In a well regulated market, anyone who is in an advantageous position or who has greater financial capacity must be prevented from using this advantage against smaller competitors or consumers.
President Bachelet explains, “consumers win, as they get fair prices and better products; companies win as the increase in consumer confidence allows for lower transaction costs; and Chile wins by having a more dynamic economy and increasing the legitimacy of its stakeholders.”
The key measures included in the Bill are as follows:
Collusion
Everyone in Chile is aware of the high price that is paid, literally and in terms of public trust, when two or more competitors agree to fix prices, limit production, share markets or collude in public tenders. These bad practices mean that businesses that could potentially compete are excluded from the market, consumers are faced with artificial price rises, the range of available products or services limited and our economy and our trust are severely damaged.
This new bill establishes tougher penalties in cases of collusion:
• Increased fines. At present the maximum fine for collusion is US$25 million. The bill proposes increasing fines to as much as twice the profit gained through the collusion or up to 30% of sales revenue during the period in which the anti-competitive behavior took place. In other words, penalties that will act as a deterrent against these unacceptable and damaging practices.
• Imprisonment. A special legal form will be created in the Criminal Procedure Code for cases of collusion, with prison sentences of between 5 years and one day and 10 years. The Public Prosecution Service would be able bring cases before the Defense of Free Competition Tribunal, and also before the Guarantee Court.
Mergers
Mergers are legitimate tactics and can be beneficial, as long as they do not interfere with free competition.
• Preventative and compulsory controls. Given that the existing controls for mergers are very much voluntary in nature, the bill proposes stronger controls for mergers that are valued over a specific amount. In such cases, mergers will have to be evaluated by the National Economic Prosecutor’s Office, which will give companies more certainty and the National Economic Prosecutor’s Office more scope to forestall any actions that may be detrimental to free competition.
• Definition of merger operations. A precise definition of merger operations will be incorporated into the law.
• Specific timeframes. The timeframes for evaluation and investigation by the Public Prosecution Service will be clearly specified in order to clarify the process for both parties. If the merger is approved, this process will ensure that the merger is not anti-competitive and will not be questioned at a later date.
Free Competition
The bill also includes a series of institutional measures to improve the defense of free competition system.
The National Economic Prosecutor’s Office will:
• Be able to conduct market competitiveness studies
• Be able to establish penalties against anyone who obstructs investigations.
• Be able to recommend modifications to the regulations, which currently only the Free Competition Tribunal is allowed to do.
• Establish the exclusivity of the Free Competition Tribunal judges.
For consumers affected by anti-competitive infractions, the bill proposes that consumers be allowed to make compensation claims through the civil courts, in accordance with the Consumer Rights Protection Law.