within the scope of a list of exempted transactions.

Decree 396/2001 added another exempted transaction which does not require approval of the Antitrust Committee, which is listed as point (v) below.

The list of exempted transactions is currently the following:

(i) acquisitions of companies, when the purchaser already holds more than 50% of the shares;

(ii) acquisitions of bonds, debentures, non-voting shares or debt securities of companies;

(iii) acquisition of only one company by only one foreign company that does not have any assets or shares of other companies in Argentina;

(iv) acquisitions of liquidated companies (which have not performed any activity in Argentina during the preceding fiscal year); and

(v) transactions where each of the total local assets of the acquired company or the local amount of the transaction is lower than US$20 million, and in which the involved companies have not participated in economic concentrations for an aggregate of US$ 20 million in the last 12 months or US$60 million for the last 36 months (both amounts refer to the total value of the local assets or to the total amount of the local transaction).

IV. Recent Opinions of the Antitrust
Committee

The following are some opinions passed by the Antitrust Committee in response to specific consultations filed before it, which may illustrate its criteria in connection to enforcement of the provisions of the Antitrust Law:

* A four-year option to acquire shares does not require notification until such option is exercised.

* A transfer of a trademark to a third party for a monetary value must be notified.

* In order to consider that a company is acquiring a “substantial influence” over another, which would be subject to the notification requirement, the purchaser must have a veto power on decisions related to commercial policies and competitive strategy of the target company.

* Any transfer of a company’s asset or group of assets, which permit the transferee to carry out an economic activity and have a volume of business must be notified to the Antitrust Committee.

* If a company exports products to Argentina on a habitual basis and such exports constitute a substantial portion of the total exports of such products in the country (e.g. from 34% to 62%), such company is deemed to have activities in Argentina for purposes of the Antitrust Law.

* An acquisition of a company in Europe, having the buyer only a branch in Argentina and the seller no activity in the country, should not be notified if the products sold domestically by the acquired company (i) bear an insignificant market share, (ii) are not habitual, and (iii) there is no vertical or horizontal integration between the products commercialized by both the buyer and the seller.