1 Legal and enforcement framework

1.1 Which legislative and regulatory provisions regulate dominance in your jurisdiction?

The competition legal framework in Chile is mainly established in the Competition Act (Law Decree 211). Article 3 of the Competition Act sets out a general provision that proscribes any "deed, act or agreement that impedes, restricts or thwarts competition, or tends to produce such effects". Article 3 also provides a non-exhaustive list of anti-competitive conducts, including:

  • "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" (Article 3, paragraph 2, letter b); and
  • "predatory pricing or unfair competition practices deployed to obtain, maintain or increase a dominant position" (Article 3, paragraph 2, letter c).

As the Competition Act does not define ‘dominance', most of its elements and criteria are found in the case law and guidelines of the competition authorities.

1.2 Do any special regimes apply in specific sectors?

The Competition Act applies equally to all sectors of the economy. Specific competition provisions are additionally included in sectoral laws, which are also enforced by the competition authorities. These regulations include:

  • Law 19.542, which modernises the state port sector;
  • the Law on Freedom of Opinion and Information in the Exercise of Journalism (19.733);
  • the Water Code (Law Decree 1.122/1981);
  • the Law on Rates for Sanitary Services (Law Decree 70/1988);
  • the General Electricity Services Law (Law Decree 4);
  • the Gas Services Law (Decree Law 323); and
  • the General Law of Telecommunications (18.168).

1.3 Is the legislation intended purely to protect economic interests or does it have other aims?

Article 1 of the Competition Act provides that the purpose of the law is "to promote and defend free competition in the markets". Therefore, the Chilean competition legislation has no aims or goals other than to protect competition.

1.4 Which authorities are responsible for enforcing the legislation?

From an institutional perspective, Chilean competition law is enforced through a tribunal-based model:

  • An administrative agency, the National Economic Prosecutor's Office (FNE), investigates and prosecutes anti-competitive conducts; and
  • A specialised tribunal, the Chilean Competition Tribunal (TDLC), decides the cases.

The FNE is an independent administrative entity which is subject to the supervision of the president through the Ministry of Economy. Its main role is to investigate anti-competitive conducts and enforce the Competition Act. The FNE is also in charge of the Chilean merger control regime. Furthermore, it issues market studies and undertakes competition advocacy.

The TDLC is an independent judicial body with exclusive jurisdiction to decide competition issues, including contentious and non-contentious matters. Therefore, the TDLC's main role is to decide all cases submitted to its consideration, either by the FNE or by private parties. The TDLC can also issue general instructions on competition matters and propose to the president the amendment or derogation of regulations it considers to be anti-competitive.

The TDLC's decisions can be reviewed by the Supreme Court of Justice – Chile's highest court – under a special judicial recourse procedure (‘recurso de reclamación').

1.5 How active are the enforcement authorities in taking action against abuse of dominance in your jurisdiction? What key decisions have the enforcement authorities adopted most recently?

In recent years, the FNE has brought no cases of major significance before the TDLC related to abuse of dominance. Thus, the FNE has not been very active in the prosecution of abuse of dominance.

The exception may be a lawsuit filed by the FNE against Canal del Fútbol (CDF) (the Chilean football channel) in 2020 for abuse of monopoly power in the market for the transmission of live football matches. CDF has established a series of practices that – according to the FNE – impede competition in the market. The FNE has asked the TDLC to order CDF to stop these practices and impose a $24 million fine – the largest ever for a case of monopoly abuse. The proceedings are ongoing.

2 Definitions and scope of application

2.1 What parties are covered by the dominance legislation? Are any exemptions available?

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.

2.2 How is ‘dominance' defined in your jurisdiction?

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).

2.3 How important is market share in assessing dominance in your jurisdiction? Do specific thresholds apply in this regard?

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).

2.4 What other factors are considered when assessing dominance?

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.

2.5 How are the product and geographic markets defined in your jurisdiction?

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).

