COMPETITION and ARGENTINE ANTITRUST LAW

1. COMPETITION and ARGENTINE ANTITRUST LAW

11. HISTORICAL RECORDS Act 11.210 (1923) Executive Order 15.810 (1946) Act 12.906 (1946) Act 22.262 (1980) Act 25.156 (1999) Executive Order 1019 (1999) Decrees 726 and 788 (1999) Executive Order 89 (2001) Decree 40 (2001)

12. PHILOSOPHICAL CONCEPTS PROMOTION Development of the Economy Effective Assignment of Resources Benefits distributed among everyone PROTECTION Transparency Consumers Freedom Market transactions

13. FIRST RELEVANT INNOVATION Prohibitions considered in themselves (�per se� conducts) disappeared from the legal sanctions. The analysis of the case by case was incorporated within the legal framework, under a sort of �reason rule�.

14. CONSEQUENCES The application of the legislation will depend on the balance between the anticompetition effects of a certain conduct and the achievement or a greater economic efficiency, which the latter can imply.

15. ACTS or CONDUCTS DISAPPROVED by LAW Those ones that could LIMIT, RESTRICT, FORGE or DISTORT the COMPETITION or the ACCES to the MARKET Those ones that constitute an ABUSE of a DOMINANT POSITION in a MARKET, so that it can cause DAMAGE to the GENERAL ECONOMIC INTEREST

16. SPECIFIC CASES MENTIONED by LAW Price manipulation Restrictions for good or services Horizontal distributions agreements Restrictions to offers and bids in biddings, licitations and competitions Limitation to technical or invest development

17. Anything else? Subjective attacks to competitors Price agreements Limits to the technological development Obligations to additional sales or purchases Obligation of consumption abstention Unjustified refusal to satisfy orders Interruption of supply without an alternative Sale below the cost The abuse of a dominant position

18. SECOND MAIN INNOVATION Autarchic body (Court of Defense of Competition) is created as an Administrative Court Seven (7) members Selected through a public contest before a jury Six-year period (removed partially every three years) Cannot be removed without justified cause

19. THIRD MAIN INNOVATION Some control related to concentrations and mergers

20. �ECONOMIC CONCENTRATIONS� The merger between companies The transfer of goodwills The acquisition of the ownership, interest or rights on shares of stock, equity interest, debts instruments, bonds, which grant any kind of influence over the decisions of the persons issuing them, when such an acquisition gives the purchaser the control or the substantial influence over the same

21. Anything else? Any other agreement or act which practices or legally transfers to a person or an economic group the assets of a company, or which grants determining influence over the decisions about ordinary and special management and administration matters of a company.

22. WHAT DOES THE LAW PROHIBIT and TRY to AVOID? The economic concentration whose objective (or effect) is or can be to reduce, restrict or distort the competition, so that it causes damage in the general economic interest

23. ACTS SUBJECT TO AUTHORIZATION Any of the take overs mentioned before when the amount of the total volume: of the whole of the affected companies exceeds in Argentina the amount of US$ 200,000,000.- of the total business worldwide, of the group of companies affected, exceeds US$ 2,500,000,000.-

24. PROCEDURE(confidential) NOTICE TO THE COURT WITHIN ONE WEEK FOLLOWING: Conclusion of the agreement Registration of the business before the competent office COURT MUST DECIDE WHITHIN 45 WORKING DAYS FOLLOWING THE PRESENTATION: To Authorize To Condition To Deny IN CASE OF SILENCE THE OPERATION WILL BE CONSIDERED AUTHORIZED

25. YOU DO NOT NEED TO ASK FOR AN AUTHORIZATION IF: The buyer was the owner of more than 50% of the shares of the stock capital before The bonds, shares or debentures do not give political rights (vote) Only one foreign company, which did not have any assets in Argentina or shares of local companies before, buys only one local company Acquisitions of liquidated companies that did not register activities in the country within the last year.

26. Of Course, You Can Also Ask The Court In Advance

27. WARNING!!!! The acts shall only have effects among the parties or towards third parties, once the procedure of previous authorization fixed by the law has been complied with; additionally, there are significant fines

28. From US$ 10,000.- to US$ 150,000,000.- for the antitrust conducts (forbidden practices and abuse of dominant position) Up to US$ 1,000,000.- per day (no notification of economic concentrations; or not to stop the conducts or effects when the Court orders so) Additional penalties

29. STEPS to authorize ECONOMIC CONCENTRATIONS Which is the relevant market? (Definition) Identification of the companies that actually act in the relevant market Measurement and qualitative analysis of the concentration Possibility of increasing the power market in an unilateral o coordinate conduct

30. NEXT STEP Are there regulatory, logistics or transport barriers to imports? Are there possibilities for new competitors to come into the relevant market? Do the consumers represent a limitation to the power market? Is the conclusion that there are a possibility to increase the market power in an unilateral or coordinate way?

32. NEXT STEP Are there efficiency productive profits?

33. FINAL STEP

34. THE FINAL DECISION CAN BE APPEALED TO A JUDICIAL COURT Please... Do not !!!!

35. STANDARD OF THE DECISION The final authorization (administrative or judicial) turns the business unattackable But if the parties gave to the authority false information or false documentation, it could be attacked

36. WHICH IS THE PROBLEM WITH THIS PROCEDURE? Time Merger (130 days) Goodwill transfer (90 days) Take over (45/60 days) Surprise factor The market Competitors Workers Confidentiality Disclosure Know how Customers Inside information

37. ONE ADITIONAL PROBLEM The Administrative Court can suspend the term if it considers that the parties did not give enough documents and information necessaries for making the decision, or if a deeper investigation or analysis is necessary The procedure could be longer than 45 working days

38. THE PITFALLS Who will lead and manage the company in the meantime? What happens if the company needs supplementary financial assistance? Who will assume the losses and the gains of the period? If a crisis appears... who will decide what to do? What happens if there are first refusal rights?

39. MATERIAL ADVERSE CHANGES? What happens if the market changes? Is there a way to protect good faith? Will the affected party cooperate to obtain authorization from the Court? What happens if the �relevant� market moves? Is there any way to abort the business? What happens if in the meantime the business becomes not viable, or the company that was merged in suffers losses that cannot be absorbed by the price (or its adjustments)?

40. WHAT HAPPENS IF THE COURT DOES NOT AUTHORIZE THE BUSINESS?

41. WHAT HAPPENS IF THE COURT CONDITIONS THE BUSINESS?

42. More pitfalls! When you have two different sizes of companies and you must pass by the Court only because of one of them... If the authorization is denied, or it is conditioned to another act... If the business aborts... Could any compensation be claimed by the affected company? WHAT ABOUT?: Strategic information Cost and expenses Corporate image New chances of business Information got by the competitor or the other company Public information Damages in terms of customers and market share

43. WHO HAS THE RIGHT TO APPEAL THE COURT DECISION?

44. How can we build a price, its adjustments, and how can we prevent all the pitfalls in this kind of business?

45. If you know how... You are a genius!!!! If not... Try to find a good lawyer !!!!