The Court’s defense of the free competition Chilean decided to temporarily suspend the merger process between airlines LAN and TAM, after hosting a petition by the National Corporation of consumers and users (Conadecus), in which is requested to analyse in depth the effects of such an operation. This type of research can last on average about 8 months and it would delay all plans of creation of LATAM Airlines Group S.A., known to be one of the biggest airlines in the world. According to a note from the newspaper La Tercera, Conadecus asked the Court that determines whether the business, announced in August of 2010, conforms or not to the rules of free competition. The TDLC, after request is to suspend the steps that followed in the melting operation, already requested authorities, competitors and regulators that provide background. Partners LAN Chile and TAM linhas aeras of Brazilian flag, also dealt with permissions in Brazil, the Administrative Council of economic Defense (the Chilean TDLC counterpart) and the national agency Civil Aviation (Anac).
The first is in charge of safeguarding free competition and the second preserves that I will not infringe the limit of 20% set for foreign investors in Brazilian Airlines. As everything seemed to go smoothly, the two companies announced last week, after signing a binding agreement, the deadline to seal the operation would be between 6 and 9 months. However, this order of the Chilean TDLC completely stops the process. The writing of Conadecus joined the TDLC on Thursday at noon, according to La Tercera, and eleven hours later, the Court received another document, signed by the FNE (national economic Prosecutor) and Lan. The firm had managed an out-of-court agreement with the entity that directs the Prosecutor Felipe Irarrazabal and they proposed mitigation measures for the routes where they have concentrations above 90%: Sao Paulo, Rio de Janeiro and Asuncion. However, the submission was rejected by the TDLC, since before he had welcomed the request of Conadecus. According to LAN managers, consumer action was greeted with surprise, because they hoped that the out-of-court settlement signed with the FNE blindara operation at short notice.
Lawyers for the company said that the decision of the TDLC is unpublished and active for the first time a query of this type by the action of third parties that are not the firms involved, or the economic national prosecutor’s Office. This will be a brake on the system. It allows any now try to paralyze a merger, although it has no direct interference in the case, said a lawyer. Among the options that have LAN is exposing its arguments in the query or submit an appeal for reconsideration to the TDLC, asking for reconsideration of the decision. If the Court rejects the appeal, it could challenge the decision in the Supreme Court.