COMPETITION POLICIES/LAWS
Background

The history of the competition system in Chile began in 1959, with the enactment of the first competition act (Law No. 13,305). The competition provisions were part of an economic and industrial statute that responded to policy recommendations made by an international mission of specialists, whose main purpose was to address macroeconomic instability issues. One of the statute's chapters created the Antimonopoly Commission, whose function was to punish harmful conduct and control industrial and commercial activities. In 1963, the position of the Fiscal Nacional Economico (National Economic Prosecutor, or "FNE") was created to investigate and prosecute anticompetitive conducts. These institutions dealt with few cases. Between 1959 and 1973, most decisions were recommendations to prevent infringements in the future. Since much of the economy was planned, many products and services were subject to price regulation and many firms were owned or managed by the government, and so competition policy and law did not play a significant role.

After the military coup d'etat of 1973, changes in competition policy were part of a program to roll back the previous government's steps towards a state-planned economy. The Competition Act (Decree Law No 211 of 1973) created new institutions, the Competition Commission (also known as Comision Resolutiva) and central and regional Consultative Commissions (the Comisiones Preventivas, central and regional). Members of the Competition Commission and the Consultative Commissions were unpaid and served part-time. These bodies could impose sanctions and issue injunctions and recommendations, while the FNE continued in its functions of investigation and prosecution.

In the first two decades of work (1973-1993), the Competition Commission tended to focus on market foreclosures such as vertical restraints. Its formal, legalistic approach was founded on the 1980 Constitution's protection of economic rights. Competition policy did not seek to promote consumer welfare, but rather to protect economic freedom. Enforcement resources were scarce. Competition policy was overshadowed by macroeconomic reforms. Competition law enforcement was a less important part of Chile's reform programme, which emphasized trade liberalization, privatization and deregulation.

After democracy was restored in 1989, Chile undertook a major pro-growth agenda, developed both by the government and the private sector. This agenda stressed regulation reforms in telecoms and electricity and in areas such as capital markets that could also improve competition and efficiency. Making this kind of regulatory reform a priority created necessary conditions and prepared the way for invigorated competition enforcement. Yet the predominantly consultative competition law system, implemented by institutions with limited enforcement powers, could not deal effectively with significant cases in Chile's increasingly developed economic conditions. The FNE's investigative powers had been somehow increased by a reform in 1999, but the institutional structure needed a more thorough overhaul.

The institutions were revamped in November 2003. The Competition Act of 2003 (Law No. 19.911) created the Tribunal de Defensa de la Libre Competencia ("TDLC") to substitute the Competition Commission and the Consultative Commissions. Under the current system the FNE submits complaints to the TDLC for adjudication and decision. The 2003 law also granted some new powers to the FNE. The TDLC is a court, subject to the supervision of the Supreme Court of Justice. Its members include two economists and three lawyers. The TDLC has applied more sophisticated economic analysis, in contrast to the formal legal standards found in the administrative decisions of the old Commissions.

Enforcement has stepped up markedly since these changes. Notably, sanctions are dramatically higher. Since 2004, the average fine imposed by the TDLC has been about US$ 840,000. By comparison, during the period 1974-2002, the average fine, after review by the Supreme Court, was about US$ 13,500.

Amendments recently entered into force further strengthen enforcement. Among others, the changes introduced a leniency programme to detect and prevent cartels, substantially augmented the FNE's investigatory powers and increased the fines for infringement.