Legal framework and procedure
Although not specifically contemplated by the Antitrust Law (Law 25.156) or its regulatory decrees, preliminary diligence is increasingly used by the Antitrust Commission in order to establish whether an economic transaction with effect in Argentina should have been notified according to Section 8 of the Antitrust Law.
Using all of the information sources at its disposal, the commission constantly monitors articles published in newspapers and on the Internet, seeking data about economic transactions carried out both in Argentina and abroad.
In addition to the commission's own capacity to initiate preliminary diligence of its own accord, preliminary diligence may be initiated by the commission in response to a complaint made by a person or entity regarding a specific transaction.
Since preliminary diligence does not have a stipulated due process, it will be carried out on the basis of requests for information from the parties involved in the economic transaction in question, issued by the commission. To this end, the parties involved (on notification by the commission) should present themselves before the commission and join the proceedings.
Following the conclusions reached on the basis of the investigation, the commission may:
- consider that the parties involved in the economic transaction were under no obligation to notify the commission as set out in Section 8 of the Antitrust Law; or
- urge the parties involved to notify the economic transaction under investigation.
In the latter case, the commission may also impose a fine on the parties involved in the economic transaction of up to AR$1 million a day for failing to comply with the notification terms set out in Section 8 of the Antitrust Law. The fine for late notification is set out in Section 46(d) of the Antitrust Law.
Although there are several preliminary diligence procedures under way, two cases in particular can be used to demonstrate the possible outcomes mentioned above:
- In Telecom/Telefónica(1) the commission concluded that the economic transaction should have been notified. Both parties were fined a total of AR$241 million.
- In Perdigão/Sadia(2) the commission initiated a preliminary diligence on the basis of press reports. After a period of a few months, the parties were able to prove that the economic transaction should not have been notified in Argentina, as the total business volume of the companies involved did not exceed the threshold stipulated in the Antitrust Law. The commission thus closed the investigation.
In recent years preliminary diligence has been used by the commission as a key tool in the investigation of economic transactions (both national and foreign) that should have been notified.
As demonstrated by the two cases mentioned above, if the commission determines that a transaction should have been notified according to Section 8 of the Antitrust Law, the fine imposed can be substantial, reaching as much as AR$1 million a day from the date on which the notification given in Section 8 of the Antitrust Law should have been made until actual notification.
Thus, if the parties have any doubts as to their obligation to notify the commission of an economic transaction, they should file an advisory opinion with the commission.
According to Resolution 26/2006 of the Secretariat of Technical Coordination, when applying for an advisory opinion the parties must describe the economic transaction and explain why they believe that the transaction is exempt from prior antitrust control. The application must be filed with the commission.
The commission must analyse the information filed by the parties, and may request additional information if necessary. If no additional information is requested or if the parties comply with the presentation requirements, the commission must issue its opinion and advise the secretary of domestic trade (who is responsible for issuing the final resolution) as to whether the economic transaction should be notified under Section 8 of the Antitrust Law.
A request for an advisory opinion means that the commission is responsible for determining whether the parties are obliged to notify the economic transaction. It also provides the parties with a degree of reassurance, as otherwise they would be at risk of being fined for failing to file the notification on time.
For further information on this topic please contact Alfredo M O'Farrell or Miguel del Pino at Marval O'Farrell & Mairal by telephone (+54 11 4310 0100), fax (+54 11 4310 0200) or email ([email protected] or [email protected]). The Marval O'Farrell & Mairal website can be accessed at www.marval.com.ar.
(1) Telefónica de España - AR$104,692,000; Mediobanca - AR$17 million; Intesa San Paolo - AR$17 million; Assicurazione - $43 million; and Sintonia Group - $17 million.