Merger Control 2024 Comparisons

The Peruvian merger control regime is established in Law No 31112 (Merger Control Law) and its Regulations, approved by Supreme Decree No 039-2021-PCM. This regime, applicable to all sectors of the economy – unlike the previous one, which was applicable only to the electricity sector – entered into force in June 2021.

Specific threshold calculation rules are set in the Thresholds Calculation Guidelines. Likewise, the Guidelines for the Qualification and Analysis of Concentration Operations contain criteria and case examples of the type of transactions within the scope of the Law, and criteria for the substantive analysis of concentration operations.

There are also two notification forms: the Ordinary Notification Form and the Simplified Notification Form.

Although not a merger control procedure per se, in the telecommunications sector, transfers of concessions and radio spectrum require prior approval from the Ministry of Transport and Communications. By express indication of the Merger Control Law, competition concerns are excluded from the scope of analysis carried out by the Ministry.

The authority in charge of the procedure according to the Merger Control Law is the Peruvian Competition Agency (INDECOPI), an administrative entity independent from the executive branch. Its Competition Commission is the competent body to decide merger control cases in the first administrative instance. The National Directorate for the Surveillance and Promotion of Competition (previously known as the Competition Commission’s Technical Secretariat) (hereinafter, the “National Directorate”) is in charge of instructing the merger control procedure.

Appeals against the Commission’s decisions are known by the Competition Tribunal, whose final administrative decision ends the administrative proceeding. The Competition Tribunal’s decisions are subject to judicial review.

Other Authorities Involved in the Review Process

Under the Merger Control Law, if the economic concentration involves companies that operate in markets under specific regulation, the Competition Commission is authorised to request non-binding reports from the concerned Regulatory Agencies on the level of the market’s concentration, as well as their technical opinion on the possible effects of the transaction.

Concentrations Concerning the Financial Market and Agents Participating in the Stock Market

In the case of the financial market, the Superintendency of Banking, Insurance and Private Pension Funds Management Companies (SBS) has competence to carry out a prior control through a prudential and financial stability analysis, while INDECOPI conducts its analysis on competition issues. Authorisation by both entities, each within their areas of competence, is required. For these purposes, the SBS issued its Resolution No 00511-2023, which seeks to harmonise the analysis under its powers with INDECOPI’s analysis under the Merger Control Law.

If the transaction involves companies that receive deposits from the public or insurance companies that pose relevant and imminent risks, compromising the strength or stability of the companies or the systems they are part of, only the prior authorisation of the SBS in its field of competence is required.

When the transaction involves economic agents authorised by the Superintendency of the Securities Market (SMV) to act in the stock market, INDECOPI conducts the merger control procedure, while the SMV carries out its prudential evaluation on the matters under its competence. Authorisation by both entities, each within their areas of competence, is required.

Notification of a transaction is mandatory, provided that it qualifies as a concentration operation according to the Law, and that it meets the relevant thresholds.

Notwithstanding this, the Merger Control Law allows the parties to conduct voluntary notifications of concentrations falling below the jurisdictional thresholds. It also grants INDECOPI the power to investigate concluded concentrations on an ex-officio basis. See 2.11 Power of Authorities to Investigate a Transaction.

Under the Merger Control Law, executing a merger transaction before it has been submitted to the merger review procedure is considered a serious infringement subject to a fine of up to 1,000 tax units (UIT) (approximately USD1.4 million for 2024) provided that such fine does not exceed 10% of sales or gross income earned by the offender, or its economic group. See 2.13 Penalties for the Implementation of a Transaction Before Clearance.

To date, there are no records of any fines imposed under the Merger Control Law.

Types of Transactions

Concentration operations

The Merger Control Law and its complementary regulations state that concentrations within the scope of the law can arise as a result of:

• a merger;
• the formation of a joint venture, which is intended to be permanent and fully functional;
• the direct or indirect acquisition of control over other companies through different means, such as the acquisition of shares, participations, or through any other contract or legal figure that confers direct or indirect control of a company; and
• the acquisition of productive assets which have been operative in the past 12 months with the following characteristics:
1. to which a defined income volume is attributable;
2. that can reinforce or increase the market share of the acquirer; and
3. that have generated income during the year prior to notification.

