WORLD TRADE
ORGANIZATIONWT/WGTCP/W/178
9 November 2001
(01-5547)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  Spanish
COMMUNICATION FROM ARGENTINA
The following is the final text of a paper received from the Permanent Delegation of
Argentina which was circulated as an advance copy for the Working Group's meeting of
5-6 July 2001.
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Competition Policy in Argentina:  Status Report
I should like to thank you for giving me the opportunity to present you with an update on the
status of competition law in Argentina, a country where competition laws are long-established, but
have only been systematically implemented on any great scale in the last few years.  Each of the laws
enacted in our country is directly rooted, like so much other legislation the world over, in reasons or
circumstances pertaining to economic life, as can be perceived even from their titles.
The first such law, known as the Anti-Monopoly Law, was promulgated in 1923.  It was
enacted as a result of a complaint by meat producers from what is known as the Pampa Humeda, the
second largest plain in the world after that in Uk raine, following the joint purchase of their major
cold-storage plants by foreign capital. The reason adduced at the time was that the law promised to
defend those meat producers from the purchasing power that would be gained by the owners of
the cold-storage plants and which would bring down cattle sales prices.
Several years on, in 1946, when state intervention in the economy was well under way, the
Argentine Congress, already firmly committed to the process of nationalizing the economy and
contending that the sheer complexity of the above-mentioned law meant that its implementation was
restricted, not to say virtually non-existent, approved a second executive decree and gave it the force
of law. The dichotomy was the national economy versus private capital internationally allied in
common cause against Argentina .  This resounding, if rather ineffective title remained unchanged
and some legislators even went so far as to call for the inclusion of the death penalty for anyone
caught perpetrating monopolistic practices.  The fact is there was only one conviction throughout the
entire period in which the law remained in force (until 1980).
It was at that time that Argentina embarked upon a timid and not particularly orderly process
of trade liberalization backed by two major laws:  one on fair trading, the other the then new
competition act.  As you can see, its title differs fr om that of its predecessors reflecting the change in
the way in which the problem was perceived.  For the first time, it was clear that the enactment of this
law had more to do with the idea that the market was to become the main actor as far as resource
allocation was concerned.
It was within this framework that Law 22,262 was enacted.  This law did introduce some real
changes to various elements, both procedural and institutional, but what was truly significant about it
was the adoption of a form of drafting conducive to a more appropriate interpretation of such issuesand the introduction of the concept that behaviour should be analysed on the basis of the rule ofWT/WGTCP/W/178
Page 2
reason, taking both its impact and its adverse effects on consumers into consideration.  The earlier
legal concepts were thus eliminated.
Implementation initially forged ahead, but lack of continuity in the deregulation of the
economy, its recurrent closure to international trade and other extremely serious economic crises ledto a falling off in the second half of the 1980s.
The early 1990s saw Argentina caught up in the midst of the privatization process,
deregulation of the economy and the unprecedented opening up of its markets.  The first wave of
privatizations, conducted by a government anxious to achieve fiscal stability, did not take this law into
consideration and resulted in the paradox that, in order to secure the highest price for the sale or
concession of state public service providers, competition was actually impeded as a result of theabsence or inappropriateness of its regulatory frameworks even in sectors where it would otherwise
have proved feasible. These first few privatizations are still heavily criticized even today.
A second round of privatizations however, was, handled more skilfully and involved the gas
and electricity markets.  The regulatory frameworks of these markets were the product of lawsenacted by the legislative branch, which took both competition law and stimulation of competition
into consideration as far as possible.
As a result, the implementation of competition law flourished as of 1996 and led to a
considerable increase in both the number and the significance and complexity of the fields covered.The launch in 1977 of the most significant ex officio investigation in the history of Argentine antitrust
law culminated in what was only the second such penalty ever imposed in the whole world.  The case
in question was related to the liquefied petroleum gas market and the offence was abuse of dominant
position.  The judgement was upheld by a higher court, and is now pending appeal before the
Supreme Court of Justice.
For that reason, as well as for budget-related considerations, in 1999 the State sold off its
shares in this company (the largest in Argentina).  This sparked off an intense political controversy
which, in turn, led to the promulgation of a new competition act providing for prior vetting of mergers
and acquisitions.  Once again, it had taken a problem to precipitate a new law.
This is, perhaps, the first big lesson that we le arned and that we would like to share with you.
Our countries often only bolt the stable door after the horse has gone, and this is the first major
obstacle to getting the message across that these laws are actually beneficial.  It is perhaps also true to
say that such laws did not achieve the desired results owing to the fact that they did not form part of a
government competition policy.
The last piece of legislation, Law No. 25,156, entered into force on 29 September 1999 and
contains a number of major amendments with regard to that of 1980.  I shall only mention a few,
those I feel to be the most salient, given that we are leaving a copy of the law with the Secretariat.
The order in which these amendments are presented has no bearing whatsoever on their
degree of importance.
First of all, I should like to say that the Law confirms the establishment of an independent
tribunal, members of which shall be required to undergo an extremely strict selection process before
examiners from different fields of activity. The selection panel shall consist of two members of theLegislative Branch (one senator and one deputy), a member of the Judiciary, a member of the
National Academy of Law, a member of the National Academy of Economic Sciences, a member of
the Executive Branch and a member of the Public Prosecutor's Office.WT/WGTCP/W/178
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Another important aspect is the incorporation in this law of the prior control of economic
concentrations, a concern which, as we have already pointed out, was triggered off by the above-
mentioned acquisition.
One issue which has, however, been resolved is that which sprang from the creation of
regulatory agencies for privatized public services, whose powers overlapped those of the competition
agency. These bodies now no longer enjoy any competence in the area of competition policy.
One last point which should be made in relation to the scope of the Law is that not a single
sector is omitted; that is to say, there is no sectoral restriction.
A number of other reforms were also introduced, but we will refrain from discussing them
here since they are not of such great interest to you, given that they refer to procedural aspects or
timeframes.
Merger control
As we have mentioned, this issue was included in Law No. 25,156 of September 1999 and
brought about a striking increase in merger control activities dealing with the myriad of notifications
submitted.  We analysed almost 300 mergers in the year 2000 alone.  The direct benefit of this
situation to the competition agency was the wealth of knowledge gleaned and in-depth understanding
acquired of the most wide-ranging problems of mark et functioning, coupled with exceptional training
in their analysis.
It can also be said that the current unprecedented spate of mergers has greatly affected the
Argentine economy, which is now very much part of the global production process.  Consequently,
many of the notifications received relate to mergers conducted outside Argentina which undoubtedlyfailed to take their repercussions on this country into consideration. A total of 43 per cent of the
notifications submitted related to mergers abroad. Yet more significant, however, is the number of
foreign conditional or contingent mergers;  this figure scales 60 per cent.
I should now like to mention some of the more interesting cases on which we have ruled.  Let
me first mention that of Correo Argentino, a servi ce for which Argentina awards a concession and for
which an exhaustive analysis of the position of the postal services market in countries the world over,from the most regulated to the most liberalized, was conducted, together with a definition of this
market, taking substitutability as regards supply into consideration.
Another case involves a resolution on a merger illustrating vertical integration in the
processed cement market where, I believe, we accurately analysed the degree of substitutability of thisproduct and imposed a severe restriction.
And lastly, there is the impact on the retail trade of the concentration of Carrefour-Promodes.Thank you very much.
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