1. Guiding parameters of free market competition.

Free competition is the maximum expression of the effective relationship between economic operators in the market. In other words, it is the economic principle that allows companies and any natural person to participate freely in a specific economic activity, thus generating supply and demand, these being, in addition, the regulatory factors of the market.

The existence of this economic principle depends mainly on two spheres; firstly, a private sphere such as the ability of economic entities to freely enter and exit the market and operate in it. On the other hand, the “freedom” of action they have. And secondly, from a public perspective, the existence of economic indicators, an adequate legal framework and adjusted to the transparency required by the economic system.

With the systematization provided by technologies, transparency in markets is an indicator of guarantee and, therefore, a value perceived by consumers. For this reason, in market relations, visibility in a triple prism must take precedence: for other economic operators, for consumers and for the authorities in charge of enforcing competition rules. (For a more exhaustive analysis of what is proposed, see: NUEVO, G., “Las marcas notorias y marcas renombradas de la marca”). NUEVO, G., Las marcas notorias y las marcas renombradas en la legislación y la jurisprudencia española, Revista Crítica de Derecho Privado – LA LEY URUGUAY, Nº16, 2019, pp. 345 and following).

2. What are concentration operations.

Understanding mergers requires assuming a frequent market movement, understood from a commercial perspective but unknown from the point of view of antitrust law. These are economic operators that, due to their market share, have a position superior to the rest, that is to say, they enjoy a dominant position. This concept is both relevant and delicate within the market, which is why antitrust law controls these situations of “power” but does not prohibit them.

In view of the above, the operators present in the markets, in their eagerness to gain market share (power), are increasingly opting for the concentration formula. These operations are based on two parameters; they must start from a reality that concerns two or more companies and, consequently, results in the modification of the structure of the economic operator. In short, mergers involve a total change in the control structure of one or more companies.

The key element in identifying a concentration is control. Access to the control of an economic operator involves:

  • Merger of two or more independent companies.
  • Acquisition of control over one or several companies. Joint acquisition of one or several companies, or even through shareholdings, is also possible.
  • Creation of a company in partition.

3. The borderline nature of the operations: Risks and utility.

As mentioned above, the ambition of the entities to acquire more market share, to control their scope of operations or relevant market, may involve an approach of “absorption” of other operators as a way to increase their frontiers. Although it is true that, under the contemplation of the antitrust authorities, they may involve a completely discretionary and arbitrary alteration at the will of any operator with a dominant position, causing damage that is difficult to repair for a specific relevant market.

This phobia of anticipation on the part of the competent administration has resulted in the fact that any market operator that intends to carry out a concentration operation that may jeopardize a specific market must notify the authority in order to identify them. The purpose of identifying possible transactions that may be considered concentrations is to analyze whether they should be subject to control or not and, therefore, to observe the mandatory nature of acquisitions of control so that, if certain thresholds are met, these transactions must be notified to the competent authorities.

On the other hand, it must be assumed that not all concentration operations involve a risk, and for this purpose the relevant market of the operation must be exhaustively defined and the share of each operator involved in the operation must be analyzed.

With this in mind, mergers are a strategically useful resource within antitrust law, as long as the borderline between permitted and prohibited conduct is understood, and the specific procedures for notification and cooperation with the competent administration are known in order to achieve a successful transaction  .




Gonzalo Nuevo López 
Abogado- Attorney

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 + 34 660 938 836

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