On November 22 the House of Representatives passed a bill approving a new competition law in Argentina (the "Bill"), set to replace Law 25,156 of 1999.
The Bill was referred on November 27 to the Senate, where it is expected to be approved soon. Once passed, the Executive will need to regulate the law within 60 business days. The launch of the public process to select the members of the new competition agency is set to commence within 30 business days of the enactment of the regulation.
The Bill will introduce sweeping changes in the current competition law regime in Argentina, among which we highlight the following:
NEW AGENCY AND SPECIALIZED COURT
- A new independent agency, the Autoridad Nacional de Competencia (National Competition Authority, or "ANAC") will be created.
- The ANAC will be comprised by the Tribunal de Defensa de la Competencia (Antitrust Tribunal), the Secretaría de Instrucción de Conductas Anticompetitivas (the Anticompetitive Conducts Trial Secretariat) and the Secretaría de Concentraciones Económicas (the Economic Concentrations Secretariat).
- The Tribunal will be comprised by five members —of which two will be lawyers and two economics professionals— and will have adjudicatory powers. On the other hand, both Secretariats will conduct the behavioural and merger control processes —as the case may be— and ultimately advice the Tribunal on the suggested course of action.
- The members of the Tribunal and the heads of the two Secretariats will be appointed through a public merit-based selection process, by a jury formed by representatives of the Government, the Attorney's General Office, and legal and economics academies.
- Appeals made in the city of Buenos Aires will be heard by a specialized competition law chamber within the Federal Civil and Commercial Court.
- Increased jurisdictional threshold of 100 million Unidades Móviles, a coefficient updated by the inflation index. The initial value of the Unidad Móvil is set at ARS 20 pesos. Accordingly, the new notification threshold as of the date of this newsletter would be of approximately USD 113.9 million, a very significant increase considering that the current threshold is of around USD 11.4 million.
- Likewise, increased thresholds for the de minimis asset/transaction value exemption, jumping from USD 1.1 million/ USD 3.4 million to USD 22.8 million / 68.4 million.
- Merger filings will be reported pre-closing. The change from the current post-closing system will take place one year after the creation of the ANAC.
- Gun jumping will be subject to daily fines of up to (i) 0.1% of the consolidated annual turnover in Argentina of the notifying companies (buyer and target/merging companies) or (ii) if such criterium could not be used, fines of currently up to USD 855,000, as the case may be.
- Filing fees will be due. The amounts will be set by regulation.
- Merger filings will be made public and any third party may file objections, although the agency will not be required to consider them.
- Mergers shall be decided within 45 business days, unless the agency were of the view that the merger restricts competition, in which case it will communicate its objections to the parties in written form (said objections also made public) and will call them for a hearing to examine possible mitigating measures. In such case, the review can extend for additional 120 business days.
- Fines will be increased to up to the higher of (i) 30% of the turnover of the business associated with the infringement in the last fiscal year, multiplied by the number of years of the infringement (with a cap of 30% of the total local consolidated turnover of the infringing parties in the last fiscal year); or (ii) double the amount of the economic benefit caused by the infringement. If a fine cannot not be determined by application of the foregoing criteria, it will be imposed by the Tribunal with a cap of currently up to approximately USD 228 million. Fines may even be doubled in the case of repeat offenders in the 10 years preceding the most current sanction.
- Cartel practices will be considered per se illegal and no longer subject to rule of reason analysis.
- Interlocking directorates could, under a rule of reason approach, be found illegal.
- A leniency program for cartel practices will be created, granting (i) immunity to the first applicant; (ii) a 50% to 20% reduction in the fine to other applicants; and (ii) a "leniency plus" reduction of one third in the sanction imposed on the first conduct.
- New provisions allowing for a faster, more efficient private enforcement of antitrust violations, namely: (i) should parties file the claim once the administrative decision imposing a sanction (if existent) is final, such decision will be binding on the civil judge, and the case will be heard under expedited procedural rules; and (ii) parties that benefitted from leniency applications will be exempted from civil liability or face reduced liability, as the case may be, with the exception of liability stemming from (a) claims by defendants' purchasers or their direct and indirect suppliers; and (b) cases where defendants could not obtain complete redress of their claim by parties not benefitted by leniency applications.
- The Bill contemplates that the Tribunal will issue a regulation in order to grant exemptions to contracts and other type of agreements (including but not necessarily limited to horizontal cooperation agreements) which may prima facie raise anticompetitive issues but that be ultimately considered by the Tribunal not to impair competition.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.