Uruguay: New Antitrust Law In Uruguay

Last Updated: 26 February 2008
Article by Juan Manuel Mercant

Originally published in Urguay Antitrust, Volume 6, Issue 9, December 13, 2007.

At the end of July 2007, the Uruguayan government enacted the Ley de Libertad de Comercio y Preservación de la Libre Competencia or Trade Freedom and Free Competition Preservation Act, which came into effect in early August and marked the beginning of a new era for antitrust in Uruguay.

As it is still in its infancy, the antitrust act may yet be regulated and refined through decrees and regulations issued by the government, which has 120 days from 20 July to produce the regulations. At the time of writing, no regulations have been released.

The antitrust act repeals almost all previous regulations related to anti-competition matters and will cover all persons (legal entities and individuals, public or private, national or foreign) except for the limitations established by law owing to reasons of general interest.

The main purpose of the antitrust act is to ensure that the markets function without distortion and according to free-market principles of supply and demand.

The act focuses most intently on anti-competitive conduct. Section 2 provides that the abuse of a dominant position is prohibited, as well as all practices, behaviour or recommendations, both individual and concerted, aimed at or having the effect of restricting, limiting, hindering, distorting or preventing current or future competition in the relevant market.

To assess these practices, the enforcement agency may take into account whether they generate economic efficiency gains for the individuals, economic units and companies involved, the possibility of obtaining them through alternative means and the benefit transferred to consumers. This means that the anti-competitive conduct listed under section 4 of the act will still be analysed by the competent authorities under the 'rule of reason' criteria with no per se anti-competitive conduct, as is the case in other jurisdictions.

Concepts such as 'relevant markets' and 'dominant position' – which were not included in previous legal provisions – have now been defined. We anticipate that this will be very useful in the application of the antitrust act, as the definitions guide the law's interpretation and regulations.

Control Of Economic Concentrations

'Economic concentrations' are generally defined as operations that modify the relationship among agents operating in the market, and that affect or may affect the ownership of the companies operating in a certain market sector or of certain assets, the number of companies or the independence of their administrators, etc, and which could modify or affect the market structure. For these reasons, economic concentrations have been the subject of regulation in most jurisdictions with competition laws.

Article 7 of the act establishes that any act of economic concentration must be notified when certain thresholds are met. The second paragraph of this section provides that potential acts of economic concentration are "those operations which imply a modification in the control structure through: mergers of companies, acquisition of shares, quotas or participations, acquisition of business as an ongoing concern, total or partial acquisition of corporate assets, and any other type of legally valid agreement which imply transferring the control of all or part of the economic units or enterprises".

Such economic concentrations (provided that they meet the thresholds, as defined below) must be notified to the competition authority, the Comisión de Promoción y Defensa de la Competencia, 10 days prior to closing. Thus it will be crucial to determine the moment when the transfer of control (which triggers the obligation to notify) is effectively achieved and this determination will depend, among other things, on the terms and conditions and type of economic concentration under analysis. Through this act, for the first time in Uruguay, a system of notification is being introduced.

In this context, the aim of the notification is not to obtain a clearance for the transaction (which is only required in cases where a 'de facto monopoly' is in place, explained further below), but to notify the antitrust commission about the occurrence of an economic concentration that meets the thresholds: thus, the antitrust commission could not object to the deal. In other words, the point of this notification is to make the agency aware of such economic concentration so it gains knowledge about sectors of the economy in which it could be more likely that anti-competitive practices or abuse of a dominant position may take place.

According to section 7 of the act, notification filings are mandatory when one of the following conditions are met:

  • When, as a consequence of the operation, a market share equal to or higher than 50 per cent is reached. This alternative does not take into account the volume of the economic concentration, but the market share participations of the parties involved or, more precisely, of the resulting structure. The implementation of this criterion aims to cover certain transactions that would probably cause relevant changes in the market structure. To determine whether a company has a certain market share, the relevant market should be determined by the parties involved.
  • When the gross annual turnover in Uruguayan territory of the group of participants in such an operation, in any of the last three accounting years, is equal or superior to 750 million indexed units (equivalent, as of August 2007, to approximately US$50 million). This is a much more objective and precise criteria than the one mentioned above, which requires the previous assessment of the relevant market (a definition that is normally debatable).

There are some exceptions to these thresholds, contained in section 8. The transaction does not have to be notified in these cases:

  • the acquisition of companies in which the buyer is the holder of at least 50 per cent of the shares;
  • the acquisition of bonds, debentures and debt securities, or any other debt instruments issued by the company, or the acquisition of non-voting shares;
  • the acquisition of a sole company on behalf of a foreign company that did not previously possess any assets or shares in other Uruguayan companies;
  • the acquisition of companies, declared bankrupt or not (mainly in financial distress), with no activities in Uruguay during the previous year.

Section 9 of the act requires prior mandatory filings in those cases in which the economic concentration operation ultimately results in a de facto monopoly. Unfortunately, the legislation does not make clear what is meant by a de facto monopoly. This issue will probably be clarified by future regulations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions