Although Argentina’s first antitrust act was passed in 1923, the first legislation contemplating administrative agencies focused on the enforcement of antitrust law was enacted in 1980 by means of Law No. 22,262. This law set up a dual authority based on the National Commission for the Defence of Competition (the CNDC) as an advisory administrative body established to submit non-binding recommendations to the Trade Secretariat of the Ministry of Economy and Production (the Secretariat), an office of the federal government ultimately in charge of enacting final administrative antitrust rulings, subject to appeal before judicial courts.

Following the amendment of the Argentine Constitution in 1994, which included protection against anti-competitive practices and control over natural and legal monopolies as constitutional rights, new antitrust legislation was enacted in 1999 by means of Law No. 25,156 (the Law), later regulated by Presidential Decree No. 89/2001 and other related decrees and regulations (collectively, the Antitrust Law). The Antitrust Law addresses both the prosecution of anti-competitive practices and the control of market structures through the mandatory notification of certain economic concentrations not previously required under Law No. 22,262.

The Law provides for the creation of a new antitrust enforcement body, the National Tribunal for the Defence of Competition (the TNDC). The TNDC is intended to be a decentralised body of the federal administration, fully independent both in decision-making and enforcement, formed by seven members appointed by the president of Argentina following a public competitive selection process. Despite the time elapsed since the enactment of the Law, the constitution of the TNDC is still pending and now long overdue. As a result, antitrust enforcement continues to be the responsibility of the antitrust authorities predating the Law under, and as permitted by, temporary provisions of the Law. As indicated above, such enforcement bodies are the CNDC and the Secretariat. Failure to create the TNDC has triggered challenges to the authority of the CNDC and the Secretariat to enforce the Antitrust Law. In 2008, the Federal Supreme Court confirmed that, until the TNDC is appointed, Argentine antitrust authority remains dual, with the CNDC having instruction and advisory powers, and the Secretariat having decision-making authority (National Supreme Court, in re Belmonte, Manuel y otro v Estado Nacional, 16 April 2008). Recently, the Court of Appeal on Economic Crimes issued two judgments with unusually severe criticisms on this matter, stating that the delay in the constitution of the TNDC represents a legal scandal and asking the National Supreme Court to request the National Executive Power to proceed with the formation of the TNDC.

The CNDC consists of five members, a chairman and four commissioners. Commissioners are appointed for a four-year term. Two commissioners must be lawyers and the other two economists. The CNDC chairman is a political appointee of the Argentine president designated without a fixed term. At present, the chairman is a lawyer and former judge; of the three current commissioners, two are lawyers and one is an economist. The position of fourth commissioner, also an economist, is currently vacant.

The CNDC carries out investigations at the request of a party or ex officio, and submits non-binding recommendations to the Secretariat, the office ultimately in charge of enacting final administrative antitrust rulings subject to appeal before judicial courts. In the vast majority of cases, the recommendations of the CNDC are endorsed by the Secretariat.

Judicial review and its pitfalls
The Antitrust Law provides that administrative decisions imposing fines, issuing remedial orders, denying mergers or dismissing complaints may be appealed before federal courts.

Following the Law and Presidential Decree No. 89/2001 there have been uncertainties as to whether the federal courts with authority on civil and commercial matters or the federal courts with jurisdiction on economic crimes are the correct venues to hear appeal cases, with contradictory court rulings on the subject. These uncertainties have increased over time as, in addition to the aforementioned courts, the federal courts with jurisdiction on administrative law matters (contencioso-administrativo) have also declared themselves competent to review antitrust rulings.

On 16 April 2010 the Federal Supreme Court, in the case in re Telecom Italia SpA y otro, a case that resulted in a jurisdictional conflict involving different federal courts, ruled by majority in favour of the jurisdiction of the Federal Courts of Appeals in Economic Crimes located in the City of Buenos Aires to review a decision issued by the CNDC. The majority focused primarily on the principle of perpetuatio jurisdictions (preservation of the jurisdiction assumed by a court) in light of the fact that the parties had not challenged a previous resolution in the case by the Federal Court of Appeals in Economic Crimes, thereby accepting its jurisdiction. The dissenting opinion of Justice Petracchi follows a line in favour of the jurisdiction of the Federal Court of Appeals with authority on civil and commercial matters based upon the provisions of Decree No. 89/2001.

Recent developments
Update on anti-competitive practices

In 2010 the CNDC continued a proactive attitude in connection with the investigation of several conduct cases including cartel cases and abuses of dominant position. Several fines were imposed by the Secretariat during the period in connection with the health and media industries. In the media industry, major national cable operators Multicanal and Cablevisión were fined 2.5 million pesos for alleged collusive behaviour in the geographical division of the Santa Fe city market.

During this period, the CNDC finished the analysis of a proposal for the incorporation of a leniency programme into the Law. The draft provides for a partial amendment of the Law in order to incorporate such a programme into its provisions. By means of Resolution CNDC No. 157 dated 15 December 2010, the CNDC approved the draft bill to be forwarded to the National Congress for approval.