Transfer or change of permanent control

The Merger Control Law defines concentration operations as any act or operation that involves a transfer or change in control of a company or part of it. According to the complementary regulations and guidelines, the change of control should be intended to be long-lasting or permanent for a transaction to qualify as a concentration.

Transactions that are not considered to be concentration operations

The Merger Control Law contains a list of the types of transactions that are not considered to be concentration operations subject to notification. These are the following:

• the corporate growth of an economic agent as a result of operations carried out exclusively within the same economic group;
• the internal corporate growth of an economic agent, regardless of whether it takes place through own investment or with resources of third parties that do not participate in the market;
• the corporate growth of an economic agent that does not produce effects in the markets within the domestic territory, either in whole or in part;
• control acquired over an economic agent as a result of a temporary mandate conferred by law relating to the forfeiture or denunciation of a concession, asset restructuring, insolvency, creditors’ agreement or other similar procedure; and
• the temporary holding by credit, financial, insurance or capital market institutions of stocks or shares acquired for the purpose of resale, provided that no voting rights are exercised to determine the competitive behaviour of that undertaking.

Internal Restructurings or Reorganisations

According to the Merger Control Law, restructurings or reorganisations do not fall within their scope of application given that they do not entail a transfer or change of control. 

Operations Not Involving the Transfer of Shares or Assets

According to the Merger Control Law, the transfer or change of permanent control in a company or part of it is considered as a decisive factor. Therefore, shareholders’ agreements or any other type of contract that involves a change of control will be caught by the law.

The Merger Control Law defines the term “control” as the possibility of exerting a decisive and continuous influence over an economic agent through rights of ownership or use of all or part of a company’s assets, or rights or contracts that allow a decisive and continuous influence on the structure, deliberations or decisions of a company’s bodies, determining, either directly or indirectly, the competitive strategy of a firm.

Acquisitions of Minority or Other Interests Less Than Control

Under the Merger Control Law, acquisitions of minority interests are subject to notification, provided they involve the transfer or change of control of a company.

The Merger Control Law provides two thresholds to be met concurrently for a transaction to be subject to mandatory notification:

• a total annual gross sales or revenue, or asset value in Peru of the companies involved in the concentration during the fiscal year prior to the notification of the concentration equal to, or greater than, 118,000 UIT (approximately USD156.6 million in 2024); and
• a total annual gross sales or revenue, or asset value in Peru of at least two of the companies involved in the concentration during the fiscal year prior to the notification of the concentration equal to or greater than 18,000 UIT (approximately USD23.8 million in 2024) each.

There are no special jurisdictional thresholds applicable to particular sectors.

The Regulations of the Merger Control Law state that the authority should consider the annual sales or gross income, or asset value, generated in Peru by the concentrating parties during the previous fiscal year. For these purposes, the authority must consider either the gross income or the asset value involved, and not both at the same time, as established by the Thresholds Calculation Guidelines.

Some of the main rules included in the Thresholds Calculation Guidelines for jurisdictional thresholds calculation by income or assets value are the following.

Income

The calculations shall include income coming from the operations carried out by the concentrating parties during their ordinary course of business. Only the sale of products to clients located in Peru and services provided to clients located in Peru are to be considered.

Threshold calculation excludes income from transactions outside the usual course of business, taxes and sales within the same economic group.

Assets

The calculations shall consider the book value of all assets (tangible and intangible) located in Peru, except for those that were not located in the country during the previous year.

Threshold calculation excludes assets located in Peru for which more than 50% of the income generated corresponds to sales to foreign customers.

It must be considered that, according to the Thresholds Calculation Guidelines, the relevant exchange rate to be used for threshold calculations is the average exchange rate of the last 12 months prior to the notification, as determined by the Central Bank.

According to the Merger Control Law, the jurisdictional thresholds consider the gross sales or revenue, or asset value in Peru of “the companies involved in the concentration operation”. The Regulations of the law establish which entities are relevant for the calculation of jurisdictional thresholds:

• merger and constitution of a joint venture – annual sales or gross income, or asset value of all the parties involved and their economic group;
• acquisition of an economic agent – annual sales or gross income, or asset value of the acquirer, its economic group; and the target (economic agent) and the agents it controls; and
• acquisition of operative assets – annual sales or gross income, or asset value of the acquirer, its economic group and the sales or income generated by the target (the productive asset).

