On August 28th, Provision 62/2023 of the National Commission for the Defence of Competition (CNDC, for its acronym in Spanish) was published in the Official Gazette. The provision establishes the inclusion and exclusion criteria for a merger to be processed under the "summary procedure" (PROSUM), which was recently regulated by Resolution 905/2023 of the Secretariat of Commerce.

As of July 6th 2023, the new regulation is applicable to all acts of concentration notified for authorisation under Chapter III of Act No. 27.442 on Defence of Competition (LDC).

Although the changes are multiple with respect to the provisions of the previous Resolution, the most significant one is the formal introduction of the simplified procedure provided for in Section 10 of the LDC.

The LDC entrusts the enforcement authority with the implementation of the PROSUM, which will be applicable to those mergers that are less likely to have significant negative effects on competition. The implementation of the PROSUM has led to the creation of the F0 form. The resolution delegates to the CNDC the establishment of the eligibility criteria that a concentration must meet in order to be processed under the PROSUM.

In compliance with the above, the CNDC established the eligibility criteria for a merger to be processed under the PROSUM. According to the Provision 62/2023, a merger may be processed under the PROSUM when it involves:

1. Conglomerate mergers.
2. There is a change in the nature of control over the target entity from joint to sole control - and towards a pre-existing controlling company.
3. Horizontal mergers where the combined market share in each of the relevant markets affected by the operation is less than 20%.
4. Horizontal mergers where the combined market share in each of the relevant markets affected by the transaction is less than 35% and the increase in the HHI is less than 150 points.
5. Vertical mergers where the individual market shares in each vertically related market are less than 30%.
   In addition, the CNDC has established those scenarios where a merger cannot be processed under the PROSUM and, consequently, must be referred to the ordinary procedure. In this case, the companies that are subject to the notification obligation must simultaneously file forms F0 and F1 – and eventually, if required by the complexity of the transaction, they must file form F2.
   In this regard, a transaction may not be processed under PROSUM if:
6. at the time of initiating the procedure, the parties are not in a position to provide all the information and documentation established in Form F0;
7. the HHI post-transaction in a relevant affected market is higher than 2,500 points;
8. the merger eliminates a vigorous and effective competitor (actual or potential);
9. the merger combines two major innovators;
10. there are indications that the merger would make it possible to prevent the expansion of competitors in any relevant affected market;
11. a company already established in a market intends to acquire a small but highly innovative company, although not yet at its technological peak, either to use its technology or to deactivate it;
12. the transaction could significantly increase the parties' market power, due to the combination of technological, financial or other resources, although the combining entities do not operate in the same market;
13. the merger would create a portfolio of products and/or services;
14. the notified operation involves the creation of a joint venture by undertakings that remain independent, if the operation involves the creation of a joint venture for a specific business segment;
15. in a change from joint to sole control, any of the following situations arise:

- The undertaking acquiring sole control of the target entity is itself a direct competitor of the target entity, provided that the market share is substantially high.
- The enforcement authority has not examined the previous operation of acquisition of joint control over the target entity by the undertaking acquiring control and the company that ceases to be the controlling undertaking by virtue of the notified operation.
11. simultaneously with the transaction, the acquirer or the target has a shareholding in a competing undertaking that exceeds 5% of the share capital or votes;
12. a national economic regulatory organism must issue the opinion provided for in section 17 of Act No. 27.442, unless the parties can prove -at the time of notification- that such organism has no objections regarding the possible impact on competition in the respective market and compliance with the applicable regulatory framework;
13. the CNDC considers that further information is required to properly analyse the effects of the transaction on competition.

With the establishment of the aforementioned criteria, Regulation SC 905/2023 comes into full force and effect.

The national antitrust community agreed on the need to modernise the regulation of the procedure for notifying mergers, both to adapt it to the provisions of the LDC -sanctioned in 2018- and to incorporate the experience accumulated by the CNDC in the more than 20 years of applying merger control in Argentina.

Resolution 905/2023 is available in the following link.