COMPETITION LAWS OUTSIDE THE UNITED STATES Third Edition Volume I AMIERIGANBARASSOCIATION Antitrust Law SectionTABLE OF CONTENTS Volume Foreword... .V Chapter I ARGENTINA chic scene eer 1 Chapter 2 AUSTRALIA, Chapter 3 BRAZIL... Chapter 4 CANADA, Ad Chapter 5 CuINa 5 Chapter 6 COLOMBIA Chapter 7 EUROPEAN UNION 7A Chapter 8 FRANCE. 81 Chapter 9 GERMANY Chapter 10 HONG KONG 10-1 Chapter 11 INDIA sn MlVolume IT Chapter 12 IRELAND . Chapter 13 ITALY... Chapter 14 JAPAN Chapter 15 Mexico Chapter 16 NETHERLANDS. Chapter 17 RUSSIA.... Chapter 18 SINGAPORE... Chapter 19 SOUTH AFRICA Chapter 20 SOUTH KOREA... Chapter 21 ‘SPAIN Chapter 2 ‘TAIWAN Chapter 23 UNITED KINGDOM joe a LL 16-1 71 18-1 19-1 20-1 (cle with First dyna emei cL new Cole laws note and enac two unde shou appl ensu erro! Outs forty this of fruit Wo ‘Tree stag over Cler The serv theirFOREWORD Welcome to the Third Edition of Competition Laws Outside the United States (CLOUS), providing in-depth coverage of the competition laws of 23 jurisdictions with which U.S. businesses trade extensively. In the years since the publication of the First Edition of CLOUS in 2001 and the Second Edition in 2011, there has been dynamic change and expansion of competition laws around the world, and the emergence of many new antitrust regimes. Reflecting these developments, this TI Edition contains updated chapters for the twelve jurisdictions originally covered by CLOUS and the six jurisdictions that were added to the Second Edition. It also adds new chapters addressing the competition laws of five more jurisdictions: Argentina, Colombia, Hong Kong, Singapore, and Taiwan, thus now addressing the competition laws of 23 jurisdictions outside the United States. As was true for the first two editions of CLOUS, a cautionary statement must be noted: in most of the jurisdictions covered in this Third Edition, the law, regulations, and interpretations change rapidly. In some regimes, because of only recent enactments, there is scant case law or other guidance documents. As with the first two editions, the reader s ould use this Third Edition only as a starting point for understanding the law of another country. For a more refined analysis, the reader should seek the legal advice of experienced counsel qualified to practice in the applicable jurisdiction. Despite the efforts of the authors, editors, and reviewers to ensure the accuracy of the information contained in the Third Edition as of mid-2019, errors and omissions may remain, and changes surely will occur. The Third Edition of CLOUS has been prepared by the Competition Law Outside the United States Editorial Board. The Section is particularly grateful to former Section Chair Irving Scher, the Editor-in-Chief, for his leadership in bringing this work to completion. The Section’s special thanks also go to the other members of the Editorial Board for their exceptional efforts in bringing this publication to fruition: H. Stephen Harris, Jr., Patrick Kelleher, Paula W. Render, and Barbara H. Wootton. Special thanks also go to Katherine Clemons of the Seetion’s Books and Treatises Committee, who provided exceptional assistance in the publication’s final stages, including editing and finalizing drafts of all 23 chapters for publication, and overseeing final text and style editing efforts, and to David B. Rochelson, J. Andrew Clemons, Michael Kippins, and Brandon Bigelow, who assisted in that major effort. The Board was also aided by Justine Johnson who, along with David B. Rochelson, served as the Committee's Young Lawyers Representatives, Each of the chapters was authored by leading competition law practitioners in their respective jurisdictions: © Argentina: ulin Petia, Federico Rossi © Australia Elizabeth Avery, Rebecca Ponnuthurai, Anna Belgiomo-Nettis, Necharika Maddula, Tom Abraham, Marina Yang, Isabella Van Leer, Jacqueline Reid© Brazil: Marcio Soares, Amadeu Ribeiro, Paulo Cesar Luciano Jr., Marcelo Rizzo Napolitano © Canada: Anita Banicevic, Dajena Pechersky © China: Janet Hui © Colombia: Mauricio Jaramillo Campuzano, Victor Ayalde, Carlos Esguerra ° EU; Valeria Losco, Eric Mahr, Kirsty Brown, Anthony Ojukwu, Amaryllis Muller, Ken Vorrasi, Lee Roach, Johannes Zotti © France: Katrin Schallenberg, Marco Plankensteiner © = Germany: Dorothee de Crozals, Daniela liger, © Hong Kong: Mateus Pollard, Kathleen Goui, Jackie Lau, Joshua Chan © India Arshad (Paku) Khan Ireland: Philip Andrews, Ciaran Donohue © Maly: ‘Alberto Pera, Andrea Pezza, Nicola Maria Francesco Faraone © Japan: Tetsuya Nagasawa © Mexico: Carlos Mena Labarthe © Netherlands: — Weijer VerLoren van Themaat, Paul Lugard © Russia: Vassily Rudomino, German Zakharov, Viadislay Alifirov, Ksenia Tarkhova, Ruslana Karimova, Alla Azmukhanova, Nadezhda Filimonova, Daniil__ Lozovsky, Alexander Artemenko, Alexander Nazarov, Artem Fattakhov, Artem Lachinov © Singapore: Kala Anandarajah © South Africa: John Oxenham, Jemma Muller, Michael-James Currie © South Korea: Cecil Saehoon Chung, Tae Yong Kim © Spain: Marta Delgado Echevarria © Taiwan: Professor Andy Chen © UK: ‘Tom Bolster, Anna Morfey, Lucy Rigby, Stella Gartagani, Jamie Nicolaides ‘A second group of leading competition law practitioners served as reviewers and provided helpful critiques and comments. The Section’s thanks go to Bemardo Cassagne, Francisco Rondoletti, Sol Garcia Gill, and Michael Modesto Gale for ‘Argentina; Noni Jean Nelson and Elizabeth Richmond for Australia; Eduardo Frade for Brazil: Justine Johnston for Canada; Lixin Wang and Anora Wang for C ‘Alfonso Miranda-Londofto for Colombia; Hans Bousie, and Elaine Whiteford for the European Union; Line Le Gleut, Romain Ferla, and Florence Bryan for France: Sebastian Jungerman and Lori Taubman for Germany; Stephen Crosswell and Wendy Thian for Hong Kong: Anand S. Pathak and Anora Wang for India; Tara Kelly for Ireland; Gian Luca Zampa, Valeria Losco, Ermelinda Spinelli, Giorgio Candeloro, Alessandro Di Gio, Mario Todino, and Filomena Crispino for Italy; Hiromitsu Miyakawa and Matthew Searvie for Japan; Gabriel Altamirano and Bertha Alicia Ordaz Aviles for Mexico; Claudia Taveras for the Netherlands; Yvan Desmedt for the Netherlands; Alexander Viktorov, Olga Kovtunova, and Michael Rodriguez vifor Russia; Corinne Chew for Singapore; Lara Granville, Chris Charter, and Tommy La Voy for South Africa; Hwan Jeong, Suruyn Kim, Jeong Ho Sun, Miji Lee, and Genny S. Kim for South Korea; Michaela Spero and Belen Irissary for Spain; Professor Richard Li-dar Wang for Taiwan; and Peter Crowther and Lisa Hatfield for the United Kingdom. The Section of Antitrust Law wishes to acknowledge a special debt of gratitude to Freshfields Bruckhaus Deringer LLP and Jones Day, which firms devoted substantial resources to the project by providing lawyers who authored and reviewed many of the chapters. itis our hope that with the aid of this Third Edition, practitioners will continue to find CLOUS to be a uniquely useful guide to world competition law May 2020 Brian R. Henry Chair, Antitrust Law Section ‘American Bar Association 2019-2020CHAPTER 1 ARGENTINAOVERVIEW 1. SUBSTANTIVE LAW 1 Argentina-3 CONTENTS General Overview of Competition Laws a. — Introduction. b. Background of the New Antitrust Law Overview of Structure, Independence, and Jurisdiction of Enforcement Agencies. Overview of Structure, Independence, and Jurisdiction of Judicial Authorities Dininin Horizontal Agreements and Practices a. Overview. b. Cartel Enforcement. (1) Agreements Covered (2) Enforcement Authorities (3) Investigatory Procedures (a) Dawn Raids (b) | Compelled Production of Documents. (c) Wiretapping...... 7 (4) Leniency Program (e) Settlements A (0) Penalties... c. Treatment of Intragroup ; Conspiracy or Acts by Related Compa 4. Other Horizontal Practic Mergers and Acquisitions, a, Transactions Covered b, Joint Ventures c. Notification and Procedure... (1). Jurisdiction... (2). Filing Procedures (3). Filing Fees. (4) Special Provisions for Un (5) Initial Information Requirements (6) Confidentiality. (7) Exemptions (8) Substantive Test... Treatment of Efficienci Collective Dominance. Abuse of Dominance (1). Overview BO sR >R meeArgentina-4 (2) Tied Selling and Bundlin A (3) Conditional Discounts (4) Refusal to Deal.... 1 (5) Predatory Pricing.. (6) Exploitative Conduct... a (7) Resale Price Maintenance .. (8) Role of Legitimate Business Justi e. Settlements. ss L £, Remedies and Sanetions ... fe 4, Intellectual Property G 5. Interaction between Competition and Other G Laws and Regulations a a. Trade... a b. Foreign Investment... c. Regulatory Frameworks. t st c ‘ORCEMENT OF COMPETITION LAWS AND PROCEDURES... a 1. Ageney Enforcement... a. National Enforcement Pp (1). Responsible Agencies and Structure 2 (2) Investigative Powers and Procedure. b. Subnational Enforcement . w 2. Judicial and Administrative Procedures .. st a. Relevant Courts os 5 bv b. Time Ordinarily Required for First Instance b Review and Appeals... 3 — in 3. Private Actions..... a st D. JURISDICTION... ct 1. Extraterritorial Application of Law in 2. International Agreements and Cooperation. m el m re D mArgentina-5 A. Overview 1. General Overview of Competition Laws a. Introduction Argentina’s first comprehensive and modem antitrust regulation was through Law No. 22,262, enacted in 1980,' Law No, 22,262 introduced important new features: it created the first specific antitrust agency in Argentina, the National Commission for the Defense of Competition (Comisin Nacional de Defensa de la Competencia or CNDC), the rule of reason approach to analyzing all anticompetitive conduct, and the concept of abuse of dominance. During the initial twenty years (1980-1999), antitrust enforcement focused on anticompetitive conduct. Antitrust policy acquired constitutional status through the 1994 amendment to the Argentinian Constitution. Article 42 of the amended Argentinian Constitution states that the federal authorities shall provide for “the defense of antitrust against any kind of market distortions,” and “the control of natural and legal monopolies.” Law No. 25,156 enacted in 1999 retained most of the features of the 1980 predecessor law, but for the first time created a merger notification procedure.’ Since 2000, antitrust enforcement has moved to focus on merger control.* A new Law in Defense of Competition or Antitrust Law (Law No. 27,442),° which was enacted on May 15, 2018 and came into force on May 24, 2018, substantially amends Argentina’s prior antitrust regime, with the underlying rationale being to modernize Argentinian antitrust law and bring it in line with intemational best practices. The Antitrust Law’s changes to Argentina’s prior antitrust law enacted in 199° can be grouped into the following five broad categories: (1) the adoption of an ex-ante or premerger control regime with higher notification thresholds and shorter review periods; (2) the adoption of a presumption of illegality for hardcore cartels and an increase in fines for all types of antitrust infringements; (3) the introduction of the country’s first ever national leniency program; (4) certain modifications to foster private damages actions in the country, in particular follow-on claims; and (5) certain institutional modifications, notably the creation of a new, more independent antitrust authority and the creation of a new specialized court to review appeals on antitrust law matters. Together with implementing regulatory Decree No. 480/2018 (the Decree),’ the new Antitrust Law governs all antitrust matters. 1980, B.O. There were some previous antitrust laws (No, 11,210 of 1923 and No. 12.906 of 1946) that dealt with certain anticompetitive conduct but received little to no enforcement 2, Art. 42, CONSTITUCION NACIONAL [CONST. NAC] 3, Law No. 25,156, Sept. 20, 1999, BO, 29233, 4. Juliin Pefia & Federico Rossi, Competition Law in Argentina, COMPETITION LAW IN LATIN AMERICA: A PRACTICAL GUIDE, p. 161 (Kluwer Law International, 2016) 5. Law No. 27,442, May 15, 2018, B.O. 33870 (Ley de Defensa de la Competencia). 6. Law No. 25,156, Sept. 20, 1999, B.O, 29233. This law was repealed upon the entry into force of the Antitrust Law. 7. Decree No. 480, May 24, 2018, B.O. 33877.Argentina-6 b. Background of the New Antitrust Law The change of government in Argentina in December 2015 led to, among other economic policy changes, the prioritization of antitrust law enforcement to strengthen competition between businesses. From the start of its admini n, the Maeri government made clear that sound antitrust law enforcement was one of its priorities.* Various developments ensued, leading to the enactment of the new Antitrust Law. A new president and commissioners of the CNDC were appointed in 2016, chosen for their experience in the public, private, or academic sectors in antitrust or law and economics.” The Macri government also empowered the CNDC to carry out investigations."° Through the enactment of Law No. 26,993 in September 2014 and secondary regulations,"' the previous administration had stripped the CNDC of any decisionmaking powers, which powers were completely transferred to the Domestic ‘Trade Secretariat.'? The CNDC’s role had been reduced to that of assistant to the Domestic Trade Secretariat, with powers only to issue recommendations, opinions, studies, and reports, none of which had any binding effect. In May 2016, the Domestic Trade Secretariat re-established the CNDC with the powers it historically possessed.'> During the Macri administration, the CNDC went through a major internal restructuring of its human resources, hiring and training new junior and senior economists and lawyers. The training of the new professionals has been handled both internally, by senior professionals with strong academic backgrounds, and externally, through training programs conducted by either foreign antitrust agencies (for instance, the U.S. Federal Trade Commission)'* or international organizations (the World Bank, among others).'> In August 2016, the CNDC opened a public international consultation process for a draft bill to reform the antitrust law, which was later sent to Congress. The bill that led to the enactment of Law No. 27,442 (Law in Defense of Competition or 8. For the first time ever, a president of Argentina announced in his annual speech to Congress that antitrust law enforcement would be one of the priorities of his administration, When President Mauricio Macti opened the congressional sessions on March 1, 2016, he expressly stated that one Of the goals of the new administration was to “strengthen antitrust law enforcement”. Sev Mauricio Macri, PALABRAS DEL PRESIDENTE MAURICIO MACRI EN LA 134° APERTURA DE SESIONES ORDINARIAS DEL CONGRESO PALABRAS DEL PRESIDENTE MAURICIO MACRI EN LA 134! APERTURA DE SESIONES ORDINARIAS DEL CONGRESO (2016) (*We want to improve competition and the functioning of the market so that nobody abuses their dominant positions and speculates against the consumer. | want to be very clear about this, so that no one thinks that we will be tolerant of those companies that want to put themselves above the law. We will not have the arbitrariness nor will we be bullies as some have been, but we will strengthen the defense of ‘competition ....") 