2.6 Does the dominance legislation make any distinction between dominant purchasers and suppliers?

Chilean competition law does not distinguish between dominant purchasers and suppliers.

2.7 Is collective dominance recognised in your jurisdiction? If so, how is it defined?

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).

2.8 What is the statute of limitations to prosecute abuse of dominance cases in your jurisdiction?

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.

3 Abuse of dominance

3.1 How is ‘abuse of dominance' defined in your jurisdiction?

The Competition Act does not define ‘abuse of dominance'. For this reason, the Chilean competition authorities have been responsible for developing this concept.

On the one hand, the TDCL has defined ‘abuse of dominance' as having two concurrent elements: one structural and the other behavioural. The structural element relates to a dominant position, which implies that the conduct must be deployed by an undertaking that has substantive market power and can act independently of its competitors, customers and suppliers, as it does not face effective competitive pressure. Therefore, the undertaking is in a position that allows it to establish market conditions that would not have been possible in the absence of such power. The second element relates to the undertaking's abusive conduct, which must produce anti-competitive effects or have the potential to do so. According to the Chilean Competition Tribunal (TDLC), this is the meaning of the expression ‘abusive exploitation' established in Article 3, letter b) of the Competition Act (TDLC Ruling 176/2021, c 74; TDLC Ruling 174/2020, c 88°).

On the other hand, the National Economic Prosecutor's Office (FNE) refers to ‘abuse of dominance' as "a conduct executed by an undertaking (or a group of them) that holds a dominant position, which object is to impede, restrict or thwart competition, or tends to produce such effects". The abuse of dominance can be exclusionary or exploitative.

3.2 What specific types of conduct constitute an abuse of dominance in your jurisdiction?

Chilean competition law does not provide an exhaustive list of the types of conduct that may constitute an abuse of dominance. However, the Chilean competition authorities have prosecuted and sanctioned both exclusionary and exploitative abuses of dominance.

The FNE has identified the following as among the types of conduct it may prosecute (www.fne.gob.cl/en/antitrust/what-we-do/):

  • vertical restraints;
  • tied selling or product bundling;
  • abusive prices or commercial conditions;
  • predatory pricing;
  • refusal to supply; and
  • unfair competition.

For its part, the TDLC has condemned different types of conduct as constituting an abuse of dominant position, including the following:

  • tied selling (TDLC Ruling 97/2010);
  • predatory prices (TDLC Ruling 28/2005; TDLC Ruling 39/2006, reversed by Supreme Court Ruling 3449-06);
  • refusal to supply (TDLC Ruling 45/2006);
  • price discrimination (TDLC Ruling 88/2009);
  • fidelity rebates (TDLC Ruling 90/2009; TDLC Ruling 178/2021);
  • exclusivity clauses and refusal to supply (TDLC Ruling 26/2005); and
  • unfair competition (TDLC Ruling 130/2013; TDLC Ruling 178/2021).

3.3 On what grounds may the enforcement authorities commence an abuse of dominance investigation?

Abuse of dominance cases can be brought before the TDLC by either the FNE or private parties.

Investigations conducted by the FNE may be initiated by a complaint submitted by natural or legal persons (public or private entities) or ex officio. The results of these investigations are published on the FNE's website in the form of a resolution, which includes:

  • the facts described in the complaint;
  • a description of the market;
  • analysis of the conduct; and
  • the conclusions of the investigation.

Depending on its findings, the FNE may initiate proceedings before the TDLC.

3.4 What powers do the enforcement authorities have in conducting their investigation?

The FNE has wide-ranging powers to conduct its investigations. These powers are established in Article 39 of the Competition Act. Among other things, the FNE can:

  • request information and compel the production of documents and the cooperation of public agencies, state-owned companies, firms and individuals;
  • summon anyone with potential knowledge of an anti-competitive infringement to testify as a witness;
  • inspect the premises of entities under investigation on a voluntary basis;
  • conduct dawn raids; and
  • intercept communications.

