Latest Developments in Antitrust in Argentina

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This report is an overview of the recent changes in Argentine law and certain landmark cases concerning control of mergers and acquisitions in Argentina.

Argentine law on antitrust

Argentine Antitrust Law 25,156 emerged during a new trend of market-orientated reforms in the 1990s. According to the law itself, this law is the single source of authority on the defence of competition in Argentina.1 The law provides for merger control procedures2 and a new independent enforcement body called the National Tribunal for Defence of Competition (TDC).3 Since the Tribunal has not yet started to function, the Commission for the Defence of Competition (CNDC) is currently responsible for the enforcement of Law 25,156.4
Law 25,156 is composed of more than 60 articles, divided into various chapters.
Article 7 states that 'Economic concentrations that have the purpose or effect of, or may result in, restrictions or distortion of competition in a manner which may be prejudicial to the general economic interest are prohibited.' The CNDC has stated in the past that it judges the standard of general economic interest as being mainly equivalent to the concept of consumer surplus.
In light of article 6, an economic concentration could occur through (i) merger of companies; (ii) bulk transfers, regardless whether or not the transfer of assets is done in compliance with the Bulk Sales Law; (iii) acquisition of ownership of interest in a legal entity that amounts to legal control or enables the purchaser to obtain substantial influence thereof; or (iv) any legal act that either transfers the assets of a business or grants a 'substantial influence' or 'determining influence' in the government and administration of the business.
Article 8 of Law 25,156 sets forth the obligation to notify the CNDC of an economic concentration if the total turnover amount in Argentina exceeds 200 million Argentine pesos (approximately US$66 million). In order to determine whether the threshold turnover amount is reached, the total turnover amount of the purchaser (including its affiliates) is added to the turnover amount of the targeted business acquired.
Law 25,156 provides several exemptions to the obligation of notifying the CNDC of an economic concentration. Article 10 of the law states that a company is exempted from notification when (i) the purchaser already holds more that 50 per cent of the shares of the acquired company; (ii) the acquisition is comprised of bonds, debentures, certificates of indebtedness or shares without voting rights; (iii) the acquisition is of a single domestic business by a foreign company that does not hold other interests or assets in Argentina; (iv) the acquisition is of a business in liquidation, which has not conducted business for at least one year; or (v) the amount of the transaction or the assets acquired does not exceed 20 million pesos (approximately US$6.6 million). However, the company will be required to notify the CNDC if the total combined amount of purchases or assets acquired over the course of the year exceeds 20 million pesos or exceeds 60 million pesos (approximately US$19.8 million) in the preceding three years.
The incorporation of the last exemption was an attempt to reduce the number of filings brought to the CNDC during 2001 and 2002. The impending economic crisis in 2001 was also a factor in the legislature's decision to lower the thresholds and conditions required for concentration notification.5

Notified mergers and acquisitions

During the six months from December 2007 to May 2008, the CNDC approved 20 mergers and acquisitions.6 During this period there were two of the most relevant and controversial cases in the pay-TV industry in recent years.


An important case in this area has been Claxon.7 Turner Broadcasting bought seven pay-TV channels from Claxon in Latin America, in order to expand its presence in the region. The transaction resulted in an economic concentration when Turner International Inc and Turner International Holding Company acquired 95 per cent and 5 per cent of stocks respectively, held by Claxon Interactive Group Inc and El Sitio Inc, of CTG Inversora SA.
At the same time, Turner International acquired indirectly 90.0106 per cent of Imagen Satelital SA and Turner International Holding acquired directly 3.9894 per cent of said corporation.
As a result of the transaction, Turner Broadcasting System Inc, a unit of Time Warner Inc, holds a portfolio of 13 channels and represents 10 networks in Latin America.
The notified transaction consists of the acquisition of shares, as classified in article 6(c) of Law 25,156.
The notification was required due to the volume of business of the companies affected, which exceeded the threshold provided in article 8 of Law 25,156, and because the transaction did not come under any of the exceptions set out by the law.
The CNDC noted that the concentration has a potential impact on competition. On one hand, there exist various geographic markets in which the parties compete with one another for providing television services for cable and internet, within which the transaction has the characteristics of a horizontal concentration. On the other hand, there exist various markets for signals and television content in which one of the parties (as a provider of signals and content) is also the provider of the other (as an operator of television systems for cable), within which the transaction has characteristics of a vertical concentration. Lastly, there exist numerous geographic markets for providing television services for cable and internet in which only one of the parties operates and not the other, within which the transaction also has the characteristics of a conglomerate.
The notification was presented to the CNDC on 18 January, which approved the concentration in terms of article 13 inc. (a) of Law 25,156.
The CNDC's report followed a single line of arguments issued by three members as well as the president of the CNDC, Sbatella, who advised the interior trade secretariat to authorise the economic concentration.
The CNDC considered that, even though there are various technical methods with which the notified companies already acquire television content and commercialise such content by placing it at the disposal of various users through a subscription to television systems, the merging companies play out as providers of pay-TV signals, in that they act like gatherers of programmes and like marketers of said programming.
The Report analysed the market shares of the companies considering the total rating shares and subject matter. In accordance with the total rating share, the operation would result in the merger of the first and second offeror of paid signals, with a share of 27 per cent of the marketing of paid signals in Argentina. In the news sector, the Turner-Claxon merger would have a share of 29.6 per cent and in the cinema and series sectors, it would have a share of 44.1 per cent. Regardless of the approval of the economic concentration, the CNDC deemed that the relevant market thereof would require further analysis and close control by the competition authorities.
Following the recommendations of the CNDC, the internal trade secretariat ordered the cndc to initiate an investigation of the structure, dynamics, and competitive behaviour of the production market and marketing of full-length films.


