AMENDMENT OF LAW 19,307 FOR THE PROMOTION OF COMPETITION AND EFFECTIVE CONSUMER PROTECTION

On September 11, 2019, the Senator’s Chamber passed the bill to amend articles 4, 7, 8 and 9 of Law No. 18,159 for the Promotion and Defense of the Competition. Said bill has not yet been enacted by the Executive Power, but this will happen in a few days.

The introduced amendments refer, mainly, to two aspects. First, there are some modifications on the article 4 of the referred law, which lists practices that are considered prohibited. Second, there are some modifications regarding the economic concentration control regime.

MODIFICATIONS ON ARTICLE 4°

The bill that was passed in the Parliament establishes a new regulation on certain practices that are prohibited by law. The article 4 originally establishes an enunciative list of a series of practices that are considered prohibited. These behaviors, to fit into the provisions of the referred article, must also be assessed in accordance with the provisions of article 2 of the law, which determines that these behaviors will not be considered illegal if it is proven that they generate economic efficiency gains and those benefits are transferred to consumers. For this reason, the first modification that was introduced is eliminating from the literals a, b, c, e and h the qualifications of “in an abusive way”, “in an unjustified way” and “unjustifiably”. On the other hand, it is removed from the list of article 4 as a prohibited practice for the coordination of the presentation or abstention to biddings or tenders of public or private prices.

The project also introduces an article 4 “bis” that includes a list of behaviors that are considered illegal per se, which in case of being materialized should not be submitted to the analysis of the rule of reason. This new cast of behaviors will be considered illegal for the sole fact of happening, regardless of possible justifications for them. Within the tax cast of behaviors included in this new article, a series of collusive behaviors are introduced, such as pricing; the division, distribution or allocation of areas or market segments, and the realization of agreements for the presentation or abstention to the presentation in public or private tenders.

MODIFICATIONS TO THE NOTIFICATION REGIME OF ECONOMIC CONCENTRATIONS

At this point, the bill introduces substantial modifications to the current regime. First of all, it is determined that notifications that meet certain thresholds that we will mention below must be submitted to the application body (Commission for the Promotion and Defense of the Competition, URSEC, URSEA or BCU depending on the relevant market) for prior analysis in to the development of the proceedings. In the previous regime, the analysis made by the control body was limited to the notification of the operation itself, the parties and their participation in the relevant market. However, taking into account the modifications that were introduced, that analysis should result in an authorization (or not) of the operation, prohibiting all economic concentrations that have the effect or purpose of restricting, limiting, impeding or distorting the current or future competition in the relevant market. In particular, the Commission for the Promotion and Defense of the Competition is given the power to subordinate the approval of the act of concentration at the time of the fulfillment of the conditions that it establishes. The concentration cannot be perfected until authorization has been obtained for it.

Likewise, one of the thresholds established by the current regime is eliminated, which was the case that as a result of the operation, one of the parties obtained a market share that exceeds the 50%, and the total billing amount that all parties must have in the national territory is reduced, now settling at 600,000,000 IU (approximately USD 70,970,000).

Finally, the regulation establishes that the new concentration control regime will come into force 6 months after the law comes into force.

Montevideo, September 2019