Dawn raids and wiretapping can only be used in cartel investigation cases and require:

  • authorisation from the TDLC; and
  • an order from a judge of the Court of Appeals of Chile.

3.5 Is there an opportunity for third parties to participate in the investigation?

The FNE takes a flexible approach towards abuse of dominance investigations. This means that third parties can approach the FNE at any time during the investigation, as the FNE welcomes all information provided by third parties that may be useful to an investigation. To incorporate this information into the investigation file, the FNE is likely to request a written version of the information provided or to record any declarations.

3.6 What are the general rights and obligations of the enforcement authorities during the investigation?

The FNE has the discretion to initiate an investigation ex officio in response to a complaint. The complaint should provide sufficient information to understand the facts that allegedly constitute a competition infringement and the identity of the infringing party. In order to decide whether a complaint should be investigated or dismissed, the FNE may request additional information from private parties and summon anyone who may have knowledge of the facts of the complaint.

Once an investigation has been initiated, the FNE must communicate this fact to the affected party. The FNE may order that the investigation be kept confidential, provided that it has notified the president of the Competition Tribunal of this fact. The FNE may also request the TDLC to exercise any of its attributions and apply preventive measures in connection with the investigation.

In conducting its investigations, the FNE must observe all principles that apply to administrative agencies under the Organic Law of the General Basis for State Administration (Law 18.575). Therefore, among other things:

  • the FNE must observe the principles of legality, probity and transparency; and
  • its decisions must be properly reasoned.

Additionally, as investigations require the submission of sensitive information, the FNE must ensure the confidentiality of this information.

Among other things, the FNE can:

  • request information and compel the production of documents and the cooperation of public agencies, state-owned companies, firms and individuals;
  • summon anyone with potential knowledge of an anti-competitive infringement to testify as a witness; and
  • inspect the premises of entities under investigation on a voluntary basis.

3.7 What are the general rights and obligations of the target company during the investigation? What are the general rights and obligations of individuals targeted during the investigation?

During the investigation, firms have the right:

  • to access the FNE's file;
  • to be heard by the FNE; and
  • to provide documents and all information they consider adequate for their defence.

Moreover, the FNE – either ex officio or at the request of the interested party – may order that certain portions of the file be declared reserved or confidential if:

  • the objective of this confidential treatment is to protect the identity of those who have issued depositions;
  • such information contains commercial formulas, strategies or trade secrets or any other element that, if disclosed, could significantly affect the competitive performance of their holder; or
  • confidential treatment would safeguard the effectiveness of the FNE's investigation.

According to the Constitution and the Law on Transparency and Access to Public Information (20.285) all citizens have the right to request and receive information in possession of administrative bodies. However, the FNE can deny access to confidential information if this is necessary to ensure the accomplishment of its functions or to protect third parties.

3.8 What factors will the enforcement authorities consider in assessing whether an abuse of dominance has taken place?

In general, the competition authorities will assess the ability of an undertaking to carry out the alleged conduct. For this reason, dominance must first be found to exist. Additionally, the alleged conduct must produce an anti-competitive effect on the market or have the potential to do so. This means that an anti-competitive effect or the likelihood of an anti-competitive effect must also be demonstrated before the TDLC (TDLC Ruling 178/2020; TDLC Ruling 174/2020 c 88; TDLC Ruling 176/2021, c 74).

3.9 In case of a finding of abuse of dominance, can the company seek to negotiate a settlement or similar resolution? If so, what is the process for doing so?

Settlements can be negotiated either during the FNE's investigations or to end ongoing proceedings before the TDLC.

During an investigation, the FNE can consider extra-judicial settlements if the offence is not serious and the undertaking under investigation offers effective remedies. The settlement must be submitted to the TDLC for its approval. The TDLC will assess the settlement in a single hearing, without trial formalities, summoned especially for these purposes, within five business days of the date on which it receives the information. During the hearing, the TDLC may hear the arguments of the parties to the settlement, as well as the opinion of any parties with a legitimate interest. The TDLC must approve or reject the settlement within 15 business days of the date of the hearing. Once it has become final, the TDLC's resolution is binding on the parties to the settlement and can be challenged only through a reconsideration appeal before the same tribunal.

