PERU Law and Practice Contributed by: Alfred Kossuth Wieland and Edgardo Bernal Santos, Thorne, Echeandia & Lema Abogados
7. Foreign Investment/National Security 7.1 Applicable Regulator and Process Overview Peru does not have a mandatory regime applicable specifically to foreign investments in the context of foreign direct investment. However, the Peruvian Political Constitution provides that foreigners may not acquire ownership rights within 50 km of the nation - al borders, unless such ownership is acquired due to public necessity expressly declared by supreme decree approved by the Council of Ministers. Foreign investments may be registered with PROIN - VERSION for the purpose of entering into a Legal Sta - bility Agreement, which guarantees the foreign inves - tor the right to apply the most favourable purchase and/or sale exchange rate in force at the time of the foreign exchange transaction, as well as the right to freely transfer the full amount of the following abroad, in freely convertible currency: • investment capital; • dividends or duly evidenced net profits derived from the investment; • compensation for the use or enjoyment of assets physically located in Peru; and • royalties and other consideration for the use or transfer of technology, including any other element constituting industrial property. In order to be eligible to enter into a Legal Stabil - ity Agreement, the foreign investor must submit an application for the execution of such agreement to PROINVERSION, with the documentation required for the relevant modality. The application is filed through PROINVERSION’s official filing desk. If the applica - tion satisfies the formal documentation requirements, a draft agreement is sent to the investor for review and approval. Once the draft agreement has been approved, where the applicant is a domestic investor or the receiving company, a favourable opinion must be obtained from the competent sector authority (ie, the relevant ministry) whose scope of responsibility is directly or indirectly related to the company’s economic activity.
Where INDECOPI determines that the proposed com - mitments effectively prevent or mitigate the potential effects arising from the business concentration trans - action under review, it will approve the transaction subject to those commitments and bring the prior control procedure to a close. 6.4 Antitrust/Competition Enforcement INDECOPI has the authority to deny approval of a merger submitted for its authorisation where the par - ties fail to demonstrate the existence of sufficient eco - nomic efficiencies to offset the potential significant restriction of competition, and where it is not feasible to impose conditions capable of preventing or mitigat - ing the effects that may arise from the concentration transaction. In addition, INDECOPI is empowered to act ex officio where there are reasonable indications that a con - centration transaction may result in the creation or strengthening of a dominant position or may otherwise affect effective competition in the relevant market. In such cases, the companies involved in the merger may challenge the decision by filing an appeal within 15 business days from notification of the decision. Accordingly, INDECOPI may order, as a corrective measure, the dissolution of the merger where it deter - mines that the transaction has been implemented without prior authorisation or in breach of the condi - tions imposed for its approval. Where it is not pos - sible to restore the situation to its pre-merger state, INDECOPI may impose alternative measures aimed at preventing or mitigating the potential effects arising from the concentration transaction. Furthermore, where a merger is carried out without INDECOPI’s authorisation, or where INDECOPI orders the unwinding of a merger and the parties fail to com - ply with such order, the companies involved may be subject to fines of up to 125 Tax Units (UIT).
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