9. JULIAN PENA, COMPETITION LAW AND POLICY IN LATIN AMERICA: RECENT DEVELOPMENTS 39 (Paulo Burnier da Silveira eds,, 2017). 10. Decree No, 718/2016, May 30, 2016, B.O, 33388. I. Resolution No. 359/2015 of the Trade Secretariat, Sept. 10, 2015, BO, 33211 12. Law No. 26,993, Sept. 18, 2014. 13, Decree No. 718/2016, May 30, 2016, B.O, 33388. 14. Technical training day with the Federal Trade Commission, Sept. 15, 15. PENA, supra note 9, at 40,Argentina-7 Antitrust Law)!® was introduced by the governing party and received feedback and comments from a wide range of sectors and stakeholders, including the antitrust authority, intergovernmental institutions (such as the OECD and the World Bank), the International Bar Association,"” and the American Bar Association, among others." Overview of Structure, Independence, and Jurisdiction of Enforcement Agencies The Antitrust Law foresees relevant modifications in relation to Argentina's antitrust enforcement authority, notably, the creation of a new framework, aimed at establishing a more independent and decisionmaking process. Today, and until the new antitrust authority envisioned by the Antitrust Law is effectively established, antitrust law enforcement in Argentina can be subject to political influence, as decisions are made by the Domestic Trade Secretariat, who is appointed and removed at the exclusive discretion of the President of Argentina.” An important goal of the Antitrust Law is to provide more independence to the antitrust enforcement authority. To that end, the Antitrust Law envisions removing all decisionmaking powers from the Domestic Trade Secretariat and provides for the creation of a new antitrust authority, the National Competition ‘Authority (Auoridad Nacional de Competencia). The National Competition Authority is to be composed of three bodies: (1) the Defense of Competition Tribunal; (2) the Anticompetitive Conduct Secretariat; and (3) the Economic Concentrations Secretariat.”” ‘According to the Antitrust Law, the Defense of Competition Tribunal shall be ‘composed of five members and decide all matters relating to the Antitrust Law.?! The Anticompetitive Conduct Secretariat shall investigate and prosecute all matters related to anticompetitive conduct before the Defense of Competition Tribunal, and the Economic Concentrations Secretariat will be in charge with conducting the preliminary assessment of economic concentrations under the merger control regime and issuing opinions for the Defense of Competition Tribunal to adjudicate in such Although all three bodies will belong to the National Competition Authority, each shall possess technical autonomy.” The envisaged autonomy will further the 16. Law No. 27,442, [Ley de Defensa de la Competencia}, May 15, 2018, B.O. 33870. 17, Submission’ of the IBA Antitrust Committee on Argentine Antitrust Draft Bill (Sept. 2016), available at huips:/\vww.ibanet.org/Document/Defaull aspx?Document{Uid=AB4576E8-D750-41D | AES2-387FSOOFOAM, 18. Comments of the American Bar Association Section of Antitrust Law and Section of Intemational Law to the National Commission for the Defense of Competition on the Draft Legislative Proposal {to Update the Rules and Institutions for the Defense of Competition in the Argentine Republic (Oct. 14, 2016), available ar hutps://www americanbar org/content/dam/aba/administrative antitrust [aw/20161014 comments, salsil_argentine-pdf 19, CONST. NAC. art. 99, sub7. 20. Law No. 27,442, May 15, 2018, B.O. 33870, art. 18. 21, ddan. 2 22, I. arts, 30-31 23, Id. arts. 28, 30-31,Argentina-8 goal of decentralizing the prosecution and adjudication functions, both for the sake of specialization and independence.”* The members of the antitrust authority are to be preselected by the executive power by means of a public merits-based qualification and selection process.** Thereafter, the selected candidates shall be confirmed by the Argentinian Senate.** Although a selection contest was in its final stages, on December 10, 2019, a new administration took office. As of this writing, it is uncertain what actions the new government will take with respect to implementing the institutional framework envisaged in the Antitrust Law. Pursuant to Article 80 of the Antitrust Law, pending establishment of a National Competition Authority, the Domestic Trade Secretariat and CNDC will continue in their antitrust enforcement roles.” The Domestic Trade Secretariat serves as the adjudicating authority, while the CNDC acts as an advisory and investigatory technical agency.?* 3. Overview of Structure, Independence, and Jurisdiction of Judicial Authorities According to a long-standing judicial caselaw, decisions adopted by the government administration (to which the antitrust authorities belong) can seek the review of such decisions through an appeal to the judicial branch.” Correspondingly, the Antitrust Law provides for the creation of a specialized division within the Federal Court of Appeals in Civil and Commercial matters, which will hear appeals to the decisions adopted by the Defense of Competition Tribunal.’ This modification will have the effect of ending a longstanding dispute over which court is competent to review appeals on antitrust matters..! The provision also aims to buttress the antitrust regime by having specialized judges with an antitrust law background, and solely devoted to such legal matters, review appeals on antitrust matters.3? The Id, ants. 18, 28, 30-31 Id. art. 20. Id. art. 23, Td. art. 80. ‘The CNDC is composed of five members. The President of the CNDC is appointed by the President of Argentina, The remaining four commissioners, two of which must be lawyers and two of which must be economists, are also designated by the President of Argentina but their term in office is four years, which can be renewed indefinitely. Law No. 22,262, Aug. 6, 1980, B.O., aris.7-8 29. Corte Suprema de Justicia de la Nacién [CSIN] [National Supreme Court of Justice], 19/09/1960, Femandez Arias Elena y otros ¢/ Poggio, José s/ sucesién. 30, Law No. 27,442, May 15, 2018, B.O. 33870, arts. 68 & 70. 31. Due to conflicting regulations, over a long period, it was debated whether the Court of Appeals in Criminal Economie matters or the Federal Court of Appeals in Civil and Commercial matters was competent to hear appeals of decisions adopted by the antitrust authority. In particular, see Corte Suprema de Justicia de la Nacidn [CSN] [National Supreme Court of Justice}, 21/10/2008, Repsol Yacimientos petroliferos Fiscales. GLP Envasado en la Ciudad de San Nicolis s/ Recuso de Queja. 32, According to Article 71 of the Decree, until the new specialized court is effectively set up. ntitrust-related appeals will continue to be heard by the Federal Court of Appeals in Civil and ‘Commercial matters. Law No. 27.442, May 15, 2018, B.O. 33870.Argentina-9 envisaged specialized court in antitrust law matters will not, however, hear antitrust damages actions, which may be brought before an appropriate civil court.>> B. Substantive Law 1. Horizontal Agreements and Practices a. Overview The Antitrust Law Article 1 provides that acts and behaviors related to the production or trade of goods and services limiting, restricting, or distorting competition or constituting an abuse of a dominant position in a market, in a manner which may result in a damage to the general economic interest, are prohibited and shall be sanctioned. Article 2 of the Antitrust Law sets forth a list of types of anticompetitive agreements between competitors—including price fixing, output fixing, bid rigging, and market and customer allocation—that are considered “practices absolutely restrictive of competition” and “presumed to affect the general economic interest.”°> Article 3 sets forth a non-exhaustive list of practices that are considered unlawful if they fall under the general prohibition of Article I and to which a rule of reason or effects-based approach applies. ‘Article 4 of the Antitrust Law establishes that “for the purpose of this law, in order to determine the true nature of the acts or conduct and agreements, it will be taken into consideration the situations and economic relationships that are effectively executed, pursued or established.” This article of the Antitrust Law expressly adopts the so-called “economic reality principle” under which the acts, conduct, and agreements entered into by the parties should be analyzed by the antitrust authority taking into account their real economic nature, irrespective of the legal structure devised by the parties or the parties’ intentions. In December 2018, the CNDC issued a Guideline for Business Associations and Chambers and Professional Associations and Colleges aimed at preventing the creation of cartels..7 The Guideline also provides certain rules concerning the exchange of commercially sensitive information among members. ** b. Cartel Enforcement (1) Agreements Covered While the guiding principle is set forth in Article 1 of the Antitrust Law, Article 2 sets forth a list of types of anticompetitive agreements between competitors—including price fixing, output fixing, bid rigging, and market and customer allocation—that are considered “practices absolutely restrictive of 33, Law No. 27.442, May 15, 2018, B.O. 33870, art. 62. 34 Id. art. 1. 35, Id. art. 36. Id. art 4,§2. 37, COMM'N FOR THE DEFENSE OF COMPETITION, GUIDELINE FOR BUSINESS ASSOCIATIONS AND CHAMBERS AND PROFESSIONAL ASSOCIATIONS 38, id. AND COLLI (GES (2018).Argentina-10 competition” and are “presumed to affect the general economic interest." Pursuant to Article 29 of the implementing Decree, the Defense of Competition Tribunal has the power to exempt contracts, agreements, and arrangements that contemplate conduct covered by Article 2 of the Antitrust Law insofar as they comply with the following conditions: © They must con and/or services; © They must foster technical or economic progress; They must generate concrete benefits for consumers; ‘* They must not impose on interested companies any restrictions not essential to achieving the objectives established in the aforementioned subparagraphs; © They must not offer such companies the possibility of eliminating competition with respect to a substantial part of the market in question.” ute to improve the production or distribution of goods Under the prior antitrust law, all types of anticompetitive conduct, even hardcore cartels, were analyzed under the rule of reason, The antitrust authority thus had the burden of proving: (1) the existence of an agreement or concerted practice; (2) that the alleged offenders possessed market power in the relevant market; (3) that the agreement or concerted practice distorted competition in the relevant market; and (4) that such distortion of competition could have affected the general economic interest.! Therefore, under the previous regime, even if the antitrust authority obtained “smoking-gun” evidence of a cartel, it still had to prove the anticompetitive effects of such conduct. This is in contrast to antitrust law in most jurisdictions around the world, which presumes the anticompetitive effects of cartels as a matter of law. The two most widespread systems for analyzing horizontal agreements are those adopted in the United States (ic., the per se illegality standard for certain conduct) and in the European Union (ie., the infringement by object notion for certain conduct). Under U.S. caselaw, if certain conduct deemed per se illegal by the courts is proven to have taken place, then the parties cannot present any justifications to rebut the presumption of illegality. The European Union takes a different approach, whereby certain types of conduct are considered object restrictions of competition under article 101(1) of the Treaty on the Functioning of the European Union (TFEU).* Therefore, the European Commission (and the member states’ national competition authorities) need not prove that such conduct produced adverse effects on competition, but nevertheless the parties are allowed to. submit a justification under Article 101(3) TFEU. ‘The Antitrust Law introduces a presumption of illegality for certain anticompetitive conduct identified by Article 2 as “practices absolutely restrictive of competition,” including agreements between competitors relating to price fi 39. Law No. 27.442, May 15, 2018, B.O. 33870, art. 2 40. Decree No. 480, May 24, 2018, B.O. 33877, art. 29, 41. Law No, 25,156, Sept. 20, 1999, B.O. 29233, arts. 1 & 2. 42. William Kovacie, The United States and Its Future Influence on Global Competition Policy GEO. MASON L, REV. 1157 (2015). 1 43. Consolidated Version of the Treaty on the Functioning of the European Union art, 101(1), Dec. 13, 2007, 2008 0.1. (C 115),Argentina-11 output fixing, allocation of customers or territories, and bid rigging. The legal presumption in Article 2 that such practices are “presumed to affect the general economic interest” relieves the antitrust authority from the burdensome task of, proving that certain types of agreements between competitors have anticompetitive effects. Accordingly, the authority’s burden is limited to proving the existence of the agreement or concerted practice and that the alleged offenders have liability for such conduct. The Antitrust Law does not, however, provide full clarity as to the scope of the newly created legal presumption, in particular, whether the Argentinian standard will lean closer to the U.S. standard or the EU standard. It could be argued that the ‘Antitrust Law’s approach is closer to the European Union's approach and that the Iegal presumption of illegality is rebuttable for the following reasons. First, juris et de jure or irebuttable presumptions are exceptional in Argentinian law, and generally a law specifies when a presumption cannot be rebutted (for instance, stating that the presumption does not admit evidence to the contrary). Nothing in the wording of Article 2 of the Antitrust Law indicates that the presumption created therein is irrebuttable. Second, Article 29 of the Antitrust Law (as explained in more detail earlier in this section) states that the antitrust authority may authorize certain horizontal agreements which, despite falling under Article 2 of the Antitrust Law and thus being presumed to be anticompetitive, do not affect the general economic interest.