Pre-merger notification: thresholds raised by Chilean competition authority

The new thresholds will become effective 09^th August 2019.

Santiago, March, 2019. Further to our latest newsletters on the reform to Chile’s anti-trust statute introducing mandatory pre-merger clearance, the Chilean antitrust prosecutor (FNE) published in the Official Gazette dated 29 March 2019 the new thresholds as of which it is mandatory to notify a concentration to the FNE.

This is the first time that the FNE makes a change to the thresholds it initially determined back in December 2016. As with the old thresholds, the new thresholds are a two pronged test based on turnover, not on market share: aggregate turnover of UF 2,500,000 (approx. US$ 100 million), up from 1,800,000 (approx. US$ 70 million), of the merging market players, on the one hand and individual turnover of UF 450,000 (approx. 17.5 million), up from US$ UF 290,000 (approx. US$ 11.3 million), of at least two of the merging players, on the other.

If one of the two elements of the test is not met, then it will not be mandatory to notify the proposed concentration.

The relevant turnover is only that of sales in Chile of the relevant entities. Sales made outside of Chile are not considered for the calculation of the turnover for the purposes of these thresholds.

The explanation that the new head of the FNE, Ricardo Riesco, gave for this adjustment upward was that out of the 72 transactions that have been notified to the FNE under the mandatory pre-merger control regime, 61 were approved with no remedies, another 9 were approved with remedies and only 2 were blocked. Thus, in the opinion of the FNE, the great majority of the transactions that were approved did not represent a substantial lessening of competition. On the other hand, according to the FNE, all of the transactions that were approved with remedies would have been caught by the new thresholds.

In any case, the FNE may again adjust these thresholds with just 90 days notice, without the need of any congressional action, in case it becomes apparent that they were set either too high or too low.

On another front, the FNE has made a call for comments on the current implementing regulations  of the pre-merger notification regime to see whether it would make sense to reduce the amount of information being requested under the current rules, in particular under the simplified notification mechanism.

If you require more information, please feel free to contact the following members of our competition team: Felipe Cousiño, Raúl Montero, Ximena Rojas and Camila Ringeling.