During ongoing contentious proceedings before the TDLC, once the term to answer the complaint has elapsed, the tribunal may call upon the parties to reach a settlement. In case of settlement, the TDLC must approve it, provided that it is not anti-competitive. Anyone with legal standing to sue that is not a party to the settlement can appeal the ruling approving the settlement (Article 22 of the Competition Act).

4 Defences

4.1 What defences are available to companies in response to enforcement?

Chilean law provides no specific defence for abuse of dominance. As market power is a condition for abuse of dominance to exist (Supreme Court Ruling 58.909-2016), most defendants assert their lack of market power. Commonly, they do so by contesting the market definition provided by the National Economic Prosecutor's Office (or defined by the Chilean Competition Tribunal (TDLC) in the case of an appeal before the Supreme Court) and the characteristics of the relevant market. Defendants can also:

  • refute the existence of the conduct;
  • assert the lack of anti-competitive effects and/or a causal link; and
  • provide economic justifications.

The TDLC has accepted different defences to absolve companies accused of abuse of dominance. Among other things, the TDLC has rejected the accusations where:

  • despite having market power, the defendant has not used it in an anti-competitive manner (TDLC Ruling 93/2010);
  • the defendant lacks a dominant position (TDLC Ruling 174/2020); or
  • the conduct does not produce anti-competitive effects in the market (TDLC Ruling 158/2017).

4.2 Can companies avail of leniency in abuse of dominance cases?

No, under Chilean competition law, leniency is limited to cartels.

5 Remedies and sanctions

5.1 What remedies and sanctions may be imposed for abuse of dominance? Can sanctions be imposed on individuals?

The Chilean Competition Tribunal (TDLC) can adopt a wide range of measures, including fines and/or behavioural or structural remedies. TDLC decisions can amend or eliminate acts (including contracts, agreements or schemes) that the TDLC has found to be anti-competitive. The TDLC can also order the amendment or dissolution of companies, corporations and other private legal entities that have intervened in such agreements, contracts, conventions, systems or arrangements.

The TDLC may impose administrative fines on companies and their directors, managers and persons that have participated in the infringement. The TDLC can fine undertakings:

  • up to double the economic benefit obtained as a result of the infringement; or
  • up to 30% of the company's sales within the product or service line associated with the infringement during the period in which the infringement was being perpetrated.

If neither of these amounts can be calculated, the TDLC can impose a fine of up to 60,000 tax units (about $52 million).

5.2 How are the remedies and sanctions in abuse of dominance cases determined?

In determining the fines, the TDLC can take the following elements into consideration:

  • the economic benefit obtained as a result of the infringement, if any;
  • the seriousness of the conduct;
  • the deterrent effect;
  • the recidivist character of a perpetrator which has been found guilty of anti-competitive infractions in the past 10 years;
  • the economic capacity of the offender; and
  • the collaboration that the latter has provided during the FNE's investigations.

5.3 Can the enforcement authorities impose remedies and sanctions directly or is court action required?

The TDLC is the only authority with the power to impose remedies and sanctions.

6 Appeal

6.1 Can the defendant company appeal the enforcement authorities' decision? If so, in what forum and what is the process for appeal?

Decisions of the Chilean Competition Tribunal (TDLC) imposing or dismissing remedies and sanctions can be appealed before the Chilean Supreme Court of Justice. This judicial remedy must be fully grounded and may be filed by the National Economic Prosecutor's Office (FNE) or any of the parties before the TDLC within 10 business days of the date of notification of the TDCL's decision. Filing the remedy does not suspend enforcement of the judgment, except for the payment of fines. However, at the request of any party, by means of a grounded ruling, the Supreme Court may fully or partially suspend the effects of the decision.