*® Further, the wording of Article 29 of the implementing Decree also largely resembles the wording of Article 101(3) TFEU. Thus, Article 29 mitigates against a reading of the presumption in Article 2 as being irrebuttable or creating a per se offense. Therefore, it is possible the legal presumption contained in Article 2 of the Antitrust Law is rebuttable. On the other hand, there are also arguments that suggest Article 2's. legal presumption creates a per se offense and thus contains an irrebuttable presumption. First, the presumption applies only in connection with “practices absolutely restrictive of competition”; this wording may suggest that these practices invariably ‘and without exception affect competition. Second, Mexican antitrust legislation contains similar wording (i.¢., so-called “absolute monopolist practices”), and it is interpreted as a per se offense.*” Resolution of this question will most likely be something to be clarified by the courts 44. Cimara de Apelaciones en lo Civil, Comercial Minas Paz y Tributario [Court of Appeals in Civil, Comercial, Mines, Peace and Tax}, 10/11/1994, Ohio Textil S.A. e/ Guillermo H, Guardia s/ -cucin Cambiar 45. Art. 29, Law No, 27,442, May 15, 2018, B.O. 33870, 46. It could operate as a burden-shifting mechanism whereby the antitrust authority is discharged by Jaw from proving that the cartel conduct under prosecution had anticompetitive effects, and while such anticompetitive effects would be legally presumed, the burden of proof would shift to alleged offenders to try to rebut the presumption by showing the conduct had on balance a neutral or even positive effect on competition. Within this category could fall certain collaboration agreements that restrict competition to some extent but enable larger and more comprehensive procompetitive effects (for instance, joint ventures between competitors for the launch of a new innovative product, which could entail some necessary ancillary elements that restrict competition. 47. Ley Federal de Competencia Eeondmica [Federal Law of Economic Competition, May 23, 2014 (Mex.), art. $3,Argentina-12 (2) Enforcement Authorities Please refer to the description provided in parts A.2 and A.3 of this chapter. (3) Investigatory Procedures The investigatory procedures in relation to cartel and other anticompetitive conduct are contained in Article 34 through Article 54 of the Antitrust Law. A cartel investigation can either begin through a claim filed by a third party, ex officio by the antitrust authority, or through a leniency application, Once a cartel investigation is initiated, the antitrust authority serves a written notice of the alleged facts and charges to purported offenders, who have fifteen business days to submit their explanations in relation to the alleged anticompetit conduct.*® If as a consequence of reviewing the explanations and evidence submitted by the alleged offenders, as well as certain inves this stage, the antitrust authority concludes that there are grounds to press formal charges, a formal investigation will be opened. The investigated parties will thereafter be served a notice pressing formal charges, and will have twenty bi days to submit the defenses and evidence they deem appropriate.” Subsequently, an evidence-production period commences, which shall last a maximum of ninety business days.” Afier the evidence-production period is finalized, the accused parties have six business days to file their arguments in connection with the evidence produced throughout the investigation.®! Pursuant to Article 42, the decisions adopted by the antitrust authority regarding the evidence produced during the investigation cannot be appealed to the Court of Appeals, but they can be appealed with the same antitrust authority.*? Once the parties file the arguments regarding the value of the evidence, the antitrust authority has sixty business days to issue its final resolution.“ Despite the timeline set forth in the Antitrust Law, historically in practice, cartel investigations that resulted in the imposition of a fine by the current antitrust authority took approximately between four and eight years.“ Other significant powers that the antitrust authority has during the investigation according to Article 30 of the Antitrust Law include holding hea with the presumably responsible individuals, claimant, damaged parties, witnesses, and experts. During the hearings, the authority may take these persons’ declarations and order confrontations. Furthermore, under Article 44 of the Antitrust Law, the antitrust authority may issue injunctions (je., preventive 48. Law No. 27.442, May 15, 2018, B.O, 33870, art. 38. 49. dart. 4 50. Id art. 43. Sl. Id, 52. Id. art 42. 53. Id. ant. 43. 54. This was the case for the Cement Cartel, where after a seven-year investigation, the Antitrust Authority imposed fines on several cement companies totaling ARS 309 million for their involvement in a nationwide price-fixing and territorial market allocation scheme; and for the Plasma Expander Cartel, where after a seven-year investigation, the Antitrust Authority imposed fines on the investigated companies totaling ARS 40 million.Argentina-13 cease and desist orders) ordering the accused parties to suspend the conduct under scrutiny until a final resolution is issued. ‘The limitations to the antitrust authority’s investigatory powers to safeguard the rights of defense of companies and individuals are established by the Argentinian Constitution, such as the due process of law** and property rights.” (A) DAWN RAIDS, Pursuant to Article 30(e) of the Antitrust Law, the antitrust authority can access any property linked to a potential antitrust offense with the consent of the occupants or by obtaining a search warrant, which has to be requested to the competent judge, who must resolve the request within the period of one day. Although the authority to use dawn raids was first granted to the antitrust authorities through Law No. in 1980, only a handful of dawn raids have been carried out since that time (B) COMPELLED PRODUCTION OF DOCUMENTS, Under Article 32(a) and 32(b) of the Antitrust Law, the antitrust authority has the power issue requests for documents and information from parties and third parties, (©) WIRETAPPING Argentina lacks a wiretapping regulation. (D) LENIENCY PROGRAM The Antitrust Law created the first ever leniency program in Argentina.** Unlike the introduction of a premerger control regime, which envisions a transition period, the leniency program became effective as of the date on which the Antitrust Law entered into force. ‘The internal features of the leniency program set forth by the Antitrust Law are, for the most part, similar to those in place in other jurisdictions.’ The lenienc program’s main features, set forth in Articles 60 and 61 of the Antitrust Law, are as follows: ‘¢ Leniency shall be available only as in connection with the practices categorized bsolutely restrictive of competition” under Article 2; 55, Art. 44, Law No. 27,442, May 15, 2018, B.O. 33870. 56. CONST. NAC. art. 18. 31, ts, M17. 58, Aug. 6, 1980, B.O., art. 13. 59. “442, May 15, 2018, B.O. 33870, arts. 60-61 60. The entry into force of the pre-merger control was suspended by means of a transitory clause irust Law. No such transitory clause was introduced in relation to the leniency program; hence, it became effective together with the Antitrust Law. 61. The features (especially the possiblity of reducing fines to subsequent applicants by 20 percent to 50 percent) and the terminology employed in the drafting of the leniency program suggest itis largely modelled on the European Union’s leniency program. However, unlike the EU leniency program, firms may still qualify for immunity despite having coerced other firms to join o remain ina cartelArgentina-I4 © Leniency applications shall be admitted up until the moment the ant © Leniency shall be available to both companies and individuals involved in a cartel; © The first applicant to blow the whistle and furnish evidence that allows the antitrust authority to determine the existence of the conduct shall obtain civil® and criminal immunity. provided that the antitrust authority has not already commenced an investigation or does not possess sufficient evidence to prove the cartel: © Provided that they furnish additional evidence of the cartel, second-in applicants may obtain reductions, based on the chronological order of the applications, ranging between 50 percent and 20 percent of the fines to which they may otherwise be subject as well as criminal immunity; The common requisites to benefit from leniency, irrespective of being the first applicant or not, are to: (i) immediately cease the participation in the cartel, unless otherwise instructed by the antitrust authority to avoid tipping- offs: (ii) fully, continuously and diligently cooperate with the antitrust authority throughout the whole procedure; (iii) not to destroy or conceal evidence relating to the cartel; and (iv) not have made public the decis apply for leniency (except for other antitrust authorities); authority presses formal charges against the involved individuals and/or companies (similar to the issuance of a statement of objections under European Union competition law): e 63 Directors, managers. employees, and legal representatives involved in a cartel may apply for leniency either individually ot jointly with the company on behalf of which they were involved in the cartel. Law No. 27,442, May 15, 2018, B.O. 33870, art. 61, 41 Successful leniency applicants nonetheless may be liable for private damages actions. Furthermore, ‘a successful leniency applicant could potentially be banned as a supplier of the State for up to eight years according to Article 55(e). This is so because Article 60 exempts. successful leniency ‘applicants solely from the fines established in Article 55(b) of the Competition Law. For those companies whose primary source of income stems from supplying the national government (e-8..8 ‘construction company), the uncertainty as to whether they could be exposed to such sanction could ‘operate as a major disincentive to self-report their involvement in a cartel. The same problem could Mem from the provision establishing the disqualification of directors and the general prohibition of Companies to do business from one to ten years, provided in Article 58 of the Antitrust Law, which ‘could also potentially be applied to a successful leniency applicant. The lack of certainty as to the costs and benefits stemming from a lenieney application could reduce the attractiveness of Argentina’s leniency program. ‘Article 300 of the Argentinian Criminal Code provides for imprisonment from six months to tw ‘years for individuals that “make the price of a product rise of fall by means of false news, fake negotiations or meetings or coalitions between the main holders of a merchandise, with the aim of not selling them or selling them but only at a certain price.” CODIGO PENAL [COD. PEN.) [CRIMINAL CoDe] art. 300 (Abeledo Perrot, Buenos Aires, 1971). More specifically, Article 309 of the Criminal Code contemplates imprisonment for a period of one to four years for individuals who engage in the same conduct established in Article 300, but in relation to any financial instrument. It js not clear that any of these provisions has ever resulted in the effective imprisonment of any individual, Despite their existence, public prosecutors do not appear to have applied them in practice, and it could be argued that cartels are de facto not criminally sanetioned in Argentina. The Antitrust Law, however, in order to convey certainty and thus induce self-reporting, foresees that successful applicants “shall be exempted from the sanctions provided in Articles 300 and 309 of the Criminal Code.” Law No. 27,442, May 15, 2018, B.O. 33870, art. 61, 42 fan investigation into a given cartel is already ongoing, immunity shall still be available only if the antitrust authority lacks sufficient evidence to prove the existence of the conduct.Argentina-15 ‘© The antitrust authority shall set up a marker system whereby an applicant's position in the leniency queue is protected for a given time, which allows the gathering of the necessary evidence to prepare a valid application; The identity of all leniency applicants (successfull or not) shall be kept confidential by the antitrust authority, and courts are legally prevented from ordering the disclosure of any type of evidence (ie. “statements, acknowledgments, information and/or any type of evidence) provided in the framework of a leniency application; ‘© Those applicants who fail to qualify for immunity for the first cartel being reported may nonetheless report a second and discrete cartel for which they will be granted immunity plus an additional one-third fine reduction in relation to the first cartel (&) SETTLEME} Settlements or compromises are governed by Article 45 of the Antitrust Law, which reads: Until the issuance of the resolution provided in article 43 of the law, the suspected liable party can compromise to the immediate or progressive cease of the investigated facts or to the modification of certain aspects related to them. The ‘compromise shall be subject to the approval of the National Tribunal for the Defense of Competition in order to produce the suspension of the proceedings. Onee three years of the fulfillment of the compromise provided in this article have elapsed, the proceedings shall be closed. Article 45 of the Antitrust Law fails to specify whether the possibility of offering a compromise applies to all types of anticompetitive conduct or not. However, the CNDC’s interpretation is that compromises are only applicable to abuse of dominance cases, but not to collusive or cartel behavior, which are serious offenses to competition.” This is similar to the approach adopted by the European Commission, which considers that commitment decisions are not appropriate in cases where the nature of the infringement calls for the imposition of a fine. In spite of the fact that compromises would not appear to be available in cartel cases, the CNDC has recently accepted a compromise from company Prisma, even when the theory of harm put forward by the CNDC in its investigation included collusive conduct.” 66. Law No. 27,442, May 15, 2018, B.O, 33870, art, 60, sub. (d), $1 67. Secretaria de Comercio [SeCom] [Secretariat of Trade], 16/09/2003, Cooperativa Entrerriana de Productores Mineros LTDA si Infraceidn a la Ley 22.262 (C417), 68. Commission Notice on Best Practices for the Conduct of Proceedings Concerning Art 102 TFEU, [2011] O.), (C 308) 06. 