Another important case in this area is Cablevisión.8 The Cablevisión case involved the notification of an economic concentration consisting of a set of stock transactions and corporate restructurings in 2006, in which Grupo Clarín SA, the principal media company of Argentina, and Fintech Advisory Inc came to own, directly and indirectly, approximately 60 per cent and 40 per cent respectively of the stock of Cablevisión, and joining it to Multicanal, the second largest operator of paid television in Argentina. The transaction is one of the most important in Argentina in recent years.
The transaction also included other enterprises linked to both companies, like Fibertel, the provider of internet access via cable modem, the leader in the broad-band market; Teledigital, a cable operator for the interior of the country, and Prima, an internet access company and proprietor of Flash (broad-band), Ciudad Internet (dial-up) and Fullzero.
As a result of the transaction, Grupo Clarín and Fintech Advisory acquired a majority of stock of Cablevisión and Multicanal, the two leading cable providers in Argentina.
The result was that two leading companies in the pay-TV and internet access market came to occupy the largest portion of the market for fibre-optic services, one of the fastest-growing consumer segments in recent years, which is projected to continue to grow rapidly.
Report 637 of the CNDC and Resolution 257 of the secretariat of home trade proceeded from the presentation of the notification, dated 4 October 2006. Approval of the concentration was granted in the terms of the article 13(a) of the Law 25,156.
The CNDC's Report was provided with three votes; members Humberto Guardia Mendonca and Diego Póvolo voted for their arguments and President José Sbatella voted according to his own principles.
Even though the CNDC's Report did not overlook certain competitive problems in the concentration, the approval of the concentration was based on the consideration of potential current and future competitors in the identified relevant markets and the gains in efficiency that the concentration was offering.
The transaction was presented as a natural process viewed within the context of the basic characteristics of the media industry, based on recent literature and emperical evidence. The same transaction was viewed as the natural result of the structural transformations within the communication and information technology industry, principally concerning the digitalisation of services and the investments required to that end. In that sense, the transaction implied an answer to the competitive challenges of the rapid development of an industry that requries economies of scale, density, and reach within a dynamic market that is continoulsy changing.
Therefore, the analysis of this transaction should be viewed in the context of an intense technological innovation that produces an impact of great magnitude in the industry. According to the CNDC, companies should anticipate these profound transformations of the markets and the competitive environment today and in the future.
At the same time, this accelerated process of technological change has been embraced by regulators for the purpose of using the emerging benefits of innovation in favour of consumers. The media industry evolves through technological competition and by an increasing diversity of available services. It is the consensus of the players within the media industry, such as the analysts, the corporations, and the regulators that such developments will enhance the dynamics of the market in the following years.
It should be observed that the transaction provides for a national majority capital player. In the framework of growing regional and international competition within the industry, the companies involved could confront the present scenario in better economic and financial conditions. From this transaction comes a player, that although it is an intermediate size on an international scale, will generate economies of scale and needed gains in efficiency in order to propel the development of a national industry with the capacity to compete in the world market.
In the pay-TV market, the concentration is considerable (approximately 70 per cent of the market). Nevertheless, the horizontal concentration in the pay-TV market permits the improvement of the cost structure and for technological upgrades. The digitalisation of the network provides the consumer better service: more channels, higher quality of transmission, the possibility of interaction, etc. The transaction allows for new players to enter the market through the creation of a new national network that has the possibility to compete with the telephone companies. The incorporation of a new network will permit service providers in areas currently not covered and reduce the costs of not using the networks of telephone companies.
In the internet service market, the transaction means the horizontal concentration of approximately 32.6 per cent of the market; nonetheless, the transaction will allow new players to enter the internet market, creating a new network that competes with the telephone companies. The incorporation of a new network will permit service providers in areas not currently covered and reduced the costs of not using telephone company networks.
The buyers signed a commitment before the approval of the economic concentration that established that, for a period of two years, the buyers would do quarterly presentations before the CNDC with the purpose of assuring the following:

