ADMINISTRATIVE PROCEDURES

The Federal Law of Economic Competition (FLEC) establishes three types of administrative procedures before the FCC these are pre-notification of proposed mergers, investigation of monopolistic practices and appeals for review.

i) Pre-Notification of proposed mergers

Article 20 of the FLEC establishes pre-merger notification requirements. This procedure has a preventive approach. Its objective is to facilitate the detection of anticompetitive mergers, which may enable the resulting economic agent to fix prices unilaterally, to limit supply or to facilitate any of the absolute and relative monopolistic practices foreseen in the FLEC.

Agents planning to merge must notify to the Federal Competition Commission (FCC) proposed mergers exceeding certain threshold values which are expressed in terms of the Minimum Daily Wage in the capital (MDW) as follows:

  1. The transaction is valued greater than 12 million times the MDW (about $49 million USD);
  2. The transaction results in an acquisition of over 35 percent of the assets or shares of an entity with sales or assets greater than 12 million times the MDW.
  3. The firms involved in the transaction have combined sales or assets exceeding 48 million times the MDW ($199 million USD) and the transaction results in an additional accumulation of assets or shares in excess of 4.8 million times the MDW ($19.9 million USD).

The notification consists of the filing of a copy of the proposed agreement, financial statements, market shares and other data necessary to evaluate the economic and judicial implications of the intended transaction.

Within 20 days of the first filing, the FCC may request additional information or documents, which the parties must provide within 15 days (this time limit may be extended to up to 60 days in duly justified cases).

Upon receipt of notification or of additional information, the FCC has 45 days to issue a resolution which may either condition, object or authorize the transaction. If no decision is issued within this time limit, the merger is presumed approved. In exceptionally complex cases, the FCC may extend the review period by an additional 60 days. Orders of objection may include partial or total divestiture of the concentration, the abandonment of a controlling position or the suppression of the transaction.

Transactions that have been approved may not be challenged subsequently, unless parties have provided false information. On the other hand, mergers that were not subject to notification requirements cannot be challenged once a year has elapsed following their consummation.

With respect to fines, the law states that failure to notify may be punished with a fine up to 100,000 times the MDW ($ 408,000 USD); for making false statements to the FCC a maximum fine of 7,500 times the MDW ($ 30,625 USD) may be applied and for participating in a prohibited concentration the fine may rise up to 225 thousand times the MDW ($ 918,000 USD). In addition fines may be doubled for repeated offenses.

Finally, private complaints about mergers are available only to economic agents that prove that they have suffered economic damages and losses as a result of an illicit concentration.

ii) Investigation of Monopolistic Practices

Proceedings before the FCC may start by the FCC acting on its own initiative, or on private request.

An ex officio investigation can be started when the FCC has information to presume the occurrence of a monopolistic practice, a forbidden concentration or a merger falling within the thresholds mentioned in the previous section that has not been notified.

As to the submission of complaints, the following requirements need to be fulfilled in order for the FCC to accept a claim:

A written claim may be filed by any person, in the case of absolute monopolistic practices, or by the affected parties in the cases of other practices or concentrations forbidden by the FLEC, a legal representation must be shown. Such claim shall denounce the person responsible for the infringement, or the authority or regulation that has or incurred in anticompetitive actions or effects and shall describe the alleged anticompetitive practices or concentration.

In the case of relative monopolistic practices or concentrations forbidden by the law, the claimant must include the elements that constitute such practices or concentrations and, as the case may be, the evidence that proves that he has suffered or may suffer substantial damages or losses.

The FCC may discard complaints that are notoriously inadmissible. However, provided the above conditions are met, there is no discretionary power for it to reject a case.

As to time limits, Article 33 (Section I and II) of the FLEC establishes that the alleged responsible party shall be summoned, informing it of the nature of the investigation and attaching, if applicable, a copy of the complaint.

The summoned party shall have 30 calendar days to submit its defense, attaching documentary evidence and any other kind of evidence that merits review.

Also in accordance with Article 33 (Section III and IV) once the evidence has been reviewed, the FCC shall set a time limit not exceeding 30 calendar days for the submission of the pleas, and upon completion of the file, the FCC is compelled to issue a decision in the following 60 calendar days.

iii) Appeal for review

Pursuant to Article 39 of the FLEC, economic agents have the right to file an appeal for review ("recourse for reconsideration") before the FCC, within 30 days following the notification of its first instance decision. The resolution issued may either revoke amend or confirm the decision appealed.

For this purpose a written claim addressed to the President of the FCC shall be filed indicating the appellant's name and address and the offense, together with the relevant evidence. The FCC's decision shall be issued within 60 days of the filing of the appeal. However, if no decision is issued within this time limit, the appealed decision is presumed confirmed.

It must be noted that the filing of the appeal shall suspend the enforcement of the contested decision. In view of this situation, the admission of appeals of review of decisions involving suspension, rectification or elimination of a practice or concentration or the latter's partial or total divestiture, requires the petitioner to provide sufficient guarantee that he will restore the damage and compensate losses in the event that his appeal be revoked.

In addition, if the appeal is rejected and the decision involves fines, parties may later file an administrative adversary proceeding before the Federal Tax Court.