Turnovers of Target and Its Economic Group

The Merger Control Law considers the annual sales or gross income, or asset value of the economic agents involved in the transaction. According to the type of transaction, the income or asset value considered should include those of the agent involved and its economic group. The Thresholds Calculation Guidelines state that to identify an economic group, the definitions of the law and previous case law should be considered. If an economic agent holds sole or joint control over another company, all the income or asset value of the controlled company should be counted, regardless of the number of shares such economic agent could have over the company. 

Group-Wide Calculations

In the Merger Control Law, an “economic group” is defined as the set of economic agents, local or foreign, comprised of at least two members, when any of them exerts control over the others, or when the control over economic agents belongs to one or more individuals that act as a decision unit.

Changes in the Business During the Reference Period

The regulations of the Merger Control Law establish that companies’ information must reflect their status at the time of notification. Companies guarantee, by means of affidavits, that the information they present is reliable and there are sanctions for submitting false information.

Foreign-to-foreign transactions qualifying as concentrations are subject to notification if they have any actual or potential effects in Peru. This can result, for instance, as a consequence of the companies’ having a direct participation in the Peruvian market through subsidiaries or assets located in Peru. See 2.6 Calculations of Jurisdictional Thresholds.

The Merger Control Law does not provide a market share jurisdictional threshold.

According to the Merger Control Law, joint ventures are subject to merger control if they result in the acquisition of joint control over one or more economic agents. Particularly, the law refers to the establishment by two or more independent economic agents of a joint undertaking, joint venture or any other similar contractual arrangement that entails the acquisition of joint control over one or more economic agents, which are to perform the functions of an autonomous economic entity permanently.

Considering this, a joint venture or similar contractual arrangement will be subject to mandatory notification only when it results in the creation of a new economic agent with functional and operational autonomy (a “fully functional joint venture”).

INDECOPI has the power to investigate and sanction non-notified concentrations that have met the jurisdictional thresholds within a limitation period of four years, starting from the last act of execution of the concentration. However, INDECOPI also has a period of one year to conduct ex officio investigations of operations that were not notified because they did not meet the notification thresholds.

Ex Officio Investigations Under the Merger Control Law

Under the Merger Control Law, INDECOPI has the power to investigate closed transactions that did not meet the jurisdictional thresholds within a year from their completion on an ex officio basis if the concentration is considered as one that can create a dominant position or that has the potential to restrict competition.

The regulations of the Merger Control Law refer to the following situations in which INDECOPI could investigate a closed transaction:

• transactions in concentrated markets;
• horizontal concentrations that involve the acquisition of an economic agent with a small market share and growth potential;
• horizontal concentrations that involve acquisitions of innovative economic agents that have recently entered the market;
• successive acquisition of competitors in the market; and
• other operations with similar effects.

INDECOPI can only investigate these concentrations when they have effects in the Peruvian market. This requirement is met if the agents involved, or their economic groups, have developed economic activities in Peru or have generated income in the country during the 12 months prior to the formal closing of the operation.

As of May 2024, there are no public records of ex officio investigations under the Merger Control Law.

Remedies and Exceptions

INDECOPI may force the sale of the acquired shares/assets, among other remedies, if it determines that the concentration might potentially restrict competition.

Concentrations within the financial sector that pose relevant and imminent risks, compromising the strength or stability of the companies or the systems they are part of, which have already been approved by the SBS, cannot be reviewed by INDECOPI through this process. For further information, see 1.3 Enforcement Authorities.

The Merger Control Law provides that the implementation or execution of the transaction must be suspended until there is clearance from the authorities. Such transactions will not have any legal effect if executed without authorisation.

It must be noted that, in order to register transactions in the public registry before a notary, the parties must present an affidavit declaring either that:

• the transaction is not subject to the merger control regime; or
• an express or tacit authorisation has been granted by the corresponding authorities within the merger control procedure.

