Corporations

Amendments to the Free Competition Law

On August 30th, 2016, Law Nr. 20.920, Competition Law, was published in the Official Gazette, which improves the system that defends free competition. This amendment came to life due to the collusion problems that have been exposed in the country the last few years, such as the “Chicken” and “Paper Tissue” cases.

The main innovations brought by this amendment are the following:

1.- New conducts that are considered to adversely affect the free Competition

It is because of the aforementioned cases that the following conducts were added as actions that threaten the free competition: a) agreements between competitors intended to fix prices for sales or purchases, to limit production, to assign market zones or shares, to affect the results of a bidding process and to eliminate other competitors; and b) for one person to be simultaneously director or senior executive of two or more competing companies, to the extent that the corporate group to which they belong have annual revenues in excess of 100.000 UF.

2.- Obligation to inform certain operations – free Competition

Likewise, an obligation to inform the National Economic Prosecutor when more than 10% of a competing company is acquired by a company or corporate group that have annual revenues due to sales and services in excess of 100.000 UF.

3.- Prior control on Operations of Concentration

When companies that belong to different holdings are merged, associated or acquired by one another, notice must be given to the National Economic Prosecutor, provided that such holdings have a predominant significance. In order to determine which cases must be reported to the National Economic Prosecutor, the latter must issue a ruling that indicates the threshold of sales that require such notice. This threshold shall only consider sales made in Chile and income from the company’s line of business.

Together with such notice, the parties must make all the records available to the National Economic Prosecutor, in order to assess the risks that the operation may cause to the free competition.

On the other hand, the involved parties may offer measures, which they will undertake, to mitigate the risks that the operation may produce on the free competition.

This evaluation, by the National Economic Prosecutor, may take no more than 90 days and if it is believed that the operation may considerably reduce the competition, it may even be prohibited.

4.- Augmentation of the fines and new sanctions

The fines were increased up to 30% of the offender´s sales related to the line of products associated with the infringement or up to the double of the economic benefit yielded by the infringement. If the benefit or the sales cannot be determined, a fine up to 60.000 UTA (Annual Tax Unit) may be imposed.

In case of agreement amongst competitors, a 5-year prohibition of entering into contracts with the Government and awarding concessions sanction may be imposed.

Lastly, criminal penalties for a series of conducts contrary to the free competition were restored.

Last modified: 05/10/2020