Antitrust law and legislation in Chile during Covid-19

Since the first case of Covid-19 was detected in Chile in March 2020, the Chilean government has decreed a series of sanitary and economic measures aimed at fighting the effects of the pandemic, and the National Congress has enacted a series of special laws as well.

Examples of some of these measures are the declaration of state of emergency, the establishment of mandatory quarantines in different cities, suspension of the evidentiary periods and hearings of ongoing litigations, employment protection rules, emergency income and bonuses, and a fast track for the companies to access credits.

Despite the major impact of the Covid-19 pandemic on the economy and the daily operations in Chile, the competition government agency, the National Economic Prosecutor’s Office (Fiscalía Nacional Económica or “FNE”), has not provided any special or exceptional measures related to its investigations and enforcement of competition laws, but rather has issued a public statement indicating that the free competition regulations (Decree Law No. 211, “DL211”) "do not provide for any exceptions in their application, not even in the present extraordinary case."

Meanwhile, litigation proceedings before the Competition Court (Tribunal de Defensa de la Libre Competencia or “TDLC”) are ongoing, except for the evidentiary periods, which have been legally suspended. Similarly, the TDLC has ordered the suspension of the previously decreed hearings and the presentation of the oral arguments through videoconference.

In its public statement, the FNE has set its position on the relationship between the pandemic and the antitrust rules, noting that said rules do not provide for any exceptions in their application in the event of emergency cases.

Moreover, the FNE has provided clarifications regarding antitrust laws, considering that the current situation may favour agreements between players in the same market to ensure the supply of goods and services. In this sense, and with the purpose of providing greater predictability and certainty both for the authorities acting to control the health crisis and for private parties acting in the relevant markets, the FNE stated that:

• DL 211 establishes that agreements or concerted practices among competitors that limit, restrict or hinder free competition, or tend to produce such effects, will be generally unlawful. Moreover, DL 211 sets forth specific prohibitions related with agreement or practices consisting in (i) the fixing of sale or purchase prices, (ii) limiting production, (iii) assigning areas or market shares or affecting the outcome of tender processes, as well as (iv) agreements or concerted practices that confer market power to competitors and consist of determining marketing conditions or exclude current or potential competitors.
• However, the FNE further recognises that some agreements between competitors may be lawful. To determine the lawfulness of such collaboration agreements, it is necessary to weigh-in the effects, efficiencies and risks of these agreements. In this sense, an horizontal agreement would be deemed lawful if (i) the agreement generates efficiencies which are greater than its anticompetitive risks, and (ii) the parties adopt mechanisms to restrict interaction between competitors as much as possible, and there is no less harmful mechanism to achieve such efficiencies than the execution of the agreement.
• Furthermore, the FNE declares that in a state of emergency like the current one, the production and distribution of goods, as well as the provision of services, may no longer be possible, or may not be carried out optimally, without a certain degree of collaboration between competitors.
• In these specific cases, collaboration agreements between competitors would in principle be efficient because they would allow the supply of products or services to national consumers, assuming that such result would not be feasible with each economic agent acting individually.
• According to DL 211, neither the FNE nor any other authority has the power to review and/or authorise beforehand collaboration agreements between competitors. For this reason, it is essential that these agreements are analysed, evaluated and designed with caution by those who intend to enter into them during the current state of emergency, bearing in mind the criteria indicated above.
• Notwithstanding the lawfulness of certain collaboration agreements, the FNE also warns that players must be careful,  to the extent that if unscrupulous people use the current state of emergency produced by COVID-19 as an excuse to organise cartels or carry out other anti-competitive acts which are contrary to free and fair competition in the markets, causing serious harm to national consumers, the FNE will strictly enforce the DL 211.

Among the different conducts that are prohibited under Chilean competition law, there are specific prohibitions related to (i) “the abusive exploitation, by an economic agent or a group thereof, of a dominant market position, fixing purchase or sale prices, tying the sale of two or more products, assigning market zones or quotas, or imposing other similar forms of abuse”, as also regarding to (ii) “predatory pricing or unfair competition practices deployed to obtain, maintain or increase a dominant position.”

As applicable to the generality of anticompetitive conducts addressed by Chilean law, the above explained conducts entailing abuse of dominant power are not waived or exempted whatsoever under the current pandemic crisis. Therefore, agents in the market incurring in abuse of dominance conducts would not receive a lenient treatment because of the pandemic. Furthermore, under the current situation, where the importance of goods and services´ supply is greater than before, it is reasonable to expect that the ascertainment of abusive conducts carried by an agent with market power would be simpler to be made, and the sanctions derived from such conducts should be more severe given the potential harm caused to consumers during the crisis.

In line with the above, the FNE has made available to the public new online platforms to make easier the filing of complaints against agents in the market incurring in abuse of dominance conducts.

The proceedings for obtaining merger control approvals by the FNE have remained unchanged for the time being. Therefore, the parties seeking to carry a merger or concentration operation should still abide to the same subject matter requirements and deadlines provided by law.

Notwithstanding the above, the FNE has asked in a public statement that, due to the operational constraints experienced because of the pandemic, parties should make an assessment on the convenience of filing for merger control approval, with the aim of prioritising that only transactions that are urgent or essential must be filed until normal operations are resumed. For this, the FNE has made available online solutions in order to file merger control approvals and to deliver the relevant documentation required for FNE’s analysis.