Antitrust Remedy Negotiations in M&A Transactions: A Sweep Across Case Law

On November 7, 2023, the Argentine Antitrust Commission issued its Working Document on Behavioral and Structural Solutions. The document refers to certain measures aimed at correcting the potential harm that a notified transaction may cause in the involved markets. It also makes several considerations regarding its impact on such transactions and includes a general explanation on the concept of behavioral and structural solutions, their application throughout antitrust legislation, and their jurisprudential evolution.

The document states that in 1999, Law 25156—repealed by the current Law 27442 (LDC) —incorporated the merger control review in the Argentinian legislation. Although that law did not include specify measures to remedy the harmful effects of the notified transactions, the Antitrust Commission applied these remedies and their procedure in its decisions.

Further, the document explains that enacting the LDC introduced important changes in the procedure to review transactions that could potentially restrict or distort competition. The changes included creating two mechanisms: the Statement of Objections and the Special Hearing.[1]

Interestingly, the working document recognizes the right of the parties to file a reply to the Statement of Objections within a specific deadline (currently, 15 days) and, in this way, challenge the analysis the Antitrust Commission made and propose solutions they deem relevant to mitigate competitive concerns. The working document describes these procedural mechanisms as extremely useful to identify the competition problems a transaction may present, making it possible to inform the parties of the specific objections and, at the same time, giving them the possibility of proposing solutions to those problems the Antitrust Commission identified.

Since the LDC became effective, the Antitrust Commission has issued nine Statements of Objections: four have already received a final decision,[2] one was withdrawn by the parties,[3] and the remaining four are currently under analysis.[4] Because the merger control review is carried out case-by-case, the solutions the Antitrust Commission implements are structural, behavioral, or a combination of both.

An example of these measures were those the Antitrust Commission imposed in the the Disney / Fox merger (Case 1692).[5] The Statement of Objections raised concerns regarding:
 

1. the market of basic TV sports channels since, as a result of the merger, Disney would obtain 7 of the 9 channels,
2. the portfolio effect that Disney could exert by owning a large number of channels (some of great interest to the audience), which would increase its bargaining power in the market.

Although the parties offered different compromises, the Antitrust Commission imposed an ex-officio condition with both structural and behavioral remedies. Broadly, the structural measures consisted of a divestment that involved transferring all broadcasting rights on sports tournaments and competitions for which FOX SPORTS was the licensee at the time of the notification, to create a substitute sports channel in the basic subscription.

The behavioral measures included, among others, (i) extending the commercial terms and conditions regarding the channels purchased from the companies involved that were effective before the merger, (ii) offering channels free of any type of bundling, and (iii) eliminating contractual conditions that imposed demanders minimum resale prices, progressive minimum subscriber numbers, penetration percentages, and/or subscriber numbers.

It is worth noting that the working document [MF1] reviews the 48 cases in which the Antitrust Commission applied some type of remedy in the last 24 years, highlighting the experience it has acquired in the merger control review and how this has been mirrored in implementing behavioral and structural remedies.

The working document identifies the economic sectors in which the Antitrust Commission has applied some form of remedy. It also outlines the characteristics of the most recent transactions in the sectors of telecommunications services and beers.

Finally, it adds a thematic search engine of decisions on behavioral and structural remedies between 1999-2023 that complements the document. This search engine will be updated as the Antitrust Commission issues new decisions.[6]

In short, the Antitrust Commission’s work in preparing and publishing working documents on various aspects of competition law practice and in implementing a thematic search engine should be highlighted. We find in this type of documents an extremely useful legal and jurisprudential guide to understand the applicable regulations and their implementation. This provides mechanisms for strengthening the practice of competition law in Argentina.

These documents also promote the principles of transparency and publicity, allowing citizens to be informed of the concerns that the Antitrust Commission has had in previous transactions, and of the various solutions that it has implemented to mitigate them.

Although in the LDC—enacted in 2018—the Statement of Objections appears as a tool to assess the potential competitive effects an economic concentration could have in a certain market, in practice, it has been applied only in the last few years. Consequently, as this instrument has acquired remarkable relevance, there is a clear trend towards applying the Statement of Objections in those cases that raise competitive concerns.