6.2 Can third parties appeal the enforcement authorities' decision, and if so, in what circumstances?

No. Only the FNE and/or the parties to the procedure can appeal decisions of the TDLC

7 Private enforcement

7.1 Are private enforcement actions against abuse of dominance available in your jurisdiction? If so, where can they be brought?

Yes. Claims against abuse of dominance can be filed before the Chilean Competition Tribunal (TDLC) by any affected private party. Once the TDLC has issued a final condemning decision, the affected party can claim damages before the same tribunal, according to Article 30 of the Competition Act.

7.2 Are class actions or other forms of collective action available in your jurisdiction?

According to Chilean law, consumers may be entitled to compensation through collective action. Article 30 of the Competition Act provides that, once the TDLC has issued a condemning decision, collective compensation actions may be presented before the TDLC. This provision was incorporated by Law 20,945 into the Competition Act in 2016. This reform also amended the Protection of Consumer Rights Act to allow compensation actions to be presented before the TDLC in representation of the collective or diffuse interests of consumers under the collective procedure established in the act.

7.3 What process do private enforcement actions follow?

Actions against abuse of dominance submitted by the National Economic Prosecutor's Office (public enforcement) or by an affected private party follow the same procedure before the TDLC. In both cases, a lawsuit is submitted to the TDLC.

Damages claims arising from a final condemnatory decision issued by the TDLC must be filed before the same tribunal. Any rulings issued in this procedure – except for the final judgment – may be subject to reconsideration appeals only. The TDLC's final decisions on damages can be appealed to the Supreme Court.

7.4 What types of relief may be sought and what types of relief are most commonly awarded? How is the relief awarded determined?

Since 2016, when the TDLC was granted jurisdiction to hear damages claims arising from anti-competitive conducts, there have been no rulings on such claims; of the seven procedures initiated, only one has terminated thus far and this was by way of settlement. Before 2016, these actions fell under the competence of the ordinary civil tribunals. Such actions were rare and involved compensation for damages (Aerovías DAP v LAN and Philip Morris v Chiletabacos).

7.5 Can the decision in a private enforcement action be appealed? If so, to which reviewing authority?

The TDLC's final decisions on damage claims can be appealed before the Supreme Court of Justice.

8 Trends and predictions

8.1 How would you describe the current dominance enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

In March 2020, the government presented a draft bill to the Chilean Congress to strengthen the Competition Act. Among other things, the bill would:

  • give greater investigative powers to the National Economic Prosecutor's Office (eg, the power to request that bank secrecy be lifted); and
  • create a whistleblower programme for anti-competitive conducts.

The bill is still under discussion in Congress.

When it comes to abuse of dominance, further case law and criteria are required for clarity. The FNE recently brought a few cases of abuse of dominance before the Chilean Competition Tribunal, but none of them are of major significance. This is especially critical in economies such as Chile's, where many markets are highly concentrated and there are plenty of dominant companies. It is expected that the FNE will focus its efforts on these markets and companies. The FNE is, to some extent, already doing so through its recently created Market Studies Division, which periodically issues comprehensive competition reports on specific industries.

9 Tips and traps

9.1 What would be your recommendations to companies to avoid an abuse of dominance charge and what potential pitfalls would you highlight?

Abuse of dominance cases in Chile do not receive the same public attention as other anti-competitive practices, such as cartels. This – in addition to a rather underdeveloped competition culture – means that middle management are often unaware of the types of conduct that may constitute an abuse of dominance. For this reason, consistent and robust compliance programmes may be a good way to prevent abuse of dominance investigations.

If an investigation has been initiated by the National Economic Prosecutor's Office (FNE), the recommendation is to approach the FNE proactively and cooperatively, and to negotiate a settlement if necessary. As the Chilean Competition Tribunal (TDLC) has rejected many abuses of dominance complaints, the FNE is aware that a settlement still serves as an effective means to stop anti-competitive practices and is easier to achieve than a condemnatory decision before the TDLC.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.