Comparative Guide Chile - U.S. FTA and DR - CAFTA- Chapter 16: Competition Policy, Designated Monopolies, and State Enterprises

A Comparative Guide to the Chile-United States Free Trade Agreement and the
Dominican Republic-Central America-United States Free Trade Agreement


Chapter Sixteen: Competition Policy, Designated Monopolies, and State Enterprises


Table of Contents

Due to the absence of this Chapter in DR-CAFTA, this part only describes the contents of the Competition Policy Chapter of the Chile-U.S. FTA (Chapter 16) that is divided into nine Articles (including definitions) in which the objectives, principles and scope of application of the competition policy commitments are established, as follows:

Anticompetitive Business Conduct: under the first Article of the Chapter (Art.16.1), each party must adopt or maintain competition laws to proscribe anticompetitive business conduct and also take appropriate action with respect to such conduct. The Parties must also maintain a national authority responsible for the enforcement of such measures in a way that guarantees the principles of transparency, non-discrimination, the right of the person to be heard and to present evidence on the proceeding and the existence of an independent authority to impose or to review the sanctions or remedies. Each Party’s autonomy in developing its competition policies or in deciding how to enforce its competition laws is also guaranteed.

Cooperation: recognizing the importance of cooperation and coordination (Art.16.2), the Parties agree to include dispositions on these issues to deepen the effective enforcement of competition laws. This cooperation includes notifications, consultations and the exchange of information.

Designated Monopolies: a Party may designate a monopoly or establish or maintain a government enterprise, but when this designation may affect the interests of persons of the other Party, the Article (Art.16.3) demands the designating Party to introduce conditions on the operation of the monopoly to minimize or eliminate any nullification or impairment of benefits, as well as provide written notification in advance of the designation. Additionally, the Article establishes that any privately-owned monopoly designated after the date of entry into force of the Agreement shall act in accordance with commercial considerations, provides non-discriminatory treatment to covered investments in the purchase or sale of goods and services and, does not use its monopoly position to engage in anticompetitive practices that affect these investments. The Article does not apply to procurement.

State enterprises: the Chile-U.S. FTA (Art.16.4) allows a Party to establish or to maintain state enterprises, as long as these enterprises act in a manner that is not inconsistent with the Party’s obligations and do not discriminate in the sale of their goods and services to covered investments.

Differences of Pricing: the discrimination of prices based on normal commercial considerations will not be inconsistent with the dispositions on designated monopolies and state enterprises (Art.16.5).

Transparency and Information Requests: recognizing the value of transparency the Chile-U.S. FTA (Art.16.6) established that, on request, each Party shall make available public information concerning its implementation of competition law, state enterprises and designated monopolies, as well as exemptions provided under its competition laws.

Consultations: any Party can request the establishment of consultations to foster understanding or to address specific matters; the other Party must accord full and sympathetic consideration to the concerns (Art.16.7).

Disputes: the Chapter (Art.16.8) establishes that no party can use the dispute settlement mechanism within the Agreement with respect to issues arising from anti-competitive business conduct, cooperation and consultations. The disputes concerning those obligations should access mechanisms under the WTO or perhaps an arbitration treaty.

Definitions: the Chapter (Art.16.9) concludes with descriptions for the following terms: delegation, designate, government monopoly, non-discriminatory treatment, market, monopoly, and in accordance with commercial considerations.