The use of the in dubio pro reo rule by the Argentine Antitrust Commission

In 2004, the Argentine Antitrust Commission (the “Antitrust Commission”) initiated the proceedings “Advent International Corporation e International Mail Corporation s/ Notificación Art. 8 de la ley 25.156”[1] (the “First Proceedings”) by means of which it analyzed the acquisition of OCA Holding (Gibraltar) (“OCA”), a company controlled by International Mail Corporation (“IMC”), by two companies of the Advent Postal Group (“Advent”).

In the original agreement, two OCA subsidiaries would be excluded from this transaction and would remain under the control of IMC. However, due to certain economic upheavals, an addendum to the original agreement was executed on August 5, 2005, by means of which it was stated that these two subsidiaries would remain under OCA control, which in turn, was already controlled by Advent.

On September 1, 2005, both Advent and IMC filed a brief before the Antitrust Commission requesting the exemption of the notification of the addendum. This request was filed under the First Proceedings, instead of performing a request for an Advisory Opinion, which is a separate proceeding set out by the Argentine Antitrust regulations used when there is doubt whether a notification is necessary or not.

Almost two years later, on July 25, 2007, the Antitrust Commission ordered both IMC and Advent to file a notification since it considered that the addendum was a change of control. Thus, the proceedings “International Mail Corporation y Advent International Corporation s/ Notificación Art. 8 de la Ley 25.156”[2] (the “Second Proceedings”) were initiated.

On December 22, 2008, the Antitrust Commission issued its resolution in the Second Proceedings, which approved the transaction, but imposed a fine to both IMC and Advent.

Argentine Antitrust Law sets out that the fines for late filing can be up to Ar$ 1,000,000 (approximately US$ 270,000 under the current exchange rate) per day. However, in this case, the fine was significantly lessened since the Antitrust Commission applied the in dubio pro reo rule from criminal law, which states that the most beneficial interpretation for the infringing party must be applied. A fine of Ar$ 6,500 (approximately US$ 1,750 under the current exchange rate) per day was imposed by the Antitrust Commission.

Therefore, it considered that the September 1, 2005 request suspended the term for notification of the transaction, despite the fact that it had not been performed under the settings of the Argentine Antitrust Law. This reduced the notification delay to only 15 days for Advent and 16 days for IMC.

There were, however, other mitigating factors that were taken into account, that is: (i) the confusion by the parties regarding the need for notification of the transaction, (ii) the fact that IMC was already controlling both OCA subsidiaries and (iii) the lack of any distortion to competition as a result of the transaction.

The Antitrust Commission also considered the following aggravating circumstances: (i) the fact that the parties had not requested a formal request for an Advisory Opinion and (ii) that Advent was already familiar with the merger control regulations since it had already filed other transactions before the Antitrust Commission.

In view of this analysis, the Antitrust Commission set a fine of Ar$ 97,500 to Advent and Ar$ 104,000 to IMC.

This new precedent from the Antitrust Commission sheds new light on disputes regarding late merger control filings, since it provides the infringing parties with more grounds for the challenge of fines.

Under this new interpretation, the request for the non-filing of a transaction without the proper formalities would essentially generate the same effects as the request of an Advisory Opinion.

It also leaves the door open for further application of the in dubio pro reo rule in the setting of fines, by means of which infringing parties will alleviate the penalties set by the Antitrust Commission.