CHILE LAW AND PRACTICE Contributed by: Fernando Lathrop Aubert, Francisco Cárcamo Valdés, Jimena Illanes Diez, Joyce Jankelevich Mayer, Macarena Jaramillo Solís, Michelle Niedbalski Ramírez, Nicolás Maldonado Leyton and María Fernanda Heusser Errázuriz, Lathrop Mujica Herrera & Diez Abogado
Regulation of Domestic M&A Transactions , is the relevant authority, responsible for safeguarding free competition through investigations and evaluations to ensure mergers do not pose undue risks to market competition. Notification Requirements Transactions must be notified if they cross specific thresholds. These are as follows. • Combined revenues – aggregate revenues from Chilean operations must exceed UF2.8 million during the previous calendar year (UF ( Unidad de Fomento ) is a Chilean currency unit indexed according to inflation)). • Individual revenues – the target company or its assets must have generated revenues exceeding UF450,000 in the preceding 12 months. The regime captures mergers, acquisitions of control, and influence agreements involving entities with nota - ble operations in Chile, regardless of jurisdiction or investor nationality. Review Process The process unfolds in two phases. • Phase 1 (30 business days) – a preliminary review focusing on apparent risks such as market con - centration and entry barriers. Transactions without such risks are approved quickly. • Phase 2 (up to 90 additional business days) – an exhaustive investigation if Phase 1 flags potential issues, examining unilateral effects, co-ordinated effects, and consumer impact. The total timeframe can extend to 120 business days. The FNE has also issued internal guidelines, including the Guide on Notification Thresholds and the Guide on the Notification Procedure, which provide clarity for undertakings on how to apply the law and navigate the notification process. Compliance Clearance must be secured before executing the transaction. Non-compliance can result in hefty fines or unwinding the transaction.
Considerations and Analysis The FNE uses several criteria to scrutinise transac - tions. They are as follows. • Market concentration – the Herfindahl-Hirschman Index (HHI) gauges competitive impact. • Barriers to entry – regulatory, technological or logistical obstacles for new players. • Impact on stakeholders – effects on prices, innova - tion and consumer choice. • Efficiencies – only demonstrable, consumer-centric efficiencies are considered. Substantive Competition Review Even transactions below notification thresholds or outside Article 47 of Decree of Force of Law No 1 of 2004’s definition can face review under Article 3, which prohibits activities disrupting market competi - tion. Investigations can stem from complaints or the FNE’s initiative. Case Study Resolution No 43 of 2012 involved SMU’s merger with Supermercados del Sur. The transaction was approved with conditions such as divestitures and behavioural commitments to temper local market concentration. Non-compliance led to FNE sanctions, highlighting the seriousness of the non-compliance. Chile’s merger control regime is designed to preserve competition while accommodating economic realities. The FNE operates with meticulous precision, and nav - igating this regime demands strategic foresight and thorough preparation. 6.2 Criteria for Antitrust/Competition Review Chile has a merger control regime, which often involves a comprehensive examination of substantive overlaps and competitive effects stemming from the investment. This regime is governed by Title IV of the Competition Law and Supreme Decree No 41 of 2021. However, the specific components of this assessment reveal a nuanced balance between technical scrutiny and the unpredictable local and global dynamics of the market. The review delves beyond obvious risks, such as mar - ket concentration or collusive effects, to investigate
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