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Hope, Duggan & Silva Buenos Aires

On September 29 1999 Argentina enacted a new Law on Protection of Competition (Law Nº 25.156 - the Antitrust Law). This law comes to replace the existing competition protection law system (Law 22.262) in effect in Argentina since 1980. Although the Antitrust Law maintains the basic structure of the prior regime, it now establishes a preliminary control process on business concentrations under the supervision of a new Competition Authority. This way, the Antitrust Law sets the basis for an important and previously non-existing active regulatory control over potentially anti-competitive concentration events in Argentina.

To comply with the preliminary control process any merger, transfer of going concern or acquisition of shares or assets that grants a substantial influence upon the acquired company must now - when relevant - be notified to the Competition Authority. The purpose of this notification is to allow the examination of such transactions to determine if they constitute "prohibited business concentration events" (ie, events whose purpose or effect is or may be to reduce, restrict or distort competition in a manner that may be damaging to the public interest). Failure to report such transactions may result in a fine of up to $1 million per day.

Transactions are deemed to be relevant when the aggregate annual turnover of the parties involved in such transactions exceeds, in Argentina or worldwide, $200 million or $2.5 billion, respectively. In calculating these amounts, it is necessary to add the turnover of the companies involved in such transactions to the turnover of any other entity that controls, is controlled by or is under common control with them ("control" meaning the direct or indirect ownership of over 50% of the capital stock or voting power). Few cases are exempted from this notification duty: acquisition of additional shares when already owning over 50% of the shares of the issuer thereof, acquisition of non-voting debt instruments or acquisition of a single company by a non-Argentine entity having no other assets or shares in Argentina.

As mentioned, a new Competition Authority (Tribunal Nacional de Defensa de la Competencia) will be managing this preliminary control procedure. Although reporting to the National Ministry of Economy, this body will enjoy - by its composition and functions - an important autonomy in its decision-taking powers. Until such Competition Authority is put in place, the administrative authority of the old Law 22.262 (the Comisión Nacional de Defensa de la Competencia) will assume the tribunal's functions and duties.

Notification of relevant transactions to the Competition Authority shall be made through the completion of a Form called "F1" that requires an important amount of information about the participating companies, the relevant transaction itself, the markets involved and the effects of the relevant transaction over the competition existing in such markets. In complex cases, the presentation of a tailor-made Form called "F2" could be required. Presentation of the F1 must be made either prior to the relevant transaction taking place or one-week after the earlier of the execution of the relevant agreement or the effective perfection of the concentration event.

The Competition Authority will, within 45 business days, approve, condition or reject the proposed transaction (such period may be extended for 30 days for further evaluation when facing a regulated activity). If no resolution is passed within such term, the transaction is deemed approved. Approval by the Competition Authority has the effect of barring any future challenges to the relevant transactions by administrative authorities. Lack of such express or tacit approval will cause the relevant transactions to be null and non-enforceable among the parties thereto and vis-a-vis third parties.

Esteban Mezzano

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