Under the Merger Control Law, execution of a concentration before the authority’s decision qualifies as a serious infringement, punishable with up to 1,000 UIT (approximately USD1.4 million for 2024), provided such amount does not exceed 10% of sales or gross income earned by the offender, or its economic group. INDECOPI is also entitled to order the divestment or dissolution of the concentration operation until the conditions existing prior to the transaction are restored.

Relevant Case Law

In 1999, under the previous Merger Control Law, applicable only to the electricity sector, INDECOPI imposed a sanction for the implementation of a transaction before clearance. The penalty was imposed by the Commission on the subsidiaries of the companies Endesa Spain and Enersis, in the process of consecutive acquisition of shares of the first company in the second and the increase of the participation of the second company in its subsidiary, Endesa Chile, in decision 012-99-INDECOPI/CLC.

In that case, the Commission imposed a solidarity fine of 150 UIT (approximately USD203,289 for 2024) for failing to notify the transaction prior to the launch of the takeover bid of shares by Enersis subsidiaries up until the date of its general board agreement to increase the shareholding limit one month later, after which the operation occurred almost immediately without the compliance of the notification duty by the subsidiaries. The sanction was appealed before the Competition Tribunal, which rejected the appellant’s arguments and ratified the amount of the sanction imposed in the first instance.

Later on, in decision 0794-2011/SC1-INDECOPI, also regarding Endesa, the Competition Tribunal ruled that Enel violated the previous electricity merger control law by taking control over Endesa after the notification of the operation, but before the Commission issued a decision on the matter. Finally, the Competition Tribunal modified the amount and imposed a 100 UIT penalty (approximately USD 135,526 for 2024).

There is no case law referring to the implementation of a transaction before clearance under the current regime. Nonetheless, according to the Merger Control Law, a sanction for implementing a transaction before clearance would be made public since the decisions issued by the Commission are public and available on its web page. Penalties can be imposed for implementing a transaction involving two foreign economic agents prior to obtaining clearance, such as the cases presented above.

The Merger Control Law provides no exceptions for the suspension of the implementation of the transaction until clearance is obtained.

Under the Merger Control Law, there are no provisions that allow the implementation of the transaction before clearance.

However, it is worth mentioning a case analysed under the previous merger control regime, applicable only to the electricity sector. In 2017, ISQ Fund I and ISQ Fund II requested clearance for the acquisition of Inkia Americas Ltd, indirect owner of two electricity generation companies. The transaction had already been closed abroad, but the applicants specified that Inkia had handed over its political rights to a trust managed by an independent third party in an act prior to the closure. In this way, the transfer of the trust (under the control of Inkia and its subsidiaries) to ISQ would be effectively finalised once the authority granted clearance to the operation, which happened later through Resolution 027-2018/CLC.

Under the Merger Control Law, transactions falling within the scope of the law must be notified prior to their execution. There are no specific terms or deadlines for notification.

Regarding penalties for failing to notify the transaction before execution and penalties effectively applied for failing to notify the transaction before execution, see 2.2 Failure to Notify. Under the current regulations, a sanction imposed for failure to notify would be public since the decisions issued by the Competition Commission are public and available on its web page.

Under the Merger Control Law, a copy of the most recent agreement signed for the transaction must be submitted. If such agreement has not been signed, documents that reflect the real and serious intention of the parties to carry out the operation, such as Memorandums of Understanding or Letters of Intent, should be presented to the authority.

According to the Merger Control Law, a fee should be paid to submit the notice. This fee amounts to the sum of PEN91,629.40 (approximately USD24,764 for May 2024). The fee must be paid when the request for clearance is submitted, in order to start the procedure.

It should be noted that, according to the general rules applicable to administrative proceedings, administrative fees should only cover the costs or expenses related to the activities required to carry out the proceeding.

The Merger Control Law provides two scenarios:

• in the case of mergers or joint control acquisitions, all the economic agents involved must submit the notification jointly; and
• in other cases, the economic agent that will take control over another agent or asset is responsible for submitting the notification.

As mentioned above, there are two notification forms: the Ordinary Notification Form applicable to all transactions and the Simplified Notification Form applicable in two specific cases (conglomerate transactions without overlaps and operations that involve a change from joint to sole control). For further information, see 3.11 Accelerated Procedure.

