Alert: The new Form to request authorization of economic concentrations was published



As we informed you last month, the new prior authorization regime for economic concentrations in Uruguay has entered into force.

Recently, the Commission for the Promotion and Defense of Competition (hereinafter, the “Commission“) published, in its Resolution No. 87/020 dated 7 May 2020, a new form (hereinafter, the “Form“) which will allow the parties to economic concentrations bound by the new regime to request prior authorization, in compliance with the new legal framework in force.

Other regulators in charge of applying the law in regulated sectors will probably draw inspiration from this Form when reviewing the concentrations that may be presented to them.

The Form maintains much of what was already required in the previous form, such as: information on the companies involved, data on shareholders and companies that make up the same economic group, basic description of the concentration and of the products or services sold by the companies involved, definition of the relevant markets, size of the relevant markets and the market share of each company involved.

However, the Form, as expected, introduces the obligation to provide much more information about the projected concentration, including, among others: the transaction’s size, rationale, and expected timeline, internal documents such as minutes, reports, etc., and details of previous operations notified to or authorized by the Commision. These additions follow the criteria that the law stipulates should be considered when reviewing concentrations.

As to information regarding the relevant markets, the information requested in the Form is very detailed, including the methodology followed, as well as any studies or reports used in reaching the proposed market definitions. For each relevant market, the Form requires, among other things, information on sales and market share of the companies involved in the last 5 years (instead of 3 years in the old form), and information on the main competitors and customers. The latter suggests that the Commission could contact them to gather their views on the impact of the economic concentration, with all the implications this has in terms of possible opposition being voiced, etc.

The Form also requires the description of past entry into and exit from the relevant market, of the structure of supply and demand, and of possible barriers to and total cost of entry, as well as the existence of economies of scale, network effects, etc.

The Form also includes at the end a section on possible efficiencies generated by each concentration, which should be quantified, and indicating the time frame in which they would be achieved.

There are still some questions regarding the procedure. When the Form refers to internal documents, it mentions that these will be essential for operations that go into “second phase”. We therefore assume that two stages are being considered, with the first stage reserved for cases that do not present competition problems, and the second stage for those that require further analysis.

Surely some of these questions should be clarified in the implementing regulation.

The text of the Form can be found here.

Should you need any additional information, please let us know.