On 05/16/2023 Resolution N° 905/2023 (the “Resolution”) had been issued, whereby the Secretariat of Trade provided for new Rules to notify Economic Concentration Operations (the “Rules”).
As set forth in its section 5, the effectiveness of the Rules would occur 30 days following the publication of the Resolution in the Official Gazette, what happened on July 6, 2023.
The purpose of these Rules, which abrogated the preceding ones, provided for more than 20 years ago by means of Resolution N° 40/2001 of the former Antitrust and Consumer Defense Secretariat – is to regulate the procedure whereby the economic concentration operations detailed in section 7th of Act N° 27,442 (the, “LDC” by its acronym in Spanish) must be notified.
It must be recalled that according to section 9 of the LDC, the economic concentration operations exceeding the business volume threshold equivalent to one hundred million (100,000,000) of mobile units (at present AR$ 16,255,000,000), and which are not reached by any of the exceptions set forth in section 11 of the LDC, will be notified for their examination by the Enforcement Authority of the LDC.
This is so because the LDC sets forth in its section 8th that the economic concentration which purpose or effect is or may be to restrict or distort competition, causing a damage for the general economic interest are forbidden.
To that effect the Resolution had been issued, to provide for, through the Rules, the procedure applicable to said notice so the Enforcement Authority of the LDC may evaluate the suitability of the reported economic concentration.
Among its main characteristics it must be highlighted that the Rules reflected the directive set forth by section 9 of the LDC, whereby a summary proceeding should be established for the economic concentration that at the Enforcement Authority’s criterion could have less chances to be reached by the prohibition of section 8th of the LDC.
Said directive had not had a regulatory source, in spite of the fact that the LDC is in force since year 2018.
Hence, by means of the Rules two types of notification procedures were set forth, which involve the presentation of information by the notifying party, and the development of analytical levels by the Enforcement Authority, in both cases increasingly, pursuant to the requirements provided for by the three types of Forms specified in Rules: F0, F1 y F2.
Said procedures are the following:
· Summary proceeding (PROSUM by its acronym in Spanish): applicable to cases in which presumably an economic concentration operation does not have significant effects on competition. In this case, the Parties may choose a Summary Proceeding through the presentation of form F0.
· Ordinary proceeding: applicable to cases in which the notified economic concentration operation does not fit into the criteria set forth for the Summary Proceeding, it must be carried out by filing forms F0, F1 and, eventually, form F2, as appropriate.
The Resolution had provided for in its section 3rd the instruction to the Antitrust Commission (the CNDC by its acronym in Spanish) to set forth the technical criterion that should determine in which cases the economic concentration operations notified under the terms of section 9th of the LDC could be eligible for the PROSUM. As at this date the CNDC has not issued said provision yet.
In addition to the PROSUM, the other important news included by the Resolution is the availability of a voluntary prior notice instance, in which the CNDC may be contacted to clarify specific doubts both, on substantive and procedural matters regarding an economic concentration operation planned to be notified for its authorization.
It must be highlighted that this stage is not binding for the CNDC, and it does not substitute the mechanism of the advisory opinion set forth in section 10 of the LDC and section 10 of its Regulatory Decree Nº 480/18.
Finally, the Rules clarified the mechanism to compute the terms mentioned in section 14 of the LDC, according to which the enforcement authority must issue a decision on whether or not it authorizes, conditions or forbids the notified operation within 45 days following the presentation of complete and correct information and background.
The Resolution sets forth that the terms are calculated by administrative working days, and which start only, once all the information required according to the applicable Forms (F0, F1 or F2) are filed, including the legal capacity claimed by the attorneys in fact of the notifying companies and the documentation that formalized the operation duly translated into Spanish.
As set forth in section 28, subsection (m) of the LDC, the Resolution establishes that the terms will be suspended as from the petition of additional information to the notifying companies and/or observations to the forms are made.
On the other hand, the Rules provide that the spontaneous presentations made by the parties without the CNDC’s previous requirement, will interrupt the calculation of the terms of section 14 of the LDC, that will start to run again as from said presentation.
It must be pointed out that the information submitted by the notifying companies will have the nature of affidavits; and the source supporting the statements made must be identified and, when they are required and available for the notifying companies, the original databases or supporting documents used as a source of the submitted information must be furnished.
The period of validity of the new Rules is welcome provided that it determines an innovation regarding economic concentrations after more than TWENTY (20) years following the issuance of the previous rules.
The criteria to be set forth by the CNDC must be still known. Said criteria will allow access to the PROSUM, what will result in increased efficiency in the analysis of mergers and acquisitions by the enforcement authority, guaranteeing a proper evaluation of the potential effects in the market, by means of the implementation of a summary proceeding that will allow the prompt authorization of economic concentration operations with less chances to be reached by the prohibition of section 8th of the LDC.
Once said provision is known, the relevant supplementary report will be published.
Should you require assistance on this issue, please consult Javier Gelis (gelis@abeledogottheil.com.ar), or your usual contact in Abeledo Gottheil.
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