ISSUES RELATED TO COMPETITION LAW

The basic aim of the Chilean Competition Act is "to promote and defend free competition in the markets". The Act follows the basic structure of substantive prohibitions about agreements and unilateral practices. A single, general provision contains the basic substantive rules about conduct affecting competition. Any deed, act or agreement, including a contract, that "prevents, restricts or hinders free competition," or that tends to do so, is subject to sanctions under the law (Art. 3). Subsections provide illustrative detail about some of the usual categories of competition policy concern, namely explicit or tacit agreements (Art. 3.a), "abusive exploitation" of a dominant position (Art. 3.b) and "predatory or unfair" practices to attain or strengthen a dominant position (Art. 3.c). Case law has elaborated what these general terms mean.

Scope of application: The scope of application of the Competition Act is broad. In general, it contains no exclusions or exemptions from its coverage, nor are there general exemptions authorized under other regulation. Before the 2003 amendments, the executive branch could grant monopolies on national interest grounds, after the approval of the Competition Commission. The TDLC no longer has such a power to approve or disapprove a monopoly grant. The Competition Act forbids the government from granting concessions or authorizations that might create a monopoly, unless the specific grant is authorised by law (Art. 4).

State-owned or managed enterprises get the same treatment as private parties do, and their conduct is subject to the Competition Act and enforcement. Entrepreneurial activities by non-profit government or state entities may also be examined by the TDLC. If the State violates restrictions on its entrepreneurial activities, affected private parties can obtain redress in the courts, through constitutional appeals. Moreover, the Competition Act provides no special treatment to small and medium sized enterprises.

Sectoral issues and special regimes: Chile's sector regulations use familiar tools to correct resource misallocation created by natural monopolies such as network facilities in public utilities. Price regulations apply in the electricity sector. Entry restrictions apply to water supply and to radio spectrum concessions. Market structure regulation limits vertical integration among public utilities companies, and the recommendation of competition authorities led to separation of local and long distance telecom services into different companies. Mandatory interconnection applies where control of essential facilities by a dominant carrier or network operator may prevent downstream or upstream firms from competing effectively, as for electricity generation and distribution and fixed telephone services. Regulation allocates resources, such as the radio electric spectrum or the use of water rights for generating electricity. Quotas allocate property rights to prevent the over exploitation of resources, such as auctions for tradable fishing rights. Regulation also controls entry into the taxi market: a 2005 statute froze the number of taxis until 2010.

In Chile, Competition authorities and sector regulators have a history of co-operation. There are no set arrangements or formalities governing institutional coordination, and co-operation is not mandatory, except for a few situations. The TDLC occasionally hears cases involving jurisdictional conflicts with sector regulators. Where sector regulations impose legal barriers on entry, the FNE or the TDLC may examine the regulations to ensure they do not create unnecessary restraints upon competition. The FNE and the TDLC may ask regulators to re-examine regulations should they threaten competition. If the regulator rejects the FNE's petition, the FNE may bring a formal request before the TDLC, and the TDLC can issue recommendations to amend or eliminate the regulations.

Mergers and Acquisitions (M&A): The substantive law applied to mergers is Article 3 of the Competition Act, which does not address mergers or acquisitions directly, nor does it make premerger notifications mandatory. A merger or acquisition can be considered an infringement of the Competition Act if it prevents, restricts or hinders free competition or tends to produce such effects, in which case the parties could be penalized after the merger. This adversarial proceeding against a merger may be initiated upon request by the FNE or any interested party

Also, mergers cases may be heard by the TDLC in a non-adversarial procedure when the parties to the operation voluntarily seek the Tribunal's approval or when the FNE or any interested party requires the TDLC to examine the operation

Late in 2006, the FNE released internal guidelines for the analysis of horizontal concentration operations . Moreover, early in 2009 the TDLC issued a decree establishing the information it requires from parties submitting a concentration operation to its approval.