Law for the defense of competition
Some practical considerations for its understanding, in light of recent regulations.
a) The regulations aim to prevent and punish the cartelization of the market and the abuse of a dominant position. Consequently, agreements between competitors, economic concentrations and any act or conduct intended to falsify or distort competition or market access are prohibited.
b) The parties: creates the National Competition Authority (ANC), a decentralized and autarchic body within the scope of the National Executive Power, with headquarters in the CABA although with the possibility of acting throughout the national sphere. Within the ANC, the Court for the Defense of Competition (TDC), the Secretariat for the Investigation of Anticompetitive Conduct (SICA) and the Secretariat for Economic Concentrations (SCE) will function.
c) It typifies behaviors (practices), presuming them as generating a detriment to the general economic interest (Arts. 2 and 3).
d) Submits to the provisions of the law both natural and legal persons, public and private, who carry out economic activities in the national territory and abroad. For the latter case, the activities or agreements must produce effects in the local market. It is established, for the purposes of the law, that “in order to determine the true nature of the acts or behaviors and agreements, the economic situations and relationships that are actually carried out, pursued or established will be taken into account” (Art. 4). It remains to be seen whether practice allows for greater certainty about this statement, which, a priori, should be taken following the contextual harmonization of the legal body.
e) Provides a complete statement of (what is to be understood by, and how to be understood by) the so-called dominant position in the market (Art. 5) and economic concentration (Art. 7).
f) Article 9. Prior notification. Assumptions: orders that, prior to perfecting the act that may imply an economic concentration (for example, a merger between companies), the ANC must be notified. For the assumption to be configured, the sum of the total business volume among the companies as a whole must exceed 100 million mobile units (MU). There are two (2) cases for which the Article requires, as a prior precaution, notification to the ANC: 1) Improvement of the act “per se”: the acts typified in Art. 7, such as the transfer of goodwill of one or several companies, or a merger. 2) Materialization of the takeover: although the law does not deal with it, the Regulation is in charge of stipulating the definition, indicating that “these are all those acts that, in any way, in fact or law, grant substantial influence to the acquirer or any of the members of its control group over the object of the operation”. The regulation of the law, on the other hand, delves into the cases in which it must be notified in advance. In all cases -it provides-, the notification will be optional for the selling party, although the TDC may require its participation in the process. Finally, the regulation stipulates that the acts of economic concentration that are concluded in non-compliance with the provisions of Art. 9, will not produce legal effects, without prejudice to the responsibility that may correspond to the natural or legal persons who ordered them or contributed to them. its execution.
g) At the request of a party, the TDC may issue advisory opinions on whether an act falls within the obligation to notify the ANC, as stated above. The decision is unappealable. Likewise, the TDC can act ex officio or upon a complaint by the interested party to assess whether an act (not notified) falls within said obligation.
h) The TDC, in all cases of prior notification, must decide by well-founded resolution: Authorize the operation. Subordinate the act to the fulfillment of conditions, to be established by the same authority Deny the authorization. On the other hand, Art. 14 authorizes the TDC, prior to making a decision, to notify the parties involved of its objections and summon them to a special hearing to consider possible measures to mitigate the (suspected) negative effects on competition. In this way, the parties are given the possibility of replying to the potentiality or doubt about the operation.
i) Access to jurisdiction: Outside of the ex officio action, those interested in initiating proceedings before the ANC must pay a fee that «may not be less than 5,000 nor exceed 20,000 UM» (Art. 33). Bearing in mind that the initial value of the UM is established at 20 pesos (conf. Art. 85), the jurisdiction will be restricted to a minimum payment of $100,000. It remains to be seen how this route is implemented for individuals or small companies that cannot afford the tariff.