69, Secretaria de Comercio [SeCom] [Secretariat of Trade], 31/10/2018, Investigacién de of Prisma Medio de Pago S.A. y sus accionistas en los terminos del art. | y2, inc. A), F K)y L). de la Ley 25.156 (C.1613). les 101 and io contra 1G), WD,Argentina-16 (PF) PENALTIES Violations of the Antitrust Law are subject to both injunctions and fines, among, other sanctions.” Under the previous law, fines for antitrust violations were legally capped at ARS150 million, To create further deterrence on cartelists and companies engaged in other types of anticompetitive conduct, the Antitrust Law significantly increased fines, which are to be calculated using the higher of the following two methodologies: (1) up to 30 percent of the turnover of the product to which the infringement relates during the last fiseal year multiplied by the number of years of infringement. This amount cannot exceed 30 percent of the consolidated turnover archived by the offender's economic group in Argentina during the last fiscal year; or (2) up to double the economic benefit derived from the infringement. In the event that fines cannot be calculated using either method, fines for each offender cannot exceed 200 million Administrative Units (as of this writing, ARS8,122 million). Fines are to be doubled in case of recidivism for offenders which have been sanctioned for anticompetitive conduct in the prior 10 years.” Pursuant to Article 58 of the Antitrust Law, directors, managers, administrators, trustees or members of supervisory boards of a legal entity may be jointly and severally liable for fines when, by action or omission, they have contributed, encouraged, or allowed the commission of the infraction. ¢. Treatment of Intragroup Conspiracy or Acts, by Related Companies The Antitrust Law does not contain a provision that expressly regulates intragroup coordination, However, intragroup coordination appears to be lawful under the antitrust law for the following reasons. First, the antitrust authority briefly addressed intragroup coordination matter in the Impsat case.” Although the core of the decision does not refer to intragroup coordination, the antitrust authority referenced intragroup coordination in relation to interpreting the economic reality principle of the antitrust law.” In so doing, the 70, Art. 95, Law No, 27,442, May 15, 2018, B,O. 33870. 71, Amt $5, sub. (b), Law No. 27,442, May 15, 2018, B.O. 33870. 72. Secretaria de Coordinacién Técnica [SeCoor.] [Secretariat of Technical Coordination}, 20/04/2004, Impsat S.A. c/ Advance Comunicaciones 8.A., Telecom Soluciones 8.A., Startel S.A., Telefonica de Argentina S.A. y Telecom Argentina Stet France Telecom S.A. 73. Id. stating: ‘This type of interpretation [economic reality] has several applications in antitrust law. A first example arises when dealing with claims of collusion or agreements that restrict ‘competition between two entities legally distinet but controlled by a single entity. In these ‘eases, it has been noted that for the analysis from a competition law standpoint, it should not be considered as two separate legal entities, which is to say, that said legal entities cannot collude among each other (the so-called Copperweld doctrine in the United States" caselaw). Also, this type of interpretation [economic reality] is used to assess the dominant position of a company-—either in the framework of a conduct investigation or in merger control notification—which takes into account not only the market share of said company but also that of all the companies controlled by it, or of those companies controlled by the economic group to which said company belongs. This type of interpretation stems from article [4] of the Antitrust Law that enshrines the principle of ‘economic reality.Argentina-17 antitrust authority referred to the Copperweld” case decided by the Supreme Court of the United States, which considered that a parent and a wholly-owned subsidiary are a single entity incapable of combining or conspiring under Section 1 of the Sherman Act. Second, based on the economic reality principle set forth in the Antitrust Law, the current antitrust authority has built a well-established caselaw under which intergroup corporate reorganizations are not subject to merger control notification under the Antitrust Law.’ The antitrust authority has consistently construed that internal group reorganizations (i.e., the acquisition of or merger between entities within the same economic group) are exempt from mandatory notification because they do not entail a change of control of one or more companies or assets, since the companies or assets being transferred remain under the control of the same corporate ‘group. Technically speaking, there is in fact an acquisition of control, but there is no obligation to notify because, pursuant to the economic reality principle, the control of. the acquired entity remains within the same corporate group. By analogy, this same rationale would seem to apply to an intragroup coordination case. Third, the Antitrust Law is strongly based on the European Union’s antitrust law and, as a consequence, the current antitrust authority heavily relies on EU caselaw, even to a greater extent in issues not expressly covered by the Antitrust Law, such as intragroup coordination. As seen in the Jmpsat case, the antitrust authority also relies on the precedents of the United States, Therefore, while the antitrust authority has yet to decide a case in which intragroup coordination was the central issue at stake in the case of concerted action or agreements among entities of the same economic group, it ‘will most likely analyze and rely on the caselaw of both the European Union and United States. However, as acknowledged by the antitrust authority in Jmpsat, the intragroup coordination defense appears unavailable in the case of an abuse of dominant position by two or more entities that belong to the same corporate group. d. Other Horizontal Practices Pursuant to Article 3 of the Antitrust Law, the following, among others, could constitute horizontal restrictive practices: (1) to arrange the limitation or control of the technical development or investments for the production or marketing of goods and services; (2) to prevent, hinder, or obstruct third parties from entering into or staying in a market or exclude them from such market; and (3) to affect markets of ‘goods and services through agreements to limit or control research and technological development, the production of goods, or rendering of services, or to hinder investments for the production of goods and services or their distribution. In this regard, the Antitrust Law expressly refrains from presuming the anticompetitive effects of certain conduct listed in Article 3, which shall all be analyzed under the rule of reason, including resale price maintenance and “arrangements to limit or control technical development or investments.” In connection with resale price maintenance, the Antitrust Law seems to adopt the rule 74. Copperweld Corp. v. Indep. Tube Corp., 467 US. 752 (1984). 75, Commission for the Defense of Competition [CNDC], Advisory Opinions No. 6, 15, 19, 25, 29, 35, 36, 37, 38, 48, 49, 53.106, 114, 145, 146, 148, 150, 152, 154. 76. Law No, 27,442, May 15, 2018, B.O. 33870, art. 3.Argentina-I8 of reason approach set forth in the U.S. Supreme Court decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc.," rather than follow the EU approach that such conduct constitutes an object restriction of competition. The antitrust authority will therefore have the burden of demonstrating the anticompetitive effects of any such agreements. Another modification introduced by the Antitrust Law is that the antitrust authority may issue “permits” to enter into horizontal agreements that fall under Article 2 (ie., practices categorized as “absolutely restrictive of competition”), but which according to the antitrust authority's reasonable discretion would not affect the general economic interest.” The wording of the Antitrust Law suggests that such a permit system would be voluntary and is to be used by the parties to a horizontal agreement that, although prima facie anticompetitive, does not affect the general economic interest and could therefore be exempted from the application of Article 2. The Antitrust Law refrains from providing further insights into the workings of the permit system. For instance, it does not establish whether the permit should be obtained before or after executing the agreement; however the term “permit” Suggests that it should be granted before entering into the agreement. Additionally, the Antitrust Law does not establish a deadline for notifying the antitrust authority of an agreement, The Antitrust Law features a new addition to the roster of anticompetitive conduct: the practice of interlocking directors, which is described as the imultaneous participation of an individual in relevant executive positions or holding a director position in two or more competing companies.””” Although such a conduct was already illegal under the prior antitrust regime as long as it entailed the sharing of confidential information between competitors with the aim of fixing Prices, quotas, or other conditions of competition, the Antitrust Law reinforces the prohibition by expressly including it in the non-exhaustive list of anticompetitive conduct. 2. Mergers and Acquisitions a. Transactions Covered ‘The Antitrust Law requires the parties to a transaction to notify and obtain the approval of the antitrust authority for certain economic concentrations, According to Article 7 of the Antitrust Law, economic concentrations affected by the regulations are those resulting in the control or substantial influence, direct or indirect, of one or more companies or assets. Economic concentrations that must be notified to the antitrust authority include mergers, transfers of ongoing concerns, stock acquisitions, shareholders’ agreements, joint venture agreements, and other agreements granting de jure or de facto control or substantial influence over management decisions of a 77, See Levgin Creative Leather Prods., In. v. PSKS, Ine,, 551 U.S. 877 (2007), 78. Law No, 27,442, May 15, 2018, B.O. 33870, art. 29. The envisaged “permit system” resembles that in force in the European Union under the now extinet Council Regulation 17 of 1962, whereby the parties to an agreement had to submit a notification w the European Commission to obtain clarification as to whether such agreement was exempted from the application of Article 81(1) of the TFEU as it satisfied the conditions of Article 81(3) TFEU. 79. Law No. 27,442, May 15, 2018, B.O. 33870, art. 3, sub ().Argentina-19 business.® Any act that entails the acquisition of substantial influence over the competitive strategy of a company would be deemed an economic concentration. Not all economic concentrations must be reported, only those meeting the quantitative thresholds explained in subsection 3(a) below. Economic concentrations that do not met the quantitative thresholds, and thus are not reportable, must nevertheless be analyzed under Article 8 of the Antitrust Law, notably, whether they ge the general economic interest. Since the introduction of the merger control regime in 1999, there are no known cases of non-reportable economic concentrations that have been objected to by the antitrust authorities b. Joint Ventures The Antitrust Law does not expressly address joint ventures as a type of economic concentration. Nonetheless, joint ventures have traditionally been assessed by the antitrust authority under the general rules of acquisition of control. Therefore, joint ventures are considered to be economic concentrations insofar as they produce a transfer of control over a business or asset from one person to another. When dealing with joint ventures or alliances, the antitrust authority has historically analyzed whether there is an acquisition of control over assets either taking place in Argentina or taking place abroad but with effects in Argentina, Although the Antitrust Law fails to define the term “assets,” the Argentinian antitrust authority has interpreted in its caselaw that assets are “all property that enables the development of one or more activities, which confers an independent turnover with clientele and own value stemming from the possibility to generate economic-related ‘matters to the acquiring company.”*? In that regard, the current antitrust authority has considered trademarks, real estate, distribution and license agreements, and exploitation permits to be assets. Likewise, different appeals courts have confirmed the antitrust authority’s interpretation regarding assets, stressing the potential to generate independent turnover and the assignment of clientele. An additional test used by the current Argentinian antitrust authority to determine whether an asset ‘acquisition represents an economic concentration is to analyze whether a competitor is eliminated from the market as a consequence of the asset transfer from one competitor to another." More specifically, the antitrust authority has stated that a joint venture would be subject to notification if it is allowed to provide services on its own account to third parties (ie., 10 generate its own clientele), independently from the activities developed by its parent companies.” Therefore, the antitrust authority has concluded that a joint venture which possesses sufficient functional and economic autonomy to 80. Art. 7, Law No, 27.442, May 15, 2018, B.O. 33870, art 7. BI. {d. art. 7, sub (e). 82. See, eg, Argentinian Antitrust Authority, Advisory Opinions No. 83, 93, 98 & 229; see also Secretaria de Defensa de la Competencia y del Consumidor [SeCom] [Secretariat of Competition and Consumer Welfare], 27/12/2000, YPF S.A. y Esso SAPA si Solicitud de opinién consultiva respecto a la obligatoriedad de notificar la operacién de concentracién econémica, § 4. $3. See CNDC, Advisory Opinions No, 10, 84 & 99. $4. Secretaria de Coordinacién Téenica [SeCoor] [Secretariat of Technical Coordination}, 18/08/2004, Sancor Cooperativas Unidas LTDA. y Dairy Partners Americas Argentinas S.A.Argentina-20 operate on the market as an independent economic entity would entail an economic concentration.