  • free availability of exclusively owned signals to third parties that are not integrated into fair commercial conditions;
  • a place in the line up of programming for non-integrated signals;
  • pluralism, freedom of information and entertainment that guarantees to users informative content, sports and entertainment;
  • the transfer of efficiency gains to users by means of:
  • carrying out an investment plan; and
  • increasing the number of digital users for better quality and image;
  • basic representative tariff (TBR) in areas with superposition networks with reference to AMBA tariff;
  • social optional service (SSO) in AMBA within the term of the commitment that covers between 5 per cent and 10 per cent of homes with service; and
  • basic free service for certain institutions.
  • The aim of the current authorities seems to be to oversee compliance with the compromise and commitments undertaken by the merging companies.

    Organisation, procedural rules, and current regulations

    During recent years there have been certain administrative and operational amendments that have drawn the the attention and concern of most business people, practitioners and scholars in the field.
    The CNDC is composed of five members, one of whom acts as president. The secretariat of the ministry of economy, who has jurisdiction over the CNDC, appoints the members of the CNDC. The appointment is for a four-year term and the members may be re-elected for additional terms.9
    The CNDC has jurisdiction over both conduct and concentration cases. A conduct case may be initiated by a complaint filed by a party,10 a request by the secretary of state of the ministry of economy who has jurisdiction over the CNDC,11 or by the CNDC itself.12 Most conduct investigations, however, are initiated by a complaint.
    If the CNDC determines that a complaint is valid, it must notify the respondent who then has 10 days to file a response.13 If the CNDC determines from the response that there was no violation, or after concluding its investigation the CNDC determines that the evidence in the complaint does not indicate a violation of the law, the CNDC will dismiss the case.14
    Once the CNDC determines that there is a case, it assigns the case to one of its five members. At least one lawyer and one economist are entrusted to assist the member in charge of the case. The CNDC enjoys a broad range of investigative powers, including, but not limited to, the ability to subpoena documents and testimony. Evidentiary hearings are very common. If the person denounced is accused of violating Law 25,156, this person has 15 days to offer evidence on his or her behalf.15 The process of producing evidence must be completed within 90 days.16 Law 25,156 provides that a case must be completed in 180 days from the date that the proceedings were initiated. These precise deadlines are rarely achieved.
    The CNDC member who is in charge of the case completes the investigation with the support of the lawyer and economist assigned to the case. When the investigation is completed, he or she submits an opinion to the CNDC en banc. Decisions of the CNDC are rendered on the basis of a majority vote. The decisions rendered by the CNDC are recommended to the secretariat, who has jurisdiction over the case. Both the CNDC recommendation and secretariat's ruling are subject to review by the appropriate court.
    On 12 July 2006, the secretary of technical coordination - today, the internal trade secretariat - announced Resolution 26, which approved the advisory opinion that will be signed by the secretariat of the CNDC. The Resolution and its appendix establish the possibility for the parties to an economic concentration to present an advisory opinion in order to determine whether the same is subject to the control foreseen by article 8 of Law 25,156.
    The week-long period established in article 8 of Law 25,156 for the notification of the economic concentration transaction remains suspended at the request of the advisory opinion, the term, which was once fixed, being resumed by the resolution announced by the secretariat.
    The CNDC will be able to request from the parties all the information and documentation necessary in order to analyse the advisory opinion and will advise the secretariat of the proper course to follow. The resolution announced by the secretariat will be appealable.
    Most recently, the resolution of the secretariat of home trade, No. 70/2008, published in the Official Bulletin dated 5 June 2008, approved the internal administrative reorganisation of the CNDC. The resolution creates the positions of the first and second vice president of the CNDC, appointing attorneys Humberto Guardia Mendonça and Diego Póvolo, two officials who had already performed in the organisation as members, to these positions, respectively.
    Apart from the tasks that were already theirs as members of the CNDC, the internal trade secretariat assigned to the first vice president supervisory duties, to take on the resolutions inherent in the Administrative Area of the Commission, and replace the president in case of absence or impediment. That is to say, that from 6 June 2008, the first vice president is in charge of the budget and the hiring of the CNDC. The first vice president is also in charge of the secretariat of the legal department and the clerkship reception desk of the CNDC.
    The second vice president heads the new Department of Investigations and Audits, created in the same resolution. Additionally, the second vice president will have to replace the first vice president, in case of absence or impediment.
    While this article was being written, the secretariat of home trade announced the replacement of the president of the CNDC.

