According to media reports, however, the transaction did not require the prior approval of the National Economic Prosecutor’s Office (FNE). This is noteworthy, since originally the parties involved had publicly stated that such approval was necessary (see press release of Diario Financiero of August 28, 2024).
In this context, the case offers an opportunity to review the criteria that determine whether an asset acquisition must be mandatorily notified to the FNE under the merger control regime.
In Chile, pursuant to Article 47 letter d) of Decree Law 211, an acquisition of assets constitutes a concentration transaction when, through it, an economic agent acquires, in any way, control (decisive influence) over assets of another previously independent agent, which is not part of the same business group.
According to the FNE’s Competition Guide, only assets that have the ability to change the structure or competitive dynamics of markets are relevant for these purposes, which implies that the assets must have the capacity to develop a durable economic activity and generate an impact on competition.
According to these criteria, for example, the purchase and sale of assets between entities belonging to the same corporate group does not constitute a concentration. Neither will the acquisition of assets that play a merely secondary or circumstantial role in the economic activity carried out by the acquirer, being incapable of impacting in any way the competition in the relevant market in which it operates, be a concentration.
However, in order for an asset acquisition to require prior approval from the FNE, it must not only qualify as a concentration transaction, but it is also necessary that certain sales thresholds are exceeded, namely:
- The purchaser and its corporate group, on the one hand, and the assets acquired, on the other hand, must have generated, separately, sales in Chile equal to or greater than 450,000 UF, during the fiscal year prior to the notification; and
- The sum of the sales of both parties in Chile (i.e., of the buyer, its corporate group and the assets acquired, jointly) must have reached UF 2,500,000, also during the fiscal year prior to the notification.
Thus, if these sales thresholds are not exceeded, notification to the FNE is not mandatory.
Therefore, not all asset acquisitions require prior notification to the FNE. In the case of the acquisition of Open Kennedy, the reasons why mandatory control was ruled out have not been made public, but they must meet one of the criteria set forth herein (i.e., it does not qualify as a concentration or the sales thresholds are not exceeded).
In short, the system of preventive control of concentration operations in Chile is based on objective criteria defined by law and the guidelines prepared by the FNE, and not on the media visibility of the operation.
