Competitiveness Bill: Impacts on Economic Concentrations

The Bill reduces the joint turnover threshold that triggers the mandatory notification of a merger or acquisition from 500 million to 350 million UI (Indexed Units), while raising the individual threshold from 30 million to 50 million UI. The net result is more transactions falling under prior control. We review what is changing, how it is calculated, and what should be reviewed before closing your next deal.

The Current Framework and Proposed Changes

Under Law No. 18,159 and its regulatory decree, the obligation to notify an economic concentration to the Commission for the Promotion and Defense of Competition is triggered when, in any of the last three fiscal years, the joint gross annual turnover of the participants within the country exceeds 500,000,000 UI (approximately USD 79,800,000), without prejudice to legal exceptions such as internal restructurings within the same economic group.

The Bill modifies the two thresholds that currently define the notification requirement, demanding that they be met cumulatively:

• Joint turnover of the participants equal to or greater than 350,000,000 UI (approximately USD 55,860,000).

• Individual turnover of at least two of the participants equal to or greater than 50,000,000 UI (approximately USD 7,980,000) each, raising the current threshold of 30,000,000 UI.

The combination of both changes aims at a specific goal: removing smaller transactions between small companies from the prior control regime, while bringing under control a broader universe of medium and large-scale operations that currently fell outside because they did not reach the joint 500 million UI mark.

How It Is Calculated

The Bill incorporates clarifications regarding the calculation of relevant turnover and what constitutes a change of control. Furthermore, a special regime is introduced for company acquisitions: in these cases, the seller's turnover is excluded from the threshold calculation, simplifying the analysis in M&A transactions where the seller completely exits the operation.

A More Structured Procedure

The Bill organizes the authorization process into three stages with defined timelines:

1. Admissibility: 15 business days for the agency to declare the application complete.

2. Initial analysis phase: 30 calendar days from the declaration of completeness.

3. Extended evaluation phase: An additional 60 calendar days if competition risks are identified.

Additionally, the agency may suspend the clock while requesting additional information, and applicants can propose remedies, which allows for another 60-calendar-day suspension for evaluation. In practice, this means that a transaction can be considerably prolonged if the Commission opens the extended phase or if requests for information arise along the way.

Introduction of a Filing Fee

The fee (ranging approximately between USD 4,000 and USD 40,000, depending on the turnover of the companies involved) is non-refundable regardless of the procedure's outcome, and the application will not be considered active until proof of payment is submitted. This is a new cost to be budgeted from the very start of the deal.

Severe Penalties for Gun-Jumping (Failure to Notify)

The Bill explicitly authorizes declaring the nullity of the concentration act when there are no alternative remedies sufficient to cure the infringement, settling a previous doctrinal debate over whether violating the concentration regime could lead to the invalidity of the legal transaction.

Key Considerations

The change in thresholds is not a cosmetic adjustment; it shifts the center of gravity of merger control toward medium-sized transactions that previously did not reach the Commission. For companies growing through acquisitions, this is the time to recalculate, rather than waiting for the Bill to become law. We suggest:

• Reviewing whether, under the new thresholds, pipeline transactions (or those closed in the last three fiscal years) would have been subject to notification under the new framework.

• Paying special attention if your economic group falls below the joint 500 million UI mark but one of the parties individually generates more than 50 million UI: this is exactly the type of transaction that the threshold shift brings into prior control.

• Evaluating the impact of the new calculation rule (exclusion of the seller's turnover) on the threshold analysis for ongoing corporate sale and purchase transactions.

• Factoring the potential timeline of up to 90 calendar days (or more, including suspensions) and the currently nonexistent filing fee into the schedule of any M&A deal.

• Verifying if an operation qualifies as an intra-group internal restructuring under the expanded exemptions regime provided by the Bill before assuming that notification is required.