Competition Law in Argentina

1.         Legislation

Antitrust matters in Argentina are ruled by Law No 25,156, and amended by Decrees No 1019/1999, 89/2001 and 396/2001 (jointly, the “Antitrust Law”).

2.         Enforcing agency

The enforcing agency is the National Tribunal for the Defence of Competition (the “Antitrust Tribunal”).  However, this role is currently carried out by the National Commission for the Defence of Competition, because the Antitrust Tribunal has not been set up yet.

3.         Prohibited practices under the Antitrust Law

The Antitrust Law prohibits all acts that limit, restrict or impede competition to the extent that they may harm the general economic interest.

The Antitrust Law lists a series of acts which are considered restrictive practices, if the requirement of harm to the general economic interest is met.  This list, which is not exhaustive, includes: (i) price fixing; (ii) allocation of zones, markets, customers or sources of supply; (iii) agreement or coordination of bids in public biddings; (iv) exclusion or obstruction of one or more competitors from entering into a market; (v) tie-in practices; and (vi) predatory pricing.

4.         Cartel prosecutions

Under the interpretation of the Antitrust Tribunal, the existence of cartels is defined by the presence of competitors of the same relevant market that arrange the fixing of prices or production quotas, or arrange the distribution of market shares, with the sole purpose of restricting competition. During 2005, the Antitrust Tribunal imposed heavy fines for cartel activities in the cement and liquid oxygen markets. 

5.         Market investigations

Section 24 of Law No 25,156 provides that the Antitrust Tribunal may start a market investigation ex officio.  The investigations can also be ordered by the Secretary of Technical Coordination of the Ministry of Economy and Production or at the request of any other governmental agency or officer. During 2005, the Government used the market investigations to control price increases due to rising inflation.

The purpose of the investigation is to clarify and determine the existence of an anticompetitive act by a participant in any market.  If there is prima facie evidence of an anticompetitive act, the Antitrust Tribunal will start a separate proceeding and will require explanations from said party.  After the explanations provided by the party, the Antitrust Tribunal must decide to continue or to close the investigation if explanations rendered by parties summoned are accepted.

6.         Merger control

Certain transactions are deemed to be economic concentrations when they result in the assumption of control by means of: (i) merger; (ii) transfer of businesses; (iii) acquisition of shares; and (iv) acquisition of certain assets.

These economic concentrations require the approval of the Antitrust Tribunal if the aggregate volume of business of the companies involved in the transaction exceeds Argentine Pesos 200,000,000 (approximately US$ 65,573,000 at the current exchange rate).  This mandatory notice must be delivered prior to or within one week of the first to occur of either (i) the date on which any transfer of assets or shares takes place effectively, or (ii) the publication of any cash tender or exchange offer.  If the Antitrust Tribunal does not issue a decision within 45 business days of the filing of the full application, form and relevant documents, the transaction shall be considered as tacitly approved. 

The Antitrust Law (as construed by the Antitrust Tribunal) includes certain exemptions: (i) the acquisition of companies in which the purchaser already holds more than 50% of the shares except when the transfer entails exclusive control from a prior acquisition of joint control; (ii) the acquisition of bonds, debentures, non-voting shares or debt securities; (iii) the acquisition of only one company by only one foreign company that has no assets or shares of other companies in Argentina; (iv) the acquisition of wound-up and liquidated companies (which carried out no activities in Argentina during the preceding calendar year); (v) if the value of the transaction and the assets involved are below Argentine Pesos 20,000,000 (approximately US$ 6,557,300 at the current exchange rate); (vi) gratuitous transfers of goods to the Argentine State, provinces, municipalities and the City of Buenos Aires; or (vii) the transfer of goods among mandatory heirs, by acts among living persons or by cause of death.

7.         Sanctions

The Antitrust Tribunal may impose (i) fines of up to Argentine Pesos 150,000,000 (approximately US$ 49,180,000 at the current exchange rate) on those engaged in any prohibited activities, and (ii) fines of up to Argentine Pesos 1,000,000 (approximately US$ 328,000 at the current exchange rate) per day on those who violate the obligation to notify the Antitrust Tribunal of an economic concentration, or who disobey cease and desist orders issued thereby.

The Antitrust Tribunal can also request a judicial order to wind up or split companies, or to divest businesses in cases of infringement of the Antitrust Law.  Directors, managers, administrators, statutory supervisors, attorneys-in-fact and legal representatives of such entities may be held jointly and severally liable to the payment of the sanction together with the infringing entity.