Within the events held to celebrate the National Competition Day, the Uruguayan Commission for the Promotion and Defense of Competition announced its Resolution No. 300/021 dated November 29^th, 2021, that introduced an extremely helpful amendment enabling a fast-track regime for the authorization of economic concentrations.

In this way, our country is now aligned with countries that lead the way in antitrust matters, foreseeing two types of business concentration approval process: (a) on the one hand, the traditional process, where the approval is subject to the parties providing all the legal and economic information of the operation for the Commission’s review, as required in the form approved by Resolution No. 87/020 of the Commission; and (b) on the other hand, the new regime is now enabled for concentrations with no substantial impact in competition conditions, which significantly alleviates the agents’ burdens and consequently the Commission’s terms for study and approval.

The new Resolution enshrines the de minimis exception, already included in the Chilean, Brazilian, Colombian and Argentinian regimes, among others, that allows a more accelerated procedure for minor operations, which in turn avoids overloading the Commission’s work, diverting resources from its many tasks.

This solution allows the Commission to focus on concentrations of real material impact, instead of deploying identical efforts in every submission, regardless of whether the operation is large or small since until now, the only threshold in place consisted of a certain total turnover in the country to be exceeded among the parties, which often happened with only one of the participants.

The above led to an unwanted practical problem, as companies that exceeded the threshold alone had to require prior approval always, before acquiring any kind of asset, regardless of whether the concentration was harmless to the competition conditions. Such excessive increase of ‘controllable operations’ caused superfluous obstacles with unnecessary associated expenses for the agents, leading to a ‘bottleneck’ of approval requests to the Commission. But now, Resolution No. 300/021 addresses the problem providing a simpler regime for minor operations, without the Commission having relinquished any of its powers, as it retains full authority to resolve that the operation must follow the conventional procedure if the particular case justifies it.

According to the Resolution, the cases in which the abbreviated procedure applies are two: (i) cases in which the amount of the concentration or the value of the assets that are acquired or absorbed in Uruguay does not exceed 5% of the legal threshold of 600 million Indexed Units (this is, concentrations of up to USD 3,5 million per the current applicable exchange rate), or (ii) that neither party to the concentration conducts business activities in the same product and geographic market.

The first exception refers to a merely quantitative issue, in line with the Argentine regime that applies when the assets of the target company do not exceed a certain minimum amount and is similar to the Brazilian solution that excepts concentrations from the approval process when the turnover of the target company is up to 10% of the buyer’s turnover. It should be added that in Chile, a country of reference in this matter, the thresholds are mobile according to what is dictated by the National Economic Prosecutor's Office, which allows greater flexibility depending on the different categories of operations. In our case, the limit was set at 5% of the total threshold set forth in Law No. 18,159 (in the wording given by Law No. 19,833), based on the criteria of Regulatory Decree 404/007 that presumes that operations of less than such amount do not imply a real reduction in competition.

When establishing the presumption, the Decree provides that these operations that "do not constitute a substantial decrease in competition" would be resolved in a "first stage" that would not extend beyond the first 20 calendar days of the legal term. Therefore, it can be concluded that the operations that transit through the abbreviated procedure would be resolved in the so-called first stage (because both the simplified procedure and the resolution in the first stage occur when the same conditions are met). This reasoning is consistent with the legal term established in Law No. 18,159, since the Law refers to a maximum term.

The second assumption is linked to the ‘first-landing’ exception already contemplated in section 8 of Law No. 18,159, which exempts from prior control those transactions where a single company is acquired by a single foreign company that does not previously have assets or shares of other companies in the country (what is now replicated to when the acquirer has no activity in the market in which the target operates). It is important to clarify that this exception requires that the agents do not coincide in the product market and in the geographic market. The casuistry to come will resolve whether it applies when agents participate in different product markets, but in nearby geographic markets or in markets which intra-national delimitation is questionable.

But in both cases where the fast-track process applies the Resolution sets forth certain limits. The first limit seeks to avoid the 'gun-jumping' of the agents who 'split' the operation into parts to avoid control. Hence, to avoid such abuse of the exception enshrined in the Resolution, the Commission reserves the power to control the timing of the authorization requests, replicating Argentina's solution in this regard. The second means of control is the Commission’s retention of the power to deny the abbreviated procedure when the characteristics of the relevant market, both the geographical aspect and the product aspect, justify carrying out the traditional procedure, where the parties must provide all the substantial information of the operation. And in addition to the limitations contained in the Resolution, the Commission retains full power to deny authorization or subordinate the concentration to the fulfillment of conditions imposed by the Commission, as provided for in section 9 of Law No. 18,159. Therefore, this abbreviated procedure is not a 'blank check’ at all, but rather a way of shortening the workload and deadlines for certain minor operations that merit it.

It will now be left to the casuistry to delineate possible gray aspects. But from now on, the solution is very positive, ensuring business speed in operations where it had no sense to transit the long path for merger authorization, particularly in acquisitions that are absolutely irrelevant to the conditions of competition in Uruguay.

By way of this innovative amendment, the Commission retains all of its legal powers, but allows the agent to access this simpler regime when the case justifies it, aligning our country with the best international practices in this matter.