Argentina’s antitrust regulator approves transaction subject to investment commitment for the first time

On August 30, 2012, the Secretary of Domestic Trade (SDT) of Argentina, based on a report issued by the Commission for the Defense of Competition (CNDC), approved Bridas’ acquisition of ESSO Argentina to ExxonMobil subject to the condition that the purchaser performs certain investments to increase the production capacity of the acquired company’s refinery for an amount of USD800 million and in the term of 30 months.

The purchaser Bridas is jointly-owned by Argentina’s Bulgheroni family and China’s company CNOOC. Prior to the transaction, Bridas also owned a 40% stake in Pan American Energy, which is Argentina’s second-largest oil producer. The target, ESSO Argentina, which prior to the transaction was ExxonMobil’s arm in Argentina, is mainly active in the downstream oil market through a refinery in the city of Campana (Province of Buenos Aires) and more than 500 gas stations spread throughout Argentina.

The CNDC’s analysis identified that the transaction raised an horizontal overlap in the liquefied petroleum gas production market and several vertical relations, since the purchaser is active the exploration and production of crude oil, whereas, the target (ESSO Argentina) is active in several downstream markets such as refining of crude oil, and wholesale and retail of oil derivates, among others.

According to the CNDC, the transaction created the third all-integrated oil company in Argentina besides state-controlled YPF (recently expropriated by the Argentine government to Repsol) and Petrobras. With regard to size, after the transaction, Bridas has become the second largest integrated oil company in Argentina, only after YPF.

The most significant fact of the transaction is that it is the first time the antitrust regulator conditions the approval of a transaction to the execution of investments by the parties. The investment commitment was proposed by the merging parties to the authority and has the following main characteristics: (i) to increase of ESSO’s refinery capacity, by almost 50% of its current capacity; (ii) works shall be finished within 30 months as of the approval; and (iii) works shall be subject to a quarterly monitoring by the SDT. However, this is not the first time the CNDC takes merger control decisions for non-antitrust goals in the energy market. The CNDC once conditioned a merger under the commitment of the acquirer that it would divest a company that, due to national security concerns, the government of Argentina did not want to allow a foreign ownership.


1. The decision is available at

For further information on this topic please contact Julián Peña