    * * *

    Argentina has seen during the last year certain relevant cases that were of great note to the business community, along with certain administrative and operational changes in the CNDC that have produced great concern.


    1 See Miguel Angel De Dios, 'Argentina Merger Control: New Developments'. The Antitrust Review of the Americas 2008, Global Competition Review.
    2 See Law No. 25156 articles 6 to 16, 16 September 1999, Boletín Oficial 5.
    3 See Law No. 25156 article 17, 16 September 1999, Boletín Oficial 5.
    4 See Law No. 25156 article 58, 16 September 1999, Boletín Oficial 5. The CNDC applied article 58 of Law No. 25156 in several rulings.
    5 See Miguel Angel De Dios, 'Antitrust in Developing Countries: a report on Argentina, Southwestern Journal of Law and Trade in the Americas', Volume XIV, Number 1, 2007.
    6 Grupo Clarín SA, Vistone LLC, Fintech Advisory Inc, Fintech Media LLC, VGL Argentina LLC y Cablevisión SA s notificación article 8, law 25,156 (Conc. 0596); Tapabiena LLC y otros s/notificación article 8, law 25,156 (Conc. 630) ; Sr. Sandler, Sra Allara y Fox Internacional s/notificación article 8 law 25,156 (Conc. 616); Adecoagro LLC y otros s/notificación article 8 law 25,156 (Conc. 639); Mcdonalds Latin America LLC y otros s/notificación article 8 law 25,156 (Conc. 633); Atanor S.C.A. y Valuveal s/notificación article 8 law 25,156 (Conc. 647); Pampa Energía SA y Central Puerto SA s/notificación article 8 law 25,156 (Conc. 628); Mccain Argentina SA y otros s/notificación article 8 law 25,156 (Conc. 638); Pampa Holding SA y otros s/notificación article 8 law 25,156 (Conc. 640); Río Tinto PLC y Alean Inc s/notificación article 8 law 25,156 (Conc. 646); Hipódromo Argentino de Palermo SA, Intralot SA y Tecno Accion SA s/notificación article 8 law 25,156 (Conc. 613); Bañados del Salado SA y Adecoagro LLC s/notificación article 8 law 25,156 (Conc. 636); Global Crossing Limited, GC Cristal Acquisition y Impsat Fiber Networks Inc s/notificación article 8 law 25,156 (Conc. 621); Inversora Cervecera SA y otros s/notificación article 8 law 25,156 (Conc. 655); GP Investments Ltd, Pride International Inc y Pride International Ltd s/notificación article 8 law 25,156 (Conc. 675); Swift Armour SA y otros s/notificación article 8 law 25,156 (Conc. 656); Dieva SA y otros s/notificación article 8 law 25,156 (Conc. 642); General Electric Corp., Cardover Partners Limited, 3i group PLC y IMMP Capital Corp s/notificación article 8 law 25,156 (Conc. 611) ; Silver Lake Partners III, TPP Partners V L.P. y Avaya Inc s/notificación article 8 law 25,156 (Conc. 648); Electroingeniería SA y otros s/notificación article 8 law 25,156 (Conc. 664).
    7 See Expediente # SO1:0020359/2007 (Conc. 614).
    8 See Expediente # SO1:0373486/2006 (Conc. 596). As leading counsel of records in the case, we have represented the merging companies and their controlling entities throughout the proceedings before the competition authorities.
    9 There are various examples that indicate that the commissioners are swayed by political pressure. According to Law 25,156, in order to remove a member of the CNDC, the presiding secretary over the CNDC must show cause for removal before the Ministry of Economy. In practice, members of the CNDC either resign or are forced to change their politically controversial opinions before removal proceedings are initiated.
    10 Law No. 25,156 article 26, 16 September 1999, Boletín Oficial 5.
    11 Currently, a request to the CNDC is made by the secretariat of coordination.
    12 Law No. 25,156 article 26, 16 September 1999, Boletín Oficial 5.
    13 Id. article 29.
    14 Id. article 31.
    15 Id. article 32.
    16 Id. article 34.

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