** “The Antitrust Law does not expressly refer to the full-function joint venture concept, and the current antitrust authority has been wary to decide cases exclusively by reference to such concept. Still, it would be reasonable to argue thet in light of the value given to the European Commission’s precedents," the antitrust authority ould in principle deem a non-full function joint venture as not constituting an Gconomic concentration, whereas, in contrast, it would deem a full-function joint venture as entailing an economic concentration. in light of the above, a transaction could entail a reportable economic concentration if it is considered to be a full-function joint venture or entails an acquisition of control over assets located in Argentina of located abroad but with effects in Argentina (provided it also meets relevant thresholds described in the next Section), Even if creation of a joint venture is not considered to be an economic Concentration under the terms of Article 7 of the Antitrust Law, and thus is not reportable to the antitrust authority, it would have to be nonetheless assessed under the general antitrust framework for anticompetitive conduct set forth in the Antitrust Law (ie., whether it will entail a restriction of competition whose object or effect is to affect the general economic interest). c. Notification and Procedure (1) Jurisdiction When compared with the previous antitrust regime, the Antitrust Law significantly increased the notification thresholds. An economic concentration must be notified to the antitrust authority if the combined Argentinian annual net sales of the acquiring group and the aequired group exceed 100,000,000 Administrative Units during the preceding year (as of February 2020, ARS4,061 million).*” Total net cinnual sales are calculated by adding (I) the net direct and indirect sales of the acauiting group in Argentina during the more recent fiscal year of the company. and (2) the net sales of the target group or assets in Argentina during the most recent fiscal year. “The regulations are to be interpreted according to the economic reality” principle established in Article 4 of Antitrust Law. Therefore, the acquiring group should be considered as a whole for purpose of calculating the net sales referred in (1) above, regardless of the legal structure or the vehicles used and even if the sales belong 10 smother relevant market, The acquiring group should account for the net sales in ‘Argentina of any of its own controlling shareholders and those of their controlled 85, Id. Sé_ The antitrust authority has closely followed the European Commission's notion of control (i. European Commission's notice on the concept of concentration) on a series of advisory opinions aatvume. This postion was enshrined in Advisory Opinion No. 124 of July 6, 2001, in which the Argentinian antitrust authority stated that “it has considered as valuable and applicable by analogy fe our. national legislation said foreign doctrine.” See Secretaria de la Compe la Desregulacién y la Defensa del Consumidor [SeCom] [Secretariat forthe Defense of Competition Deregulation and Consumer Welfare}, 0607/2001, Ente Provincial Regulador Elécrico de Mendoza s/Consulta interpretacion Ley 25.156, 4 18, 87. Law No. 2 art. 9,Argentina-21 subsidiaries. In calculating the net sales in Argentina, imports to Argentina should be included, unless these are intra-group sales. The current antitrust authority has ruled that exports from Argentina should always be included in the calculation of net sales. Economic concentrations meeting this threshold are reportable, unless one or more of the legal exemptions provided in Article 11 of the Antitrust Law is applicable (as further explained in subsection (g) of this section). Notably, unlike the previous merger regime in which thresholds were fixed in local currency, the Antitrust Law has expressed quantitative thresholds in ‘Administrative Units. Pursuant to the implementing Decree, the value of the ‘Administrative Units is to be updated each year by January 31 following the evolution of the consumer price index. As of January 28, 2020, the value of the ‘Administrative Unit was ARS40.61.%° The increase in the notification thresholds expected to result in a reduction in the number of mergers being reported. These changes will allow the antitrust authority to reallocate resources to perform more thorough analyses of those mergers being reported, as well as focus on tackling cartels and other anticompetitive conduct. (2) Filing Procedurt ‘The Antitrust Law provides for the future implementation of a premerger control regime pursuant to which authorization from the antitrust authority is required to cither consummate a reportable economic concentration or acquire any type of control or substantial influence over the target.°! However, the premerger control regime will enter into force one year after the time the new National Competition Authority is effectively established Until then, the current postclosing regime will continue in force.°? whereby the parties are allowed to consummate a reportable economic concentration and notify the antitrust authority one week after the consummation or the acquisition of control, whichever occurs first. Despite being legally allowed to consummate an economic concentration, it is important to stress that the antitrust authority retains the power to, totally or partially, undo the economic concentration (or request remedies thereof), even several years afier its consummation. (3) Filing Fees According to the new law, filing fees shall range from 5,000 to 20,000 ‘Administrative Units (as of February 2020, ARS203,050 to ARS812,200).” As of this writing, the new filing fees were not yet implemented, Further details concerning which parties must pay the filing fees and the timing for such payment will be 88. CNDC Advisory Opinion No. 8, Dec. 7, 1999. 89, Law No. 27,442, May 15, 2018, B.O, 33870, art. 85; Decree No. 480, May 24, 2018, B.O. 33877, arts. 10-85. 90, _ Resolution No, 13/20 of the Domestic Trade Secretariat, Jan. 27, 2020, B.O, 34294. 91, Law No, 27,442, May 15, 2018, B.O. 33870, art. 9 92, Id. at. 84. 93. fd. art. 33,42.Argentina-22 established by the executive power based upon a recommendation from the National Competition Authority. (4) Special Provisions for Unsolicited Takeover Bids Argentina lacks special provisions for unsolicited takeover bids; therefore, the general merger control rules are applicable. (5) Initial Information Requirements The notification obligation is accomplished through submission of a so-called F-1 Form to the antitrust authority. The F-1 Form is a standard notification form, which comprises six sections. The first section relates to the notifying companies, . those submitting the F-I Form, The second section relates to the Involved Companies, ie. those active in the Argentine market, and their activities in the country, The third section refers to the affected markets, ie., those where horizontal or vertical relations arise between purchaser and target, as well as product market definition. The fourth section relates to geographic market definition, The fifth section relates to market information for the affected markets. And lastly, the sixth section involves some general background information. Complex transactions or those posing competition concems might lead the antitrust authority to request the parties to submit the F-2 Form (a standard form, Which is substantially economic in scope) and/or an F-3 Form, which is not a standard form, but rather customized by the antitrust authority considering the transaction at hand. Resolution No. 40 of 2001 of the former Secretariat of Competition and Consumer Defense establishes which information and how it shall be furnished to the antitrust authority (including, the content of the F-1, F-2, and F-3 Forms). Pursuant to the implementing Decree of the Antitrust Law, the notification obligation is to be fulfilled, in all cases, by the purchaser (be it the direct purchaser, or any of its controlling companies). Notification by the seller is optional, except in the case of mergers where the notification must be performed by the merging parties.”* (6) Confidentiality Pursuant to Article 13 of the Antitrust Law, the regulations will set forth the form and additional content of the notice of economic concentrations projects and company takeover transactions in order to ensure their confidentiality. Such regulations will provide for a procedure for each economic concentration notified to the antitrust authority to be publicly disclosed for any interested party to submit statements or objections that may be proper. Should there be objections, they will be communicated to the notifying parties. The antitrust authority will not have a duty to express an opinion on such submissions. 94. Id. art. 33,413, 95. Decree No, 480, May 24, 2018, B.O. 33877, art. 9, oTArgentina-23 Article 13 of the Decree also provides that merger files are confidential and can be only be accessed by the merging parties, their legal representatives, and the members of the antitrust authority. Third parties cannot access the merger file, although the Antitrust Law provides that certain non-confidential information relating to notified mergers shall be made publicly available on the antitrust authority's website. To that end, the CNDC implemented a registry system in December 2019. The companies notifying an economic concentration may request the antitrust authority to maintain total confidentiality of the submitted documentation and information, The antitrust authority has a great deal of discretion, however, as to which documents and information will receive confidential treatment. (7) Exemptions Pursuant to Article 11 of the Antitrust Law, the following economic concentrations are exempt from an otherwise mandatory notification requirement: ‘© Acquisitions of companies in which the buyer already owns more than 50 percent of the shares and voting rights, as long as there is no change in the nature of control of the company (i.¢., from sole to joint control or from joint to sole control); Acquisitions of bonds, debentures, notes, and non-voting shares; ‘Acquisitions of a single Argentinian company by a foreign company that owns no assets in Argentina (excluding those held for residential purposes) or shares in other Argentinian companies, and which had no significant, regular, and periodic exports to Argentina during the preceding 36 months; ‘© Acquisitions of companies in liquidation that did not transact business in Argentina in the preceding year, except if the main activity of the target company is the same than that of the acquirer; and © Acquisitions of companies in which the amount of the Argentinian portion of the transaction and the value of the assets in Argentina to be transferred does not execed 20 million Administrative Units (as of February 2020, ARS812.2 million), known as the de minimis exemption. Without prejudice to this rule, those transactions for less than 20 million Administrative Units (as of February 2020, ARS812.2 million) must be notified where the acquiring group was involved in a concentration transaction in the same market in Argentina valued at 20 million Administrative Units (as of February 2020, AR$812.2 million) during the preceding 12 months, or 60 million Administrative Units (as of February 2020, ARS2,436.6 million) during the preceding 36 months. According to the well-established caselaw of the current antitrust authority, the above legal exemptions are to be narrowly interpreted. 96. Decision 75/2019 [CNDC], Oct. 15, 2019. This registry was created on December 9, 2019 and is available at hutps:/‘www.argentina.gob.ar/defensadelacompetenci a/registro-nacional.Argentina-24 (8) Sanctions for Failing to File Failure to file or a delay in filing shall result in daily fines of up to 0.1 percent of the consolidated national net sales registered in the previous fiscal year by the economic group that failed to notify the economic concentration; or, if the aforementioned criteria cannot be applied, up to 750,000 Administrative Units a day (as of February 2020, ARS30.4 million).°” Upon the implementation of the premerger control regime explained above, these fines shall also be applicable to any measure which prematurely, totally or partially, implements an economic concentration prior to the approval of the antitrust authority. Directors, managers, controllers, officers, and corporate attorneys who by their action or omission contribute to the failure to file or late notification are jointly liable for this fine. d. Substantive Test Pursuant to Article 8 of the Antitrust Law, economic concentrations that have the object or effect of restricting or distorting competition in a manner which may affect the general economic interest are prohibited. The general economic interest has been interpreted as comparable to the concept of economic efficiency, although more inclined to consumer surplus rather than to total surplus. On April 13, 2018, Resolution No. 208/2018 of the Secretariat of Trade of Argentina was published in the Official Gazette whereby a new set of guidelines for the analysis of economic concentrations has been adopted (2018 Merger Guidelines). The 2018 Merger Guidelines supersede those issued in 2001 by Resolution No, 164/2001 of the Secretariat of Competition and Consumer Defense, and they adopt new working and interpretation tools for the review and analysis of economic concentrations. The 2018 Merger Guidelines consolidate the antitrust authority's experience in the merger review field since 2001, as well as the international best practices on the matter. In this regard, the antitrust authority received feedback and comments from several foreign competition agencies, international multilateral organizations, the International Bar Association, the American Bar Association, and other stakeholders while a draft of the 2018 Merger Guidelines was subject to public consultation Pursuant to the 2018 Merger Guidelines, market definition is not an unavoidable task in the analysis of a concentration, but it is “often necessary." The 2018 Merger Guidelines expressly foresee that an economic concentration can be analyzed without the need of adopting a precise market definition, most commonly in the case of concentrations whose impact on competition is low (e.g., concentrations that do not raise competition concerns under various alternative plausible market definitions) e. Treatment of Efficiencies ‘The antitrust authority considers that only in exceptional circumstances, will an economic concentration that increases the market power of the merging parties 97. Law No. 27,442, May 15, 2018, B.O. 33870, art 55, sub (4). 