The minimum information to be submitted according to the Ordinary Notification Form is the following.

• Description and purpose of the transaction – type of transaction and why it qualifies as a concentration; transaction value and type of financing mechanism; transaction schedule; minutes of corporate bodies regarding the transaction, etc. Internal or external reports, studies, presentations and/or reports on the transaction.
• Ownership and control structure of participants – control structure before and after the operation; kinship, management or ownership links with companies operating in the country.
• Market identification and description – description of relevant markets involved in the transaction. In addition, detailed market information (sales for the last three years, supply structure, demand structure, product differentiation, market entry and exit conditions, market revenues and exits in the last five years, total entry costs for a viable competitor, etc) is required for “identified involved markets”, defined as those in which:
1. there is horizontal overlap and a combined market share of at least 20% is identified;
2. there are vertical relations and the individual or combined market shares are at least 30%;       
3. any of the agents has a market share of more than 30% and the other party is a potential competitor; and
4. any of the agents has a share of more than 30% and another agent has significant intellectual or industrial property rights in the same market.
• Description of efficiencies – type of scope, reason why it cannot be achieved by means other than concentration, quantification and efficiency transfer mechanism.
• Identification of the countries in which the operation has been notified and resolutions, if available.

On the other hand, the most relevant information of the Simplified Notification Form includes the following.

• Description and purpose of the transaction – type of transaction and why it qualifies as a transaction; transaction value and type of financing; transaction schedule; minutes of corporate bodies regarding the transaction, etc.
• Ownership and control structure of participants – control structure before and after the concentration; kinship, management or ownership links with companies that carry out activities in the country.
• Economic activities carried out by the companies involved – list of economic activities developed by the involved economic agents, main characteristics of the supply and demand of such activities, supporting information that the operation qualifies as a simplified form assumption (operations without horizontal overlapping or operations that imply a change from joint control to exclusive control).
• Identification of the countries in which the operation has been notified and resolutions, if available.

The Authority has the power to request further information in case a Notification is presented with the Simplified Form.

The notification is deemed not to have been submitted if the documentation is incomplete. INDECOPI receives the notification and evaluates whether the necessary information has been provided. If this is not the case, the economic agents are requested to rectify the situation. 

According to the Merger Control Law, submitting incomplete, incorrect, false, fraudulent or misleading information at any stage of the procedure qualifies as a very serious infringement of the law punishable with a fine greater than 1,000 UIT (approximately USD1.4 million for 2024), provided that such fine does not exceed 12% of the turnover of the parties in the preceding fiscal year.

According to the Merger Control Law, the first stage is the notification phase: after the submission, the Competition Direction assesses the information filed by the parties to determine whether all the requirements have been met in a period of ten working days. If any of them is missing, a ten-working-day period is granted to the parties for rectification, after which the Competition Direction declares the application admissible or inadmissible within a period of five working days. 

Phase I

Once the notification is admitted, Phase I involves the Commission’s evaluation as to whether the concentration falls within the scope of the law, as well as whether it raises serious competition concerns. This stage lasts a maximum period of 30 working days. If the Commission does not find any serious competition concerns or finds that the transaction does not fall within the scope of the law, the transaction is approved. However, if there are serious competition concerns raised in the Commission’s evaluation, the assessment moves on to Phase II. Both decisions must be notified to the parties.

If the Commission does not issue a decision within the provided period, the concentration is automatically authorised in application of positive administrative silence.

Phase II

Phase II lasts a maximum of 90 working days, after notifying the parties that the transaction has moved on to the next stage of evaluation and publishing a brief summary of the concentration in order to allow third parties to present relevant information. This period may be extended for an additional period of 30 working days, with due justification by the authority for such extension.

Both in Phase I and Phase II, the Commission is allowed to suspend the course of the period if the parties have proposed commitments in order to analyse them.

After the issuance of the clearance decision, authorising with conditions or denying the request, only the party requesting the clearance may appeal such decision within 15 working days, after which the Competition Tribunal has a maximum of 90 working days to decide.

Timeline for Clearance

Under the Merger Control Law, the approximate term of the procedure considering Phase I and Phase II is 190 working days at first instance and 115 working days on appeal.

As of 15 May 2024, INDECOPI had received 54 merger filings. 41 of these concentrations were approved unconditionally in Phase I, two were approved with conditions in Phase II, and five were withdrawn by the parties. As of 15 May 2024, according to the authority, six transactions are still under review as per the public information available.

The concentrations approved in Phase I did not entail any significant negative effects on competition and were approved within less than 30 working days as from the date of admission of the filling. The two concentrations approved with conditions in Phase II were approved within less than 155 working days as from the admission of the filing.

For further information on the concentration that involves a more in-depth competitive analysis, see 5.2 Parties’ Ability to Negotiate Remedies, which includes a discussion of typical remedies.

According to the Merger Control Law, prior to the filing of the application, the economic agents involved in the transaction may contact the National Directorate, either jointly or separately, in order to consult whether their transaction falls within the scope of the law, which information must be submitted with their application and other related aspects. The National Directorate’s opinion is not binding for the Competition Commission.

Information provided by the parties, including prior consultation with the authority, is confidential.

Under the Merger Control Law, once a notification is presented, the National Directorate can provide a ten-working-day term to complete the notification form. Additional requests for information during the review process are not expressly considered in the law.

For further information, see 3.8 Review Process.

Under the Merger Control Law, there is a simplified notification form for concentrations deemed to be less likely to produce any significant restrictions to competition. It must be noted that this is not a fast-track procedure, as it only requires a less burdensome notification form with no changes in the terms for the review of the concentrations.

According to the Regulations of the law, an economic agent may submit a simplified notification in the following situations:

• non-overlap concentrations – when the economic agents involved in the transaction or their economic groups do not carry out economic activities in the same product market and in the same geographic market; or, they do not participate in the same production or value chain; or
• change from joint to sole control – when an economic agent acquires sole control over an economic agent on which it already exerted joint control.

In the Merger Control Law, the substantive evaluation made by the authority seeks to identify if the transaction creates a significant restriction to competition on the involved markets. In addition, the Guidelines for the Qualification and Analysis of Concentration Operations published by INDECOPI contain certain criteria for the substantive analysis of concentration operations.

According to the Merger Control Law, it is likely that INDECOPI will conduct its assessments of markets affected by the transaction considering the definition of relevant market, included in Legislative Decree 1034 (Competition Law). According to the Competition Law, the relevant market is composed of the product market, understood as the good or service subject of conduct and its substitutes, and the geographic market, understood as the set of geographical areas where the alternative sources of supply of the relevant product are located. There is no set de minimis level below which competitive concerns are deemed unlikely.

So far, in the decisions made public, INDECOPI has relied on international criteria. For instance, when analysing a transaction in the construction sector, INDECOPI took into consideration cases decided by the European Commission for the definition of the relevant markets involved. In this same case, to assess the possible competition effects of the transaction, INDECOPI used guidelines and case law from the European Commission, the Chilean Competition Authority and the US Department of Justice. Additionally, in cases involving vertical concentrations, the Commission expressly followed the methodology set out in the non-horizontal mergers guidelines of the European Commission.

According to the Merger Control Law, the procedure is intended to analyse whether or not the transaction causes a significant restriction to competition in the markets involved. In that regard, it expressly states that the mere creation or strengthening of a dominant position is not enough to prohibit the operation.

According to the Merger Control Law, the authority considers the creation of efficiencies when deciding whether or not to authorise a merger transaction. The burden of proving the positive and supplementary impact of the efficiencies falls on the economic agents that notify the transaction. The analysis considers productive, allocation or innovative efficiencies that meet the following requirements:

• they must be proven by the applicant economic operators;
• they must be inherent in the concentration;
• they must be aimed at outweighing identified restrictive effects on competition and improving consumer welfare;
• they must be transferable to the consumer; and
• they must be verifiable by the authority.

Under the Merger Control Law, the authority is forbidden from considering non-competition issues in the assessment of a concentration. In this sense, the law expressly states that, for the purposes of the merger control procedure, INDECOPI does not consider issues different to the set goal of the regime, which is related to economic efficiency and consumer welfare.

There are no special provisions for the evaluation of joint ventures, as they are governed by the general rