Changes to Chile’s Competition Law
Chile has amended its Competition Law to “consolidate [its] leadership as a sophisticated agency in Latin America.”
The amendments, which were published in a new law on 30 August 2016, include the introduction of mandatory premerger notification and a two-phase merger control system, required notification for acquisitions of minority stakes, criminal penalties for cartel involvement, an increase in the maximum fine for anticompetitive conduct, and per se enforcement for interlocks between competitors under certain circumstances.
The most important amendments for parties doing business in Chile, and those considering potential transactions in the country, are the introduction of a mandatory premerger notification to the National Economic Prosecutor (FNE) and a two-phase merger control system.
In the past, premerger filings in Chile were voluntary, with limited exceptions for specific markets. Under the new law, parties must report a transaction to the FNE prior to its execution when the sum of both parties’ sales in Chile in the prior year is greater than, or equal to, 1.8 million Chilean units of account (approximately US$71 million) and both parties’ sales in Chile are greater than or equal to 290,000 Chilean units of account (approximately US$11 million).
Once the premerger notification has been filed, the new, two-phase merger control system prohibits parties from closing the transaction until it has been approved by the FNE or the Chilean Competition Court. The FNE can investigate a notified transaction for 30 days, after which it must either approve the transaction or extend the investigation for another 90 days for a more in-depth review.
Similar to the reporting requirements included in the new merger control system, the amendments also require that a party inform the FNE within 60 days of acquiring an interest representing more than 10 per cent of the equity of a competitor. This obligation only arises when both the acquiring and acquired parties record annual revenues in excess of 100,000 Chilean units of account (approximately US$3.96 million). This provision will allow the FNE to investigate the potential anticompetitive effects arising from the acquisition, including the sharing of competitively sensitive information and increased opportunities for collusion.
Overall, the amendments to the Chilean Competition Law mirror enforcement techniques that have been effective in other countries. The FNE president, Felipe Irarrázabal, publicly stated that the legislation will “Allow us to consolidate our leadership as a sophisticated agency in Latin America, because it provides us with all the tools to combat effectively and efficiently any competition infringement.” Companies with businesses in Chile need to be aware of their new reporting obligations to avoid any inadvertent violations.