98. SPCRETARIAT OF TRADE, ARGENTINIAN MERGER CONTROL GUIDELINES (2018), 99. Id. § IL m a@yennaan a<¢@name aes Sereneallan tarties Argentina-25 generate efficiencies that could entail a reduction in prices after the transaction. For the antitrust authority to admit such efficiencies, it shall analyze: (1) whether the efficiencies are merger specific and not attainable through other means that are less restrictive of competition; (2) the likelihood that efficiencies will materialize; and (3) whether it can be proven that efficiencies will entail a benefit to consumers in the form of lower prices, increased supply, or increased quality or variety of products. Moreover, the antitrust authority will not accept merely speculative or vague efficiencies.'" f, Remedies The Antitrust Law does not establish a mechanism for remedy negotiation or a standard approach to the terms and conditions to be applied to a divestment. However, since 2004 the CNDC has started to negotiate the acceptable remedies with the parties and has been more flexible about negotiating remedies with the parties. Since the Antitrust Law does not establish a mechanism for remedy negotiation, the process may begin as soon as the parties or the antitrust authority considers that there will be a need for a remedy in order for the economic concentration to be approved. '"! Pursuant to Section 14 of the Antitrust Law, in those cases in which the antitrust authority considers that a notified transaction has the potential to restrict or distort competition in such a way that may harm the general economic interest, prior to adopting a decision, the Defense of Competition Tribunal shall inform the parties of its objections by means of a well-founded report and shall summon them to a special hearing to consider possible measures that mitigate the negative effect on competition. Such report shall simultaneously be made available to the public. In the aforementioned cases, the term for the antitrust authority to issue a decision may be extended up to an additional one hundred and twenty days by means of a well- founded report. Such term can be suspended until the parties respond to the objections raised by the antitrust authority." g. Third-Party Rights Only the parties that notified the economic concentration to the antitrust authority are part of the notification process and can access the file. Third parties, such as competitors or clients of the merging parties, may be requested to provide information, or may be invited to testify as witnesses, but they are not allowed to access the merger file, This has been the CNDC’s interpretation, which has been ratified by the Court of Appeals in Isenbeck.'° Subsequently, this caselaw has been enshrined in Article 13 of the Antitrust Law and Article 13 of the Decree, which expressly establish that the merger file is confidential to third parties. 100. 1d. § V1 101. Law No. 27,442, May 15, 2018, B.O. 33870, art. 14,4 2. 102, Id. art. 14, 912 & 3, 103. Cimara Nacional en lo Civil y Comercial Federal (National Chamber of Federal Civil and Commercial Affairs], 29/10/2002, Cerveceria Argentina S.A. Isenbeck s/ apelacién resolucién Comisién Nacional de Defensa de la Competencia.Argentina-26 Pursuant to Article 13 of the Antitrust Law, third parties may oppose to the merger in writing, and any such oppositions or objections must be notified to the merging parties; however, the antitrust authority is not bound by the representations and objections filed by third parties when adopting a merger decision. In the past. there have been some merger cases interrupted by judicial claims initiated by third parties.!" 3. Abuse of Dominant Position a. Overview: Standards of Evaluation ‘The majority of unilateral conduct cases were decided in the early 1980s, right after the enactment of Law No. 22,262. Since then, there have been few decisions regarding unilateral conduct and almost no sanctions have been imposed by the antitrust authority. The antitrust authority has historically applied a more flexible approach when analyzing unilateral conduct vis-i-vis agreements between competitors, indicating a greater interested in pursuing conduct related to collusive practices than unilateral practices. In May 2019, the CNDC issued its first ever Guidelines for the Analysis of Cases of Exclusionary Abuse of Dominance (Dominance Guidelines), which establish the criteria and methodology that the antitrust authority will adopt when analyzing exclusionary abuses of dominance.'"® This may signal a renewed interest from the antitrust authority in tackling dominance cases. 'b. Definition of Dominance Antitrust Law provides a definition of what is a dominant position. Pursuant le 5 of the Antitrust Law, an entity has a dominant position when, for a certain product or service: (1) it is the only supplier or buyer either within the national market or in one or several parts of the world; (2) despite not being the only supplier or buyer, it does not face substantial competition: or (3) due to the level of vertical or horizontal integration, it can determine the economic viability of a competitor to the detriment of another. Pursuant to Article 6 of the Antitrust Law, in order to establish the existence of a dominant position, the antitrust authority shall consider the following circumstances: «the level of substitutability of the product or service involved, whether of national or foreign origin, and the conditions and timing of such substitutability; © the entry barrier level (m ly legal barriers) in the relevant market; and 104. See Juez Federal de Mendoza (Federal Judge of Mendoza}, 2/12/2004, Belmonte y Asociacién Ruralista de General Alvear ¢/ Ministerio de Economia y Produccién, Seeretaria de Coordinacién ‘Téenica y Comisién Nacional de Defensa de la Competencia (Recurso de Hecho); Camara Nacional en lo Civil y Comercial Federal [National Chamber of Federal Civil and Commercial ‘Affairs}, 24/05/2004, CCBA S.A. y Cerveceria y Malteria Quilmes SAICA s. recurso de queja. 105, COMM'N FOR THE DEFENSE OF COMPETITION, GUIDELINES FOR THE ANALYSIS OF CASES OF EXCLUSIONARY ABUSE OF DOMINANCE (2019).‘ions the ‘ible veen tsive s of hich phen prest Argentina. # the level at which the alleged responsible party can unilaterally influence the price determination process or restrict market supply and the level at which its competitors have to counteract such power. The Dominance Guidelines clarify that it is not illegal to hold a dominant position, but rather to abuse that dominant position to distort competition through unlawfil means.!®° The Dominance Guidelines follow the European Union's ease law on the matter, which considers that dominant companies have a special responsibility not fo distort competition in the market.” Under the Antitrust Law, the unilateral conduct of a non-dominant firm cannot be sanctioned for being abusive since only dominant firms are capable of affecting the general economic interest. Abuse of dominance cases are analyzed under the rule of reason of under an effects-based approach, and the antitrust authority’s analysis predominantly focuses on the market share of the alleged offender, as well as other relevant factors such as the level of entry barriers, the duration and market coverage of the alleged abuse, countervailing purchaser power, and the intention of the offender to exclude competitors from the market, The relevant market is established both at the product and geographic levels. In order to determine the relevant product market, the antitrust authority analyses the characteristics of the product, its price, and its use, As for the geographic market, the antitrust authority considers it to be the smallest region within which a sole competitor may impose a small but significant and no (SSNIP test) are \erease in price ¢. Collective Dominance Collective dominance, though mentioned in Article 5 of the Antitrust Law, is not ‘concept that has been used by the Argentinian authorities to date. dd. Abuse of Dominance (D) Overview The abuse of dominant position can either be exclusionary or exploitative. In cases of exclusionary abuses of dominant position, the anticompetitive behavior punished by the Antitrust Law is the use of a dominant position to exclude competitors—cither actual or potential—from the relevant market. In cases of exploitative abuses of dominant position, what is illegal is the imposition of prices and commercial conditions that are different to the ones that would prevail in a competitive market The concept of abuse is not defined nor is there a general standard set by the Antitrust Law. However. Article 3 provides a list of examples of potentially abusive conduct. The Antitrust Law requires the antitrust authority to prove a direct connection between the dominance and its abuse. Under the Antitrust Law, unilateral 106. COMMISSION FOR THE DEFENSE OF COMPETITION, GUIDELINES FOR THE ANALYSIS OF CASES OF EXCLUSIONARY ABUSE OF DOMINANCE (2019), p. 107. Case C-322/81, Michelin v, Commission [1985] CMLR 380, point 10 (Eur. Ct. of Justice).Argentina-28 conduct of a non-dominant firm cannot be sanctioned for being considered abusive unless it has enough market power to affect the general economic interest." Pursuant to the Dominance Guidelines and the case law,' the conditions that the CNDC shall prove in order to be able to sanction such type of conduct are the following: (a) Existence of a dominant position: The Antitrust Law does not specify a certain market share threshold needed for a company to be considered to have enough market power to be able to act unilaterally or independently in a relevant market while ignoring both its competitors and its customers. In order to determine whether a company has a dominant position in a given market, the antitrust authority must analyze the concentration level in the relevant market, the existence of substitute products, the entry barriers to the market, the competition posed by imports, and the gain of efficiencies. The market power should be enough to affect the normal functioning of the relevant market, For instance, in the YPF case of 1999,""" the antitrust authority considered that YPF—Argentina’s state-owned gas and oil company—had a dominant position in the LPG market, holding a 50 percent share. In the most recent dominance case of 2015, the antitrust authority considered that Clorox Argentina held a dominant position in the domestic bleach market with a 50 percent share.'!! More recently, the Dominance Guidelines issued by the CNDC establish that market shares below 40 percent are unlikely to entail a dominant position, even when attained by the largest company in the market." (b) Existence of abusive conduct: As to its effects, the abuse of a dominant position can either be exclusionary (when the main effect of the practice is the exclusion of competitors from the market or to prevent the entrance of potential ones) or exploitative (when the main effect of the conduct is that the dominant firm illegally appropriates the consumer's surplus). The ‘Antitrust Law forbids conduct that seeks to displace other competitors from the market, block their access to a market, or illegally obtain an exclusive competitive advantage. Examples of abuse of a dominant position include: (i) Refusals 10 deal: The refusal to deal has to be unjustified in order to be considered illegal. It has been considered illegal when the refusal to deal is based on discriminatory reasons. (ii) Discriminatory pricing: Price discrimination is considered illegal when a product is sold to different buyers at different prices without a valid business justification. 108, Los. 110, 1, of Tridel, 18/10/2017, HBO Ole Partners. s/ Infraccidn de la Ley N°25.156 (C1154), COMM'N FOR THE DEFENSE OF COMPETITION, GUIDELINES FOR THE ANALYSIS OF CASES OF EXCLUSIONARY ABUSE OF DOMINANCE (2019), p. 4. Secretaria de Industria, Comercio y Mineria [Selnd] [Secretariat of Industty, Trade and Mining), 31/05/1999, YPF S.A. s/ Incumplimiento de la Ley N°22.262 (C.314). Secretaria de Comercio [SeCom] [Secretariat of Trade], 17/04/2015, Clorox Argentina S.A. sf Infraccién de la Ley N°25.156 (C.1122). COMMISSION FOR THE DEFENSE OF COMPETITION, GUIDELINES FOR THE ANALYSIS OF CASES OF EXCLUSIONARY ABUSE OF DOMINANCE (2019), p. 6, “113.cos Ss oe eee Argentina-29 (iii) Bundling and tying: This type of conduct is considered illegal when in order to purchase a product in which the seller has a dominant position . the tying product), the buyer is also required to purchase another good not related to the main product (ie. the tied product) in order to increase the market share of the tied product. (©) Potential damage to the general economic interest: The antitrust authority shall analyze whether the conduct has the potential to damage the general economic interest. In doing so, it shall balance the potential benefits derived from the practice (¢.g., gains in efficiencies and productivity) vis-a-vis the potential damage caused by the anticompetitive behavior, (2) Tied Selling and Bundling Pursuant to Article 3() of the Antitrust Law, subordinating the sale of goods to the purchase of another or to the use of a service constitutes a competition restrictive practice. Likewise, subordinating the rendering of a service to the use of another or the purchase of goods constitutes a competition restrictive practice (3) Conditional Discounts Conditional discounts are not expressly foreseen in the list of examples of Article 3. However, as explained, such list is not exhaustive and does not preclude other unilateral conduct to be deemed as abusive, for instance, conditional discounts by a dominant firm. Despite the absence of mention in the Antitrust Law, conditional discounts and rebates are identified in the Dominance Guidelines as a potential form of abusive conduct." (4) Refusal to Deal Pursuant to Article 3(i) of the Antitrust Law, to unjustifiably refuse to fulfill orders for the purchase or sale of goods or services made under the current conditions in the corresponding market constitutes a competition restrictive practice (5) Predatory Pricing Pursuant to Article 3(k) of the Antitrust Law, to dispose of goods and services below their cost without justification founded on commercial use with the purpose of removing competitors from the market or of causing harm to the reputation, financial position, or trademark value of their suppliers of goods and services constitutes a competition restrictive practice. (6) Exploitative Conduct The antitrust authorities have challenged exploitative conduct under the prior and current antitrust laws. In 1999, YPF Sociedad Anénima (YPF), the main local liquified petroleum gas (LPG) producer, was fined with ARS109 million for an 113, de at 2Argentina-30 exploitative abuse of dominant position. YPF was accused of charging higher prices in Argentina by reducing LPG supply through exporting part of its production and forbidding the import of such product into the country. At that time, YPF controlled 100 percent of the gas storage capacities in the Argentinian ports. The sanction imposed by the antitrust authority was ratified by the National Justice.!"