Answer ... The abuse of dominance prohibition applies to all kinds of entities, without exception. This means that the Competition Act applies to private and public entities, natural and legal persons, and individual or collective persons. This can be inferred from Article 3 of the Competition Act, which states that the Competition Act applies to “whoever” infringes the provisions of the law.
Answer ... As the Competition Act does not provide a definition of ‘dominance’, this has been mainly constructed through case law.
Nevertheless, the Chilean Competition Tribunal (TDLC) has been inconsistent in its definition of ‘dominance’. For instance:
- in one decision, the TDLC suggested that ‘dominance’ relates to a situation of commercial strength of an undertaking regarding its competitors (TDLC Ruling 47); and
- in another, the TDLC defined ‘dominance’ as “the power of an undertaking to behave independently of its competitors, establishing market conditions that could not have been possible in absence of this power” (TDLC Ruling 112/2011).
Answer ... Unlike other jurisdictions, Chilean competition law does not contemplate a market share threshold to establish or presume the existence of dominance. Thus, to assess the existence of dominance, the competition authorities conduct a case-by-case analysis that takes into account the characteristics of the specific market under consideration.
However, market share is still a central element used by the Chilean competition authorities. For instance, the National Economic Prosecutor’s Office (FNE) Guidelines on Vertical Restraints state that a vertical restraint between undertakings holding market shares below 35% can be legal. Although the TDLC has not set out specific thresholds, it has stated that dominance can be found even when market shares are below 35% (TDLC Ruling 24/2005 and Ruling 39/2006).
Answer ... The Chilean competition authorities adopt a traditional approach when assessing dominance. The competition analysis begins by defining the relevant market (product and geographic markets). Next, the authorities assess the undertaking’s position in the market, taking into consideration:
- its market share in relation to those of its competitors; and
- other factors such as the existence of barriers that could prevent the entry or expansion of actual or potential competitors.
Answer ... The Competition Act does not provide a definition of product and geographic markets. However, the FNE has defined these concepts in its Horizontal Merger Guidelines, 2021.
The FNE has described the relevant market as “the market for a product or group of products, in a geographic area where such products are produced, bought or sold, and within a temporal dimension, in which is probable to exercise market power” (FNE, Horizontal Merger Guidelines, 2021, paragraph 10).
The FNE considers that a group of products will be part of a relevant product market “to the extent that consumers consider them as substitutes, with sufficient closeness due to their characteristics, price and/or use. In some cases, the FNE may consider not only demand-side substitution but also supply-side substitution” (FNE, Horizontal Merger Guidelines, 2021, paragraph 15).
The FNE considers that the geographic market is delimited by “the smallest geographic area within which it would be possible for a hypothetical monopolist to exercise market power with respect to the product or group of products that compose it. In addition, the FNE deems that in such area the conditions of competition are sufficiently homogeneous, allowing for the distinction of one area from another” (FNE, Horizontal Merger Guidelines, 2021, paragraph 22).
Answer ... Chilean competition law does not distinguish between dominant purchasers and suppliers.
Answer ... Article 3, letter b of the Competition Act sanctions the “abusive exploitation, by an economic agent or a group thereof, of a dominant market position, fixing purchase or sale prices, tying the sale of two or more products, assigning market zones or quotas, or imposing other similar forms of abuse”. However, the recognition of collective dominance has been the subject of debate among the Chilean competition authorities. The TDLC has stated several times that, “by definition, only one undertaking can maintain a dominant position in one market’ (TDLC Ruling 176/2021, c 78 and Ruling 154/2016, c 24). However, the Supreme Court overruled the latter TDLC decision, condemning two companies for abuse of dominance (Supreme Court Ruling 73.923-2016).
Answer ... According to Article 20 of the Competition Act, actions to prosecute abuse of dominance have a statute of limitations of three years as from perpetration of the anti-competitive conduct on which they are based. This statute of limitations is interrupted by any complaint submitted by the FNE or lawsuit filed by a private party with the TDLC.