On July 15, 2020, Uruguay’s Executive Branch issued a decree regulating Law 19,833 which established new rules for merger control review.

As we reported previously, Law 19,833 of September 11, 2019, introduced relevant amendments to Competition Law 18,159, both in relation to anticompetitive behavior oversight (it prohibits “hardcore cartels” under a per se standard) and on merger control review rules.

In relation to premerger review, Law 19,833 –which took effect regarding this aspect on April 12, 2020- established that all mergers exceeding the gross annual billings threshold in Uruguayan territory of the parties to the transaction, in any of the last three accounting years, of 600 million indexed units (approximately USD 65 million) must be preauthorized by the antitrust law enforcement agency “within a maximum term of sixty calendar days as from correct and complete filing of notice and the documentation required.”  The documentation required is listed on the merger application form (Resolution 87/020 of the Commission).

The antitrust law enforcement agency is the Commission for Promotion and Defense of Competition at a general level, and the economic regulators in regulated and related sectors.  

The Executive Branch’s recent Decree (not yet published in the Official Gazette) regulates the prior review procedure established in Law 19,833.

Briefly, the chief new aspects of the Decree are:

  • It clarifies how the turnover threshold is computed: calculation of Uruguayan turnover involves summing up invoiced amounts, including taxes, of the merger participants, as well as of their economic groups. The Decree also notes the source for the exchange rate and the value of the indexed unit that should be considered for calculation purposes.
  • It regulates deadline for filing the authorization request: the application must be filed prior to execution of the transaction. However, if the transaction is subject to fulfillment of a condition precedent, or to material acts involving acquisition of control or having a significant influence on adoption of administrative decisions of the company, the authorization application must be filed prior to such situations. The Decree also flexibilizes the timing for filing of transactions conducted abroad. They must be notified before legal or material effects take place in Uruguayan territory.
  • It sets the kick-off of the 60-day term to decide on the application: the enforcement agency has 10 business days as of filing of the authorization application to decide on whether the parties have furnished correct and complete information, and it is entitled to request further information from the parties for said purpose.
  • It sets a two-phase evaluation procedure:
  • The first stage shall not exceed the first 20 (twenty) calendar days of the 60-day legal term and shall pertain to merger transactions which given their impact do not represent a material decrease in competition. Such a low-impact situation is presumed based on the value of transaction amount or of the assets located in Uruguay and related to the transaction.
  • If in the enforcement agency’s judgment the transaction may have a negative effect on the relative market/s in question, the agency can go on to a second phase. In this stage the agency shall receive any third party allegations as to the potential antitrust impact of the transaction. The maximum term for evaluation shall be 60 days, but shall be interrupted upon requests for information from the parties.
  • It establishes penalties for gun-jumping. Transactions made without due authorization or in violation of the prohibition or conditions established by the enforcement agency shall not have legal effects. The Decree also establishes economic penalties, as already set forth in the law for those responsible for anticompetitive behavior.

The Decree also contains new aspects as to the procedure for investigating anticompetitive practices. Among others, it extends the term for responding to complaints to 15 (fifteen) business days from notice of the complaint.

Link to Decree of July 15, 2020.