* In 2018, the Domestic Trade Secretariat, following the recommendations of the NDC, imposed a fine worth AR$42.7 million to the Argentinean Society of Music Authors and Composers (SADAIC), a music collective society, for abusing. its dominant position (it held a legal monopoly) in violation of the Antitrust Law by charging excessive and discriminatory fees to certain hotels for the secondary reproduction of music.''® This decision was subsequently overtumed by the Court of Appeals in Civil and Commercial matters on the grounds that there was insufficient evidence to assert that excessive prices had been charged.'"* The Court of Appeals confirmed nonetheless the antitrust authority’s decision as to the need for Executive Branch to regulate SADAIC’s tariffS to hotels, although it set aside the finding of infringement as well as the fine. (7) Resale Price Maintenance Pursuant to Article 3(a) of the Antitrust Law, fixing, directly or indirectly, the selling or purchase price of goods and services that are offered or requested in the market constitutes a competition restrictive practice. In 2002, in TRISA,""” the antitrust authority imposed sanctions on three cable TV operators and two TV content producers, co-owners of the exclusive rights to broadcast live first division soccer matches in Argentina, The sanctions were imposed for fixing minimum prices in connection with said exclusive rights. The TV content producers had signed identical vertical agreements with the three cable TV operators, setting a minimum price for the pay-per-view of live football matches. The antitrust authority concluded that the agreements were a consequence of a collusive behavior between the cable TV operators and the TV content producers. The Court of Appeals revoked the antitrust authority's decision, holding that the TV content producers were the ones that imposed the minimum prices and redefined the relevant product market.""® It broadened the definition of the relevant product market from live first division soccer matches (which was the definition originally adopted by the antitrust authority to analyze the case) to all soccer matches, which was a very competitive market, Hence, the Court of Appeals held that there was no 114. Corte Suprema de Justicia de la Nacién [CSIN] [National Supreme Court of Justice), 11/10/2018, Auto Gas S.A. ¢/ YPF S.A. y otros! ordinario. 115, Secretaria de Comercio [SeCom] [Secretariat of Trade], 26/06/2018, Federacién Empresaria Hotelera Gastrondmica de la Republica Argentina s/solicitud de intervencién de la CNDC (C. 1302), 116. Camara Civil y Comercial Federal Sala III [Court of Appeals in Civil and Commercial matters} 20/08/2019, Federacién Empresaria Hotelera Gastronémica de la Republica Argentina c/SADAIC ¥ ottos/apel. Resol. Comisién Nacional de Defensa de la Compentencia, 117. Secretaria de Comercio [SeCom] [Secretariat of Trade], 26/09/2002, TRISA, TSC s/infiaceién ala Ley N°22.262 (C. 479) 118. Cimara Penal Econémico Sala “B™ [Criminal Court of Appeals), 29/08/2003, V.C.C. S.A, ~ Multicanal S.A. - Cablevisién T.C.LS.A. s/Infraccién a la Ley de defensa de la competencia, supreme Court ofve act lly ch ho us, Argentina-31 dominant position in the relevant market since the accused parties did not have enough market power and, thus, no possible damage to the general economic interest could follow. Therefore, it considered the minimum price maintenance practice as lawful, (8) Role of Legitimate Business Justifications The existence of a dominant position does not imply that any action taken by a company is to be considered abusive. The antitrust authority accepts legitimate business justifications as long as they are reasonable." e, Settlements In Argentina, like many other jurisdictions, settlements or commitments are offered by an investigated party in the framework of an antitrust investigation and are subject to the antitrust authority’s approval Compromises are governed by Article 45 of the Antitrust Law. According to the Antitrust Law and to the antitrust authority’s current caselaw, compromises have the following main features: ‘© They can be offered by one or more investigated parties at an early stage of an Wwestigation (i.e., prior to any damage to the general economic interest can be proven by the antitrust authori ‘© The purpose of the compromise is that the invest immediate or gradual cessation of the alleged anticompetitive behavior, © The antitrust authority has the exclusive authority to accept or reject the compromise, as well as to suggest certain modifications to the offered compromise: © The acceptance of the compromise by the antitrust authority suspends the investigation in connection with the party offering the compromise for a period of three years; and after said period has elapsed, the antitrust authority can close the investigation if the general economic interest is not affected during the suspension of the investigation, or it can otherwise continue with the investigation if there is evidence that the general economic interest has been affected; and © It does not entail an acknowledgment by the party offering the compromise neither as to the alleged facts nor as to any matter of law at issue in the investigation. fated party offers the In recent years, antitrust enforcement in Argentina has shown an increased use of commitments or compromises by the antitrust authority of Argentina as an alternative way to resolve dominance investigations. An illustrative example of how the CNDC uses compromises in dominance investigations is the PBB Polisur S.A case decided in June 2012.'%" In that case, Petroquimica Cuyo S.A. (PQC), an 119, COMMISSION FOR THE DEFENSE OF COMPETITION, GUIDELINES FOR THE ANALYSIS OF CASES OF EXCLUSIONARY ABUSE OF DOMINANCE (2019), p. 8,42. 120. Secretaria de Comercio [SeCom] [Secretariat of Trade], 07/06/2012, PBB Polisur S.A. slinfracciin ala ley 25.156 (C. 1369),Argentina-32 Argentinian company holding a 70 percent market share in the manufacture and commercialization of polypropylene copolymers, filed an antitrust claim with the antitrust authority against PBB Polisur S.A. (PBB), arguing that the latter was refusing to supply ethylene and that such behavior could potentially drive PQC out of the polypropylene copolymers market, Pursuant to the claim, such refusal to deal amounted to an abuse of PBB’s dominant position in the ethylene market, which is an essential raw material for the production of PQC’s polypropylene copolymers. An important fact to the claim was that PBB (a Dow Chemical subsidiary) was a vertically integrated firm. It was active in the production of both ethylene and polyethylene copolymers, the latter being a downstream product competing in many applications with the polypropylene copolymers manufactured by PQC, given the high degree of substitutability between these two products Given PBB’s dominant position in the ethylene market (there are other ethylene suppliers in Argentina, but PBB is the main producer), PQC alleged that PBB was refusing to supply ethylene in order to restrict competition in the downstream markets, thus driving PQC out of the polypropylene copolymers market and consequently enhancing PBB’s position in such market. Crucial to the case’ outcome was that at no point during the investigation did PBB stop supplying ethylene to PQC. The antitrust authority served notice of PQC’s claim to PBB, which submitted its explanations and shortly thereafter offered a compromise to the antitrust authority by obliging itself to continue to supply ethylene to PQC under certain price, term, and safety conditions. In accepting PBB’s compromise, the antitrust authority acknowledged that: (1) The acceptance of compromises by the antitrust authority is to be done using a restrictive approach, and solely in cases in which no damage to the general ‘economic interest is present at the time the compromise is to be analyzed by the antitrust authority. In the case at hand, since PBB continued at all times to provide ethylene to PQC, no antitrust damage was present. Hence, the compromise offered by PBB could be accepted by the antitrust authority; (2) Offering a compromise to the antitrust authority does not imply an acknowledgment of any wrongdoing whatsoever, because otherwise compromises would never fulfill the purposes envisaged by Congress when including such tool in the Antitrust Law; and (3) Compromises are a useful tool in the Antitrust Law and are designed to be used in certain cases, particularly those in which it is more convenient to favor antitrust prevention and advocacy than to continue with an investigation to possibly sanction allegedly anticompetitive conduct. Following the path of the PBB decision described above, it is expected that the antitrust authority will further foster and continue to use compromises in the future as an alternative way to resolve dominance cases in which no apparent damage to the general economic interest is present, as well as to have the investigated parties to ‘compromise and comply with the Antitrust Law f. Remedies and Sanctions Please refer to part B.1.f of this chapter regarding penalties. sh er aen be to an the bas the sto Argentina-33 4. Intellectual Property The Antitrust Law does not provide any special treatment for any determined sector or activity. However, the Argentinian Patents Law (Patents Law)'*! establishes some special rules and procedures regarding anticompetitive practices. Pursuant to the Patents Law the following restrictive trade clauses shall be deemed unenforceable: (1) those affecting the production, (2) those restricting competition, or (3) those imposing any other procedure (exclusive transfer-back requirements; requirements preventing any challenge to validity; those that impose mandatory joint license; or any other of the practices specified in the antitrust law). ‘The Patents Law provides that compulsory licenses shall be granted in case the patentee performs anticompetitive practices. In such event, the authorization shall be granted without the need of any special procedure. For the purpose of the Patents Law, the following, among others, shall be considered as anticompetitive practices: The establishment of excessive or discriminatory prices of the patented products as compared to the average prices prevailing in the market, in particular, if prices offered on the market are significantly lower than those offered by the patentee for the same products; The refusal to supply the local market under reasonable commercial terms; ‘The obstruction of commercial or production activities; and Any other conduct punishable by the Antitrust Law.! ‘The regulatory decree of the Patents Law establishes that the antitrust authority shall have to determine first if the practices are illegal.'* There are no known cases where these rules and procedures have been applied since the Patents Law’s enactment in 1995, 5. Interaction between Competition and Other Laws and Regulations a, Trade There is very limited interaction between trade laws and the competition laws. In several instances, the CNDC recommended that trade barriers be reduced, in particular when the domestic market is highly concentrated. This was the case, for ‘example, for some products in markets of industrial inputs such as aluminum, steel, and petrochemicals that used to be affected by a special import procedure that works as a non-tariff barrier. Similarly, the CNDC was consulted regarding the potential effect of an anti-dumping measure in a highly concentrated domestic market (load cells for weighing scales).'* 121. Law No. 24,481, May 1995, B.O. 28232. 122, fd art 47(@). 123. Decree 260, Mar. 20, 1996, B.O. 28360. 124, COMMISSION FOR THE DEFENSE OF COMPETITION, ANTIDUMPING MEASURES AND COMPETITION, INA HIGHLY CONCENTRATED DOMESTIC MARKET (2016)Argentina-34 b. Foreign Investment There is no interaction between the foreign investment and the competition laws in Argentina, c. Regulatory Frameworks There is little interaction between the competition area in Argentina and other regulatory frameworks. Article 82 of the Antitrust Law, removes all decisionmaking powers in relation to antitrust matters which may have been granted in the past to any regulatory agency. In other words, the antitrust authority is the sole enforcer of the Antitrust. Law, and no other agency within the Executive Branch has any enforcement powers in relation to it. C. Enforcement of Competition Laws and Procedures 1. Agency Enforcement a. National Enforcement (1) Responsible Agencies and Structure Until the new antitrust authority is established, the Antitrust Law is enforced by the Domestic Trade Secretariat, which is appointed and removed by the President of Argentina. The Domestic Trade Secretariat, which has decisionmaking, powers, is assisted by the CNDC, a technical agency with investigatory and advisory powers The Domestic Trade Secretariat generally follows the non-binding recommendations issued by the CNDC and very rarely takes a different position. The CNDC is composed of five members. The President of the CNDC is designated by the President of Argentina, who can remove him or her without cause. The remaining four commissioners, two of which must be lawyers and two of which must be economists, are also designated by the President of Argentina, but their term in office is four years, which can be renewed indefinitely. Once instituted under the Antitrust Law, the National Competition Authority, composed of (1) the Defense of Competition Tribunal, (2) the Anticompetitive Conduct Secretariat, and (3) the Economic Concentrations Secretariat, will be responsible for all enforcement. (2) Investigative Powers and Procedure Currently, cartel investigations, any other anticompetitive investigations, and merger control analyses are carried out by the CNDC. The CNDC issues a non- binding report with recommendations to the Domestic Trade Secretariat, which takes the final decision on what measures are to be taken. Once instituted, the Anticompetitive Conduct Secretariat shall investigate and prosecute all matters related to anticompetitive conduct before the Defense of Competition Tribunal, The Economic Concentrations Secretariat will be in charge of conducting the preliminary assessment of economic concentrations under the merger control regime and issuing opinions for the Defense of Competition Tribunal to adjudicate in such cases.and fhon- akes and e of ye of brger al to Argentina b. Subnational Enforcement Argentina does not have subnational, either provin of its Antitrust Law: ial or municipal, enforcement 2. Judicial and Administrative Procedures a. Relevant Courts Please see part A.3 of this chapter. b, Time Ordinarily Required for First Instance Review and Appeals Once a decision is issued by the Domestic Trade Secretariat, it can be appealed by the sanctioned companies before the specialized antitrust court within the Civil and Commercial Federal Court of Appeals (or the Federal Court of Appeals which ‘may result competent outside the City of Buenos Aires). In turn, the Federal Court of ‘Appeals’ decision may be appealed, as a last resort, before the National Supreme Court of Justice.!