Merger review in 2010
During 2010, matters pertaining to the Argentine merger review regime focused on the conditional clearance of merger transactions subject to behavioural undertakings of the parties aimed at offsetting the negative antitrust implications of such transactions, on strengthening monitoring observance of such undertakings and on penalising the infringement of undertakings made by the parties. Attention given by authorities to the monitoring of parties’ compliance with behavioural undertakings resulted in the creation of a specific section within the CNDC. In addition, controversies continued relating to the revocation of approval of merger transactions due to failure to observe behavioural undertakings made as conditions of clearance. These matters were key issues in two of the most controversial and significant merger review cases within this period.

Telefónica/Telecom
As in previous years the acquisition by telecoms company Telefónica of an indirect stake in Telecom Italia that, in turn, indirectly controls Telecom Argentina, a competitor of Telefónica Argentina, continued as a high-profile merger case. After a preliminary order and the appointment of two observers, the CNDC considered that the transaction entered into in 2007 has local effects and ordered the parties to carry out the mandatory notification imposed by the Law on certain economic concentrations. In an unprecedented decision, the CNDC explicitly highlighted that the transaction must have no effects in Argentina until its clearance and warned the parties to refrain from exercising the political shareholders’ rights purported to be transferred pursuant to the transaction until CNDC approval was granted. Eventually, in 2009 the antitrust authorities ordered Telecom Italia to divest its stake in Telecom Argentina. Later, the authorities set a deadline for the completion of the divestiture of August 2010. In addition, the Secretariat applied a multi-million-peso fine on various parties involved in the transaction for failure of such parties to observe the mandatory notification imposed by the Antitrust Law for this kind of concentration. These decisions were appealed. In response to such appeals the Federal Court of Appeals on Civil and Commercial Matters suspended the divestiture time schedule fixed by CNDC. In addition, on 1 February 2010, the Federal Court of Appeals on Economic Crimes quashed by majority ruling the resolution of the antitrust authorities that imposed the divestiture, requesting in addition the issuance of a new resolution on the matter. The majority considered that the divestiture constituted a penalty that had been imposed on foreign companies that were not parties to the transaction and the proceedings, and that they had therefore been prevented from exercising their rights of defence and due process. The ruling indicates that Telecom Italia had been the target of the stock purchase. The majority also found that the divestiture had no sufficient grounds on the analysis of the case made by the antitrust authorities and that the nullification of such decision provided the authorities with a renewed opportunity to consider the implications of the transaction for the telecommunications market. Notably in this connection, the majority considered that the nullification of the divestiture prevents the antitrust authorities that had acted in the case from issuing a new resolution on the matter and calls for a new resolving body. The minority, on the contrary, confirmed the resolution of the antitrust authorities.

In a new turning point of the case, the parties submitted to the CNDC a proposal setting forth a series of restrictions and behavioural undertakings in connection with the proposed transaction. Such restrictions and undertakings intended to ensure what has been the main concern of the authorities, the separation and independence of the parties in Argentina. The list of limitations and undertakings includes voting restrictions concerning activities in the Argentine market, and appointment of corporate officers and managers, conditions on contracts between parties, formalities for shareholders’ meetings, disclosure of corporate information and documents to the CNDC, and restrictions on flow of information between the parties, among others.

On 12 October 2010 the CNDC proposed to accept the restrictions and undertakings offered by the parties and to make the approval of the transaction conditional on the strict observance of and compliance with such restrictions and undertakings. In this connection, the CNDC considered that, despite the fact that the transaction was a danger to general economic welfare, the scope of the restrictions and undertakings submitted by the parties separate the operation of the corporate bodies thereof, mitigating the control of Telefónica over Telecom in Argentina. Clearance of the transaction therefore has been conditional upon the observance of ongoing obligations that are subject to monitoring by antitrust authorities. In addition, the CNDC also included in its decision certain pro-competitive recommendations addressed to the Secretariat of Communications and the National Communication Commission.

Simultaneously with this decision the CNDC announced the creation of an undertakings monitoring section comprising lawyers, economists and accountants responsible for the permanent monitoring of the growing number of undertakings and divestitures ordered by the Secretariat in connection with economic concentrations.

Cablevisión/Multicanal
During 2009, and in an unprecedented decision, the antitrust authorities revoked the authorisation of a merger that had been previously approved. This decision affected the 2007 approval of the merger between leading cable operators Cablevisión and Multicanal and was based upon the failure of the merging parties to comply with a series of broad undertakings made by them at the time of the approval of the transaction. The parties appealed the decision and obtained a stay of the order and even the severance of the Secretariat from the case. However, a similar decision was subsequently issued by the Ministry of Economic and Public Finance. This latter decision has also been appealed.

Quevedo Abogados