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The Chilean Anti-cartel Experience: Accomplishments and Challenges

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Abstract

We evaluate the Chilean law and enforcement record in the area of cartels. We identify the high probability of cartel detection, severe sanctions for detected cartels, and the predictability and consistency of enforcement practices as crucial factors that help enforcement agencies maximize the deterrent effect of anti-cartel law and policy. Reforms to the competition law in Chile in 2009 and 2016 have increased the probability of cartel detection by introducing more extensive investigative powers and a leniency program, have made sanctions more severe by increasing monetary fines and introducing prison sentences, and have improved the predictability of the leniency program.

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Notes

  1. See Bernedo (2013, pp. 53–58) for a history of the bank nationalization case. While the Commission started its investigation into the case in 1971, the final decision was not issued until 1975.

  2. The cap on fines is expressed in the law as 20,000 Annual Tax Units (Unidad Tributaria Anual), and is thereby automatically adjusted to inflation.

  3. In practice, leniency was already used in the pharmacies cartel case in 2009, as the FNE made an out-of-court settlement with the first company that came forward with information on collusion.

  4. The cap on fines is expressed as 30,000 Annual Tax Units in the law.

  5. The Law No. 20.945 also introduced a pre-merger notification requirement for the first time in Chile.

  6. Calculated on the basis of data collected by the authors from the annual reports of the Czech Office for the Protection of Competition (http://www.uohs.cz/en/information-centre/annual-reports.html), Israel Antitrust Authority (http://www.antitrust.gov.il/eng/subject/178.aspx), Competition Commission of Singapore (https://www.ccs.gov.sg/media-and-publications/publications/in-house-publications/annual-reports), their annual reports to the OECD (http://www.oecd.org/daf/competition/annualreportsbycompetitionagencies.htm) and personal communication with these agencies (Personal communication with the Czech Office for the Protection of Competition, December 18, 2017; Personal communication with the Competition Commission of Singapore, December 13, 2017). The Czech Republic, Israel, and Singapore were selected for comparison because their GDPs—at US$183.6 billion, US$189 billion, and US$170.7 billion respectively in 2016—are comparable to that of Chile at US$181.7 billion (World Bank 2017).

  7. See also the discussion in Lianos et al. (2014, pp. 82–84, 86–87) for a discussion of illicit gains versus the fines imposed in the pharmacies and poultry producers cases.

  8. Conversion done according to the 2016 exchange rate.

  9. Stephan and Nikpay (2015) report that, in the EU, cases that rely on leniency programs have increased to 75% of all cases.

  10. At the federal level, indirect consumers are excluded a priori, since Illinois Brick (Illinois Brick v. Illinois1977); but the possibility of compensating them in state courts has led to multiple litigations for the same cartel.

  11. It is interesting to note that in a recent bid rigging case that was brought by the FNE to the TDLC (FNE 2017) in which two pharmaceutical laboratories are accused of colluding to raise prices of sodium chloride saline solution in public tenders, the FNE started its investigation after it received complaints from two public entities: the Public Comptroller, and the Ministry of Health.

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Acknowledgements

The authors would like to thank Javiera García for excellent research assistance, and Tom Ross and Yannis Katsoulacos and two anonymous referees for their helpful comments and suggestions. This article is the product of research that was originally conducted in the context of Concurso de Políticas Públicas 2016, organized by Centro de Políticas Públicas of Pontifica Universidad Católica de Chile, which is supported by the Senate, the Chamber of Deputies, the Ministry of Social Development, the Ministry of Housing and Urban Planning, the Ministry of Environment, and the Undersecretary of Regional and Administrative Development of Chile. Umut Aydin acknowledges the financial support of FONDECYT Regular No. 1171517. Nicolás Figueroa acknowledges the financial support of Millennium Nucleus Information and Coordination in Networks ICM/FIC RC13000 and the Complex Engineering Systems Institute, ISCI (ICM-FIC: P05-004-F, CONICYT: FB0816).

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  1. Instituto de Ciencia Política, Pontificia Universidad Católica de Chile, Avenida Vicuña Mackenna 4860, Macul, Santiago, Chile

    Umut Aydin

  2. Instituto de Economía, Pontificia Universidad Católica de Chile, Avenida Vicuña Mackenna 4860, Macul, Santiago, Chile

    Nicolás Figueroa

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  1. Umut Aydin
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Correspondence to Nicolás Figueroa.

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Aydin, U., Figueroa, N. The Chilean Anti-cartel Experience: Accomplishments and Challenges. Rev Ind Organ 54, 327–352 (2019). https://doi.org/10.1007/s11151-018-9633-0

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