New Regulations for the Notification of Business Combinations

4 September, 2023 | Current Regulations

On August 28, Regulation No. 62/2023 of the Argentine Antitrust Commission was published in the Official Gazette. Such Regulation sets forth the applicable criteria to determine whether the notification of a business combination transaction may be processed through summary procedure (PROSUM, for its Spanish acronym).

PROSUM was established by Resolution No. 905 of the Secretariat of Trade, which repealed Resolution No. 40 and approved the “Regulations for the Notification of Business Combination Transactions”.

The implementation of PROSUM resulted in the creation of Form F0 and the combinations that qualify thereunder are those that comply with one or more of the requirements listed in A) below, provided none of the elements listed in B) below are present.

 

1. A) Business Combinations that may be notified through PROSUM.

– Conglomerate mergers.

– When there is a change in the nature of control of the target entity, from joint to sole control by a pre-existing controlling entity.

– Horizontal business combinations where the joint market share in each of the relevant markets affected by the transaction is lower than 20%.

– Horizontal business combinations where the joint market share in each of the relevant markets affected by the transaction is lower than 35% and the increase in the HHI is lower than 150 points.

– Vertical business combinations where the individual shares in each vertically related market are lower than 30%.

 

1. B) Business Combinations that MAY NOT be notified through PROSUM:

– When, upon initiating the procedure, the parties are not able to provide all the required information and documents set forth in Form F0.

– When the post-transaction HHI in an affected relevant market is higher than 2,500 points.

– When the business combination eliminates a (current or potential) strong and effective competitor.

– When the business combination combines two important innovative entities.

– When there are indications that the business combination could prevent the expansion of competitors in an affected relevant market.

– When a company already established in a market intends to acquire a small but highly innovative company, even if it has not yet reached its technological peak, either to use its technology or deactivate it.

 

– When the transaction could significantly increase the market power of the parties due to the combination of technological, financial, or other resources, even if the combining entities do not operate in the same market.

– When the business combination generates a product and/or services portfolio.

– When the notified transaction involves the creation of a joint venture by companies that remain independent, which will occur when the transaction involves the creation of a joint venture for a specific business segment.

– When, in a change from joint control to sole control, any of the following situations occurs: (i) The company acquiring sole control of the target entity is also a direct competitor of such entity, provided that the market share is substantially high; or (ii) the enforcement authority has not examined the previous transaction involving the joint control acquisition of the target entity by the company acquiring control of the company ceasing to be controlling entity as a result of the notified transaction.

– When, contemporaneously with the transaction, the acquirer or the target holds equity interests in competing companies exceeding 5% of the capital stock or voting rights.

– When a national economic regulatory body must issue the opinion provided for in Section 17 of Law No. 27,442, unless the parties, at the time of notification, evidence that such body has no objections regarding the potential impact on competition in the respective market and of compliance with the applicable regulatory framework.

– When the Argentine Antitrust Commission considers that more information is required to properly analyze the effects of the transaction on competition.

 

For any clarification or further questions regarding this matter, please contact María José Rodríguez Macías (mmacias@brons.com.ar).