Argentina establishes new requirements for mergers

Companies will have to provide an analysis of how the operation could affect competition

Business deal handshake. Source: Pixabay

A new resolution indicates that, as of last Thursday, companies that plan to merge with other companies, acquire other companies, or transfer their assets or goodwill to other businesses, have to provide exhaustive market analyses.

The 905/2023 resolution, passed by the Trade Secretariat, is aimed at “promoting and preserving competition” and stipulates that companies now have to fill out a “Notification of Economic Concentration Operations.”

Within the next 15 days, the National Commission for the Defense of Competition has to establish the technical criteria to define precisely under what circumstances the notification paperwork must be filled out.

In the notification, companies will have to provide analyses, reports, and surveys to assess how mergers, acquisitions, or similar operations would affect competition, actual or potential competitors, and the state of the market.

The studies required include information on market size and the companies’ share in it, as well as that of its main competitors, and information on any offered product whose share exceeds 50% of the total supply in their market.

The companies will have to indicate where in Argentina each of their products is offered, identify potential substitutes, and what their production processes are like.

They will also have to explain the characteristics that a company should have to start producing or selling the products in question, and what substitutes exist in the short term.

Companies will have to identify the competitors with more than 5% in each of the analyzed markets and determine whether in the last three years new competitors have entered or existing competitors have launched new products or repositioned existing ones in the relevant markets.

Moreover, companies will have to explain what investments a company would have to make in advertising, establishing new brands, distribution logistics, and production facilities to start offering similar products in the short term.

The previous resolution was more than twenty years old, so the Trade Secretariat considered it “timely and necessary to update it,” according to the new document.


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