j) Some procedural issues: The procedure is initiated ex officio or by complaint made by both individuals and legal entities, public or private. The complaint must contain the same assumptions as those contemplated in Art. 330 CPCCN. In principle, the breadth of evidence governs, although the TDC must decide on the admissibility of the evidence, granting that which is pertinent and rejecting that which it considers inadmissible. Said decision-making is irrevocable, although an appeal for reconsideration of the evidence measures ordered in relation to relevance, admissibility, suitability and conduct may be raised (Art. 42). The TDC may enforce conditions or order the cessation of conduct in order to prevent it from causing harm. It may order the measures it deems pertinent to prevent injuries to the competition regime (Art. 44). Although nothing more is added about this kind of precautionary measures, it is clarified that an appeal may be filed against the resolution, with devolution effect. Commitment: until (the time of) the resolution issued by the TDC, the alleged perpetrator may commit to the immediate or gradual cessation of the facts under investigation. Said commitment must be approved by the TDC, in order to suspend the procedure. After 3 years of fulfilling the commitment, without recurrence, the proceedings will be archived.
k) The leniency program. Relevant aspects: closely related to the recent changes in compliance and corporate criminal liability, Chapter VIII of the LDC allows any person (individual or legal entity) who has incurred or is incurring in a conduct of the (exhaustively) listed in Art. 2, can reveal it and recognize it before the TDC, availing itself of the benefit of the exemption or reduction of fines. Said benefit may be requested prior to the notification to the alleged perpetrators of the proceedings initiated by the TDC.
Requirements: for the benefit to be applicable, whoever requests it must meet each and every one of the following requirements, namely:
- Exemption: in the event that the TDC does not have information, the alleged responsible party must be the first among those involved in providing such information and evidence. In the event that the TDC has previously initiated an investigation, but until the date of presentation of the request does not have sufficient evidence, it must be the first among those involved to provide evidence and information.
From the foregoing, it would seem to be evident that the scheme is exclusive to the first one who arrives. However, the chapter itself specifies that “the Court for the Defense of Competition will establish a system to determine the order of priority of applications to avail themselves of the benefit established in this article” (Art. 60). It remains to be seen in practice how the evidence and/or information will be merited in the event that they are presented by more than one person, and if the exemption can be asserted when the elements provided do not allow a single beneficiary to be established with certainty.
- Immediate cessation of the action: the TDC may ask the applicant for the benefit to immediately cease his participation in the violating practice, or it may, on the other hand, request him to continue with the violating action or conduct in those cases in which he does so. I deem convenient in order to preserve the investigation.
- Full cooperation: continuously and diligently with the Court for the Defense of Competition.
- That it does not destroy, falsify or hide evidence of the anti-competitive conduct, nor would it have done so.
- That he does not disclose or that he has not disclosed or made public the intention to avail himself of the benefit.
Notwithstanding the aforementioned exemption, reductionsor complementary benefits are established for those who provide additional information or evidence of conviction or usefulness to those already possessed by the TDC, as long as the remaining requirements listed are met. Finally, it is clarified that the beneficiary of the leniency program will also be jointly and severally liable before 1) its direct and indirect buyers or suppliers; 2) other injured parties, only when it is impossible to obtain full compensation for the damage caused.
l) The law authorizes the reparation of damages that could affect both natural and legal persons. Said action, when it takes place against the resolution of the TDC that -once signed- makes res judicata on the matter in which the LDC deals, will be processed by the summary process.
m) TDC resolutions are appealable. The appeal must be filed and founded before the TDC, who must submit the proceedings to the (yet to be created) Specialized Chamber for the Defense of Competition, of the National Chamber of Civil and Commercial Appeals. The regulations of the LDC establish that until the aforementioned Chamber is created, the National Chamber of Civil and Commercial Appeals of the Federal Capital will be competent to hear the appeal.
n) For cases not provided for or contemplated in the LDC, the Penal Code and the Nation’s Code of Criminal Procedure shall be of supplementary application.
o) The regulation of Law 27,442 adds the General Syndicate of the Nation and the General Auditor of the Nation as enforcement authorities, «supervising the actions of the National Competition Authority.
»JULIAN COSSO Abogado (UBA), Lawyer, founding partner of CYT Abogados, with a practice area advising companies in situations of insolvency and crisis.