Mandatory merger regime in Chile to enter into force mid 2017: relevant for operations that have effect in Chile and will materialize after May/June 2017

New mandatory regime

A law amending the Chilean Competition Act (Decree Law N°211, “DL 211”) entered into force on August 30th, 2016. The modifications provide for a mandatory pre-merger notification regime (new Title IV DL 211).

Title IV is not applicable yet. The transitory provisions set forth that Title IV will enter into force the first day of the sixth month after publication in the Official Journal of the resolution by which the National Economic Prosecutor (Fiscalía Nacional Económica, “FNE”), the agency responsible for the future merger assessments, establishes the filing thresholds (“Resolution”).

Thresholds

The FNE published the Resolution on November 25th, 2016. The thresholds are the following:

1) The sum of the sales in Chile of the parties to the operation during the financial year (ending December 31st) prior to the year of notification is equal or more than UF 1,800,000 (approximately US$ 71 Million); and,

2) The individual sales in Chile of at least two of the parties to the operation during the financial year prior to the year of notification are equal or more than UF 290,000 (approximately US$ 11.5 Million) each.

Depending on whether the thresholds are published in the Official Journal in November 2016 or December 2016 (uncertain to date), the new regime will enter into force either May 1st, 2017 or June 1st, 2017. That means that operations of concentrations that are materialized after these dates must be notified in case the thresholds are met.

Operations of concentrations that do not meet the thresholds can be notified voluntarily. This is relevant as the FNE is empowered to investigate operations of concentration that do not meet the thresholds until a year after implementation of such operation.

Definition concentrations

Operations of concentration are defined as “facts, acts or agreements that have as effect that two or more economic agents that are not part of the same group of companies and that were previously independent from each other, cease their independency in any of their activities”. This includes mergers, acquisitions of control or assets and full-function joint ventures (defined as associations that form an independent economic entity, distinct from the joint venture parties, which perform on a lasting basis their functions).

Standstill obligation

Under the new regime, operations of concentration must be notified, prior to their implementation, by the parties to the operation if the turnover thresholds are met. Title IV provides moreover for a standstill obligation; operations notified cannot be implemented until the FNE’s decision is issued or, in case of appeal, the decision by the TDLC is. Parties can only appeal if the FNE rejects an operation of concentration.

Timing

Title IV provides moreover for a two-phase approach: (i) a first phase of 30 working days (i.e., excluding Saturdays, Sundays and formal holidays); and (ii) a second phase of 90 additional working days.

Triggering event

Title IV does not provide for a ‘triggering event’. But as the parties need to submit details on the operation, it can be assumed that the structure of the operation should be sufficiently clear before a notification can be made.

CONTACT OUR EXPERTS:

Nicole Nehmennehme@fn.cl

Sander Van Der Voordesander@fn.cl