Chile's Individual Action Plan on Competition Policy

Sixth version, October 1997


��Annex 8

6th version, October 1997

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Chile's Individual Action Plan

��Detailed description of actions in specific areas

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Competition Policy

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I. Current Position

Decree Law No211 of 1973 of the Ministry of Economy, Development and Reconstruction, as revised and published on 27 October 1980 by Decree N 511, establishes the rules for the defense of free competition. This law created a National Economic Prosecutor's Office and antitrust commissions that are empowered to prevent and resolve anti-competitive conducts within a market structure.

    The antitrust commissions act as special tribunals for competition. It states as a criminal offense any act or convention tending to lessen or impair competition. Furthermore, since the Chilean economy is very open, with no barriers to trade or foreign investment ( there are only nominal regulations on capital flows from a financial perspective), and with a low tariff level, the application of this law is increasingly important in dealing with the efficient operation of markets and with the effective benefits of a globalized economy.

��Chile has made a great effort to promote competition in key areas of the economy like telecommunications and transportation. As a result of decisions of the antitrust commission, the telecommunications law was modified in order to establish competition in long distance telecommunications via a multicarrier system.

The Laws regulating anti-dumping and countervailing measures in Chile are the Agreement on Implementation of Article VI of the GATT 1994, the Agreement on Subsidies and Countervailing Duties, Article VI of GATT 1994, and the WTO Agriculture Agreement, all of which apply with the force of law since the enactment of the Marrakesh Agreement, Law No18.525 and its Regulation Decree No575.

Law No19.496 of the Ministry of Economy, March 7, 1997 establishes Rules for the Protection of the Comsumer Rights. It entered into force in June 5, 1997.

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Explanation of the Competition Law No211

The Competition Law establishes the practices to be considered to be anti-competitive. These are described as any act that tends to hinder, or is aimed at eliminating, restricting and obstructing competition. The norms that regulate competition apply to both nationals and foreigners, and to the goods and services sectors. They also apply to uncompetitive behaviour that takes place outside the country but has domestic repercussions. The opening up of the economy has become another facet of competition policy in Chile, in that international competition provides a discipline on anti-competitive behaviour by firms located in Chile.

Laws regulating areas such as intellectual property, mining (production and marketing of copper and petroleum), financial services, etc., establish exclusivity for these activities. However, uncomopetitive behaviour in any of these activities is subject to the competition law. The competition authorities are allowed to impose price controls, for example maximum prices, as a preventive measure while an investigation is being undertaken. These measures are imposed for 15 days and may be extended for up to 30 days.

The establishment of public monopolies in extractive, industrial, marketing and services activities is allowed but the creation of private monopolies in these same activities is prohibited (Art. 4 of Decree Law No211). Nevertheless, the creation of private monopolies or the concentration of market power in private hands is allowed by the Resolutary Commission, on request of the President, in order to improve public welfare; a Qualified Quorum Law must be adopted for this purpose.

The institutions in charge of safeguarding and promoting competition are the Regional Preventative Commission, the Central Preventative Commission, the Resolutary Commission, and the National Economic Prosecutor's Office.

The role of the Regional Preventative Commission is to ensure competitive behavior, to deal with any complaints regarding uncompetitive behavior and to carry out the preliminary investigation to determine if behavior is in fact anti-competitive. The Central Preventative Commission intervenes if the case is of national character or involves more than one region. It also acts as the Preventative Commission for the metropolitan area of Santiago. Opinions (dict menes) expressed by these Commissions can be appealed before the Resolutary Commission, which supervises the application of the Competition Law and the work of the Preventative Commissions. The Resolutary Commission deals with cases of uncompetitive behavior ex officio or at the request of the National Economic Prosecutor's Office. If this commission determines that there is a violation of the Law, it may apply a fine or recommend the National Economic Prosecutor's Office to pursue a penal case. It is also within the jurisdiction of this Commission to determine if a market requires regulation because of lack of competition.

In certain cases, uncompetitive behavior has not been condemned. For example, because the cost of the monopoly could be lower than the costs of implementing anti-monopolistic policies, or because there is a lack of resources (both economic and human resources) to carry out the necessary investigations. Despite the limited resources, the cases undertaken are being completed successfully.

The anti-competitive practices the antitrust commissions have dealt with include monopolies, concessions, mergers, vertical or horizontal integration, entrance barriers, prices discrimination, exclusive representation, dominant position abuses, etc. Public agencies, or enterprises, as well as private companies practices can be investigated and eventually sanctioned.

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  1. Objective : to enhance the competitive environment in the Asia-Pacific region by introducing or maintaining effective and adequate competition policy and/or laws and associated enforcement policies, ensuring the transparency of the above, and promoting cooperation among APEC economies, thereby maximizing, inter-alia, the efficient operation of markets, competition among producers and traders, and consumer benefits

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Chile will :

Short term (1997 - 2000)

- Strengthen the antitrust commissions and National Economic Prosecutor's Office, specially in the regions. The authorities envisage in the near future, hiring new personnel, increasing the enforcement agencies budget, and drafting a more up-to-date competition law in order to deal with the afore-mentioned shortcomings.

- A draft Law is being discussed in the Congress for the introduction in Law N?18.525 of provisions establishing: (i) a system of judicial review to challenge administrative decisions; (ii) a system for a prompt refund, upon request, of any duty paid in excess of the actual margin of dumping; and (iii) accelerated investigations for new exporters who have not exported the product to Chile during the period of investigation. The draft Law also extends the length of the investigation period from 90 to 150 days, with a possibility of extension up to a maximum of 180 days.

- Participate and promote cooperation between enforcement agencies in order to avoid private (as different from Government policies) anti-competitive practices.

- Contribute to competition policy understanding in the APEC region by promoting and participating in seminars, workshops and the like.

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