As part of a set of “shock therapy” measures introduced to deregulate and stabilize its economy, the Argentinian government led by newly elected President Javier Milei has already adopted an emergency decree (Decreto de Necesidad y Urgencia) that makes broad array of legal changes. Toward the same goal, the government in late December sent up an omnibus bill on Bases and Starting Points for the Freedom of Argentines Act that, among its 600 changes, proposes to modify the current Act for the Defense of Competition (Act No. 27.442).[1]
Deregulation necessarily means relying to a greater degree on free-market competition to procure the best possible prices and quality for consumers and citizens. It therefore makes sense to strengthen competition law. As Judge Richard Posner has put it:
Because deregulation contemplates the substitution of competition for regulation as the “regulator” of the deregulated markets, deregulation increases the importance of antitrust law as a means of preventing unregulated firms from eliminating competition among themselves by mergers or price-fixing agreements.[2]
This was the case in Latin America after several countries adopted market-oriented reforms in the early 1990s.[3] But do Milei’s proposed modifications to the Argentinian Competition Act actually achieve that?
The question might be a red herring, as I would argue that the more pressing issue facing Argentinian Competition Law is that the act currently in force is not actually enforced. The most important reform introduced by Act No. 27.442 of 2018 is that it created an independent agency—the National Competition Authority (Autoridad Nacional de la Competencia or ANC)—to replace the Comisión Nacional de Defensa de la Competencia (CNDC), a body dependent of the secretary of commerce and, as such, subject to political pressure.[4] As CNDC Commissioner Pablo Trevisan has pointed out, the lack of an independent competition authority had been the Argentinian Antitrust Law’s Achilles Heel for decades.
Six years on, however, not only is there still not an ANC, but the members of the incumbent CNDC are all still political appointees.
While the text of Milei’s omnibus bill has a provision “creating” a new independent competition agency, this was already included in Act No. 27.442. The proposed bill thus still does not address the Achilles Heel, and how could it? Like many other things in Argentina, the absence of an independent competition authority is primarily a political issue, rather than a legal one. Successive governments have not had the political will or the power to implement an independent agency with independent officials.
The agency’s lack of independence is important because an agency that is not independent can be used to weaponize antitrust law and distort competition, rather than to protect it. This is especially important where the law assigns a great degree of discretion to enforcers, as is the case in Argentina. Although Argentinian enforcers have declared that “Act No. 27.442 does not include express provisions regarding non-competition aims. Decisions of the CNDC and the NCA (when established) should exclusively be focused on competition issues,” the act’s first article prohibits agreements, mergers, and abuses of a dominant position that harm the “general economic interest.”
Additionally, as Argentinian competition attorney Julián Peña aptly observes, the CNDC published new merger-control regulations in May 2023 that, among other changes, expanded the definition of “general economic interest” in merger analysis. The new definition requires defendants to show benefits related to employment, import substitution, investment, the environment, or gender policies. Rather than subject the long arm of the government to a workable standard of proposed harms (such as the consumer-welfare standard), this broadly defined notion of “general economic interest” allows highly discretionary interventions against business models and practices that benefit society overall in order to protect specific groups (i.e., small businesses, local businesses, etc.)
One of the modifications proposed by the omnibus bill is a good example of the importance of independent authorities for legal stability and predictability (and certainly is not freedom-increasing). Article 10 of the proposed new Antitrust Act allows the government to require (mandate) the notification of merger transactions if there are “reasonable indications that the economic concentration operation in question may constitute, protect or strengthen a dominant position,” even if the operation has not met the established thresholds. The rule’s broad language of the rule (“reasonable indications”) gives the government significant discretionary power, especially when combined with the expansive definition given to the “general economic interest.”
This language also resembles that used in the Peruvian Merger Control Act. When the Peruvian Merger Control Act was under discussion, I argued that such a rule “distorts the function that the notification thresholds should fulfill, which is to be an objective and easy indicator of whether or not it is appropriate to pass the review.” Such a rule would require the merging parties to carry out additional legal and economic analysis prior to the operation’s notification—very similar to what would be carried out after the notification—to determine if it entails any substantial risks to competition. An efficient merger-control regime should consider its administrative costs and the incentives it creates for all merger transactions, not just the ones it actually reviews.
Certainly, one could hope that a more libertarian government would not use its political power to interfere with its antitrust agency’s decisions, but even a libertarian government has self-interested officials. Let’s not forget that underenforcement of competitions law can be a problem too (particularly in the case of cartels, where Argentina lacks a strong record.)[5] More importantly, however, we should consider that this power could later be used by more interventionist politicians (where Argentina does have a “strong” record.)
Any changes proposed to Argentinian antitrust law must begin by finally addressing its obvious Achilles Heel.
[1] For a full review of the proposed competition law, I would suggest checking this detailed review by Esteban Greco, former president of the Argentinian Competition Defense Commission (Comisión Nacional de Defensa de la Competencia or “CNDC”).
[2] POSNER, Richard. The Effects of Deregulation on Competition: The Experience of the United States, 23 Fordham Int’l L.J. S7 (1999). p. S18.
[3] “After the Washington Consensus (1990), Latin American countries decided to change the Protectionist Model that ruled economic theory until then, and evolved into a development model based on markets that were opened to international free trade, and consequentially more competitive pressure. Pursuant to this change of strategy, all Latin American Countries included a principle of free competition in their Constitutions and issued a new wave of competition laws that they have been increasingly applying since then.” MIRANDA, Alfonso. Competition Law in Latin America. Main Trends and Features. Centro de Estudios de Derecho de la Competencia. Bogotá (2012). Available at: https://centrocedec.files.wordpress.com/2010/06/cornell-lacompetition-20123.pdf (last visited, Jan. 9, 2024).
[4] An indicator of the political nature of the CNDC is that all its members submitted their resignation en masse, in December 2023, due to the change of government.
[5] ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT – INTERAMERICAN DEVELOPMENT BANK. Follow-up to the nine Peer Reviews of Competition Law and Policy of Latin american countries: Argentina, Brazil, Chile, Colombia, El Salvador, Honduras, Mexico, Panama and Peru (2012). p. 43. Available at: https://web-archive.oecd.org/2013-08-14/244069-2012Follow-upNinePeer%20Review_en.pdf (last visited, Jan. 9, 2024).