°5 Pursuant to Article 66 of the Antitrust Law, the following antitrust authority decisions can be appealed: I nposition of fines; 2. cease and desist orders: 3. the rejection of an economic concentration or the imposition of conditions to its approval; 4. dismissal of a claim filed with the antitrust authority 5. rejection of a lenier tion; and 6. injunctions issued by the antit Antitrust Law ist authority pursuant to Article 4 of the Courts have consistently construed that the list of matters that can be appealed under the Antitrust Law is illustrative and that any other decision adopted by the antitrust authority that causes sufficient irreparable harm can be appealed by the parties affected by such decision, Pursuant to Article 67 of the Antitrust Law, an appeal suspends the effects of the decision (fines) issued by the antitrust authority after submitting a surety bond over the corresponding sanction, Therefore, the parties shall immediately pay the fine or comply with the decision issued by the antitrust authority until the Court of Appeals revokes the agency’s decision, Article 67 of the Antitrust Law further provides that appeals should be filed within fifteen business days of notification of the antitrust authority's decision, Thereafter, the antitrust authority has ten business days to submit the file to the specialized Antitrust Court within the Civil and Commercial Federal Court of Appeals or to the corresponding Federal Court of Appeals in the provinces 125. Law No. 48, Sept. 14, 1863, art. 14.Argentina-36 3. Private Actions The 1999 antitrust law allowed the victims of anticompetitive practices to seek redress in courts, However, in the two decades since the provision was engaged, there have been only two known cases in which a court awarded a private party damages in an anticompetitive conduct case.'°° The Antitrust Law introduces substantial modifications in the arena of private damages actions, in particular, those based on a previous infringement decision from the antitrust authority (known as follow-on actions)."?” Importantly, the Antitrust Law confers res judicata effects to the decisions issued by the antitrust authority vis- acvis the courts in relation to the facts and to the legal characterization of the anticompetitive conduct, once such decisions become final and non-appealable.'** This novel binding effect on courts of prior antitrust infringement decisions may foster follow-on actions by cartel victims in Argentina, The Antitrust Law does not appear to limit as to which parties are entitled to seek redress. Accordingly, it is reasonable to conclude that both direct and indirect purchasers have standing to sue for damages as long as it is proven in court that they have suffered a loss as a consequence of conduct found to be anticompetitive by the antitrust authority. This conclusion is supported by the language in article 65 of the Antitrust Law which refers to “indirect” as well as “direct” purchasers.'” The pass-on defense issue is not addressed by the Antitrust Law. However, if indirect purchasers have standing to sue for damages, it would be reasonable for a pass-on defense to be available to cartelists. More generally, according to the general prineiples of Argentinian law, this type of defense would be allowed as it is not expressly prohibited by law,'*” Additionally, pursuant to the general principles of compensation under Argentinian law, unjust enrichment is prohibited and grants a cause of action to seek the restitution of the unjust benefits that may have been obtained by a party.'"' By analogy, it could be argued that a cartelist being sued by a direct purchaser who has partially or fully passed on the overcharge to the subsequent purchasers could allege that the plaintiff would be unjustly enriched if the amount of the passed-on overcharge was not taken into consideration when assessing the damages. On this issue, the Antitrust Law largely follows the approach taken 126, Juzgado Nacional de Primera Instancia en lo Comercial N° 14 de la Capital Federal, (Lower Court ‘of Ordinary Jurisdiction in Commercial Matters No. 14], 16/09/2009, Auto Gas S.A. c! YPF S.A. y otros! ordinario. For a comment on the case, see Julian Pefta & Federico Rossi, Competition Lave in Argentina, COMPETITION LAW IN LATIN AMERICA: A PRACTICAL GUIDE, p. 169, (Jutidn Pefia & Federico Rossi eds., Kluwer Law International 2016), More recently, damages were awarded a 0 consumer association in Camara Federal de La Plata [CNLP] [Court of Appeal of La Plata}, (07/12/2017, Union de Usuarios y Consumidores c/REPSOL -YPF s/Repeticion. 127, LawNo, 27,442, May 15, 2018, B.. 33870, arts. 62 & 63, 128. Id. art. 63. 129, Id. art. 65,92. 130. According to Article 19 of the Argentinian Constitution, everything that is not forbidden is allowed, CONST. NAC. art. 19. 131, Art. 1794 of the Argentinian Civil and Commercial Code contemplates actions to seek redress in the case of unjust enrichment. Article 1742 of the Argentinian Civil and Commercial Code, which provides that a judge can attenuate the quantum of the compensation taking into account “the personal situation of the victim and other circumstances of the ease,” appears to provide some Teeway for the judge to consider whether the plaintiff has partially oF totally passed on the overcharge and, i $0, to diminish the level of compensation accordingly.) seek gaged, party private a from atitrust ty vis of the tole." js may itled to ndirect fat they ‘by the 5 of the ever, if le for a general is not iples of grants a ve been ed by a to the ed if the ‘sessing, th taken wer Court [PES.A.y jon Law in fin Peta & farded a to La Platal, prbidden is sount “the bvide some bed on the Argentina-37 under European Union antitrust law, which—unlike U.S allows the pass-on defense. As to the quantum of the compensation, the Antitrust Law establishes that it shall be calculated by the competent court taking into consideration “the seriousness of the offense and other circumstances of the case.” This appears to be in tension with the theory that the leading criteria to quantify the compensation should be the harm that the anticompetitive conduct caused to a particular victim. If the seriousness of the offense is the primary criterion used by courts to assess damages, this could lead to overly deterrent and unfair solutions and materialize in the award of large compensations to victims who suffered only limited damages." The very name of the action (Reparacién de dahios y perjuicios)"s conveys that the main goal of such an action is to obtain compensation for the damages inflicted by an anticompetitive conduct. Therefore, it is logical to argue that the judge should mainly consider the quantum of the damages to calculate the compensation. ‘The shortcoming identified above seems nonetheless to be addressed by the Antitrust Law, which elsewhere provides that the general civil rules shall also be applicable to antitrust damages 186 Such rules provide that compensation ‘ought to be full, consist of the restitution of the victim’ position to that existent prior to the infringement,” and comprise the actual loss (i.¢., dannum emergens), the gain of which that person has been deprived (ie., loss of profit or lucrum cessants), the oss of opportunity," and interest. ‘The Antitrust Law additionally provides for joint and several liability of all the parties involved in an anticompetitive conduct, although parties may subsequently initiate contribution actions among them.'’ A similar provision to that of the EU Damages Directive" is adopted in the Antitrust Law. That provision provides that a successfull leniency applicant shall only be joint and severally liable for the harm caused to: (1) its own direct and indirect suppliers or purchasers; and (2) other victims of the conduct, but only when obtaining full compensation from the other ponsible parties proves to be impossible. ! nally, the Antitrust Law establishes that follow-on damages actions shall be subject to an expedited (rather than ordinary) procedure established in the Civil and federal antitrust law 132, See European Parliament, Directive 2014/104/EU (Nov, 26, 2014), Art.13 [hereinafter EU Damages Directive], on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member and of the European Union. 133, Law No, 27,442, May 15, 2018, B.O. 33870, art. 64 134, Ifthe antitrust authority (when imposing a fine for anticompetitive conduct) and the courts (when awarding damages as a consequence of that very same anticompetitive conduct) both use the seriousness of the offense as the primary criterion, this could implicate the double jeopard; principle embedded in the Argentinian Constitution insofar as a company might be punished twi for the same offense. 135, The English translation is “damages compensation.” 136, Law No. 27,442, May 15, 2018, B.O. 33870, art. 62 137. Cédigo Civil y Comercial de la Nacién [Céd. Civ.] [Argentinian Civil and Commercial Code}, at 1740 (2014). This provision is very similar to Article 3 of the EU Damages Directive. 138. Cédigo Civil y Comercial de la Nacién [Céd. Civ.] [Argentinian Civil and Commercial Code], art 1738 (2014). Also, this provision largely resembles recital 12 of the EU Damages Directive 139, Law No, 27,442, May 15, 2018, B.O, 33870, art. 65, 140. EU Damages Directive, supra note 132, art. 11 141, Law No, 27,442, May 15, 2018, B.O. 33870, art. 65,4 2.Argentina-38, Commercial Procedural Code.'"? Antitrust damages actions (either stand- follow-on) normally entail an evidence-intensive, costly, and protracted and several years may elapse until courts reach a decision." In particular, the production of substantial economic evidence as well as the participation of economic experts to calculate the overcharge (and the pass on, if legally accepted as a defense) is typical in this type of case. How such expedited proceedings will function, given the complex issues that often arise in the framework of antitrust damages actions rem: s to be seen, D. Jurisdiction 1. Extraterritorial Application of Law Anticompetitive conduct taking place outside of Argentina is covered by the Antitrust Law as long as it has effects in the domestic market. Article 4 of the Antitrust Law adopts the so-called Effects Doctrine and introduces the principle of extraterritorial application of the law. However, there has not been any known case relating to the extraterritorial application of the Antitrust Law that derived from the sanction of cartels adopted abroad. 2. International Agreements and Cooperation Argentina has signed agreements both within Mercosur (Mercado Comin del Sur) and bilaterally with other competition agencies. In December 1996, Mercosur’ founding members (ie., Argentina, Brazil, Paraguay, and Uruguay) signed the Fortaleza Protocol of Defense of Competition to be applied to anticompetitive conduct affecting trade among its members that had a local effect in one of them. The Fortaleza Protocol was ratified by the Brazilian and Paraguayan congresses but was not approved by Argentina or Uruguay Even though the Fortaleza Protocol was never ratified, the Mercosur working group for competition matters (Working Group No. 5) continued to meet at least twice annually. In 2002, Mercosur adopted the Agreement on the Implementation of the Fortaleza Protocol. In 2004, through Common Market Couneil (CMC) Decision No. 4/2004, Mercosur approved the Consensus on the cooperation among competition agencies. In 2006, it approved CMC Decision 15/2006 establishing a system of exchange of information and consultation in the field of merger control. In 2010, Mercosur approved the CMC Decision No. 43/2010, an Agreement for the Defense of Competition in Mercosur which replaced the Fortaleza Protocol. At present, this agreement has been ratified only by Argentina (in April 2011) and Uruguay (in January 2014). 142. Such expedited proceedings (proceso sumarisimo) provide for abridged legal terms, which, unless otherwise established, shall have a duration of three days. Furthermore, appeals within such type of procedure are limited, and the production of evidence is not expressly contemplated, 143. “These actions may be particularly costly and are generally more complex and time-consuming, than other kinds of civil action.” White Paper on Damages Actions for breach of the EC Antitrust Rules, art 2.8,las ng ast of pn ng ha In the At Jess eof Argentina-39 With regard to bilateral cooperation agreements, in 2003, Argentina signed a mutual legal assistance treaty with Brazil.'** The aim of this agreement was to promote cooperation among the authorities of the countries in the area of antitrust, including cooperation in the application of competition laws, as well as technical cooperation, The agreement also sought to ensure that both countries guarantee careful consideration of their important reciprocal interests in the application of their competition laws. Although there has been limited formal cooperation, there is some sporadi informal communication regarding specific matters. In June 2011, the CNDC requested some information from its Brazilian counterparts using the mechanism established in the bilateral cooperation agreement, and the Brazilian agencies responded in August of the same year, although no information has been provided publicly as to the content of the request. In October 2011, the CNDC and Ecuador's competition agency signed a bilateral cooperation agreement, and in September 2017, the CNDC and Peru’s INDECOPI signed a bilateral cooperation agreement in competition matters. "5 In practice the interagency cooperation displayed by the antitrust authority has been low in both merger and conduct eases. 144, Mutual Legal Assistance Treaty, Arg.-Br., Oct. 16, 2008. 145, “Acuerdo de cooperacién entre las agencias de competencia de A GOVERNMENT WeBsITE (Sept acuerdo-de-cooperacion-entre ARGENTINIAN 19, 2017), available at htips:/www.argentina.gob.ar/noti las-agencias-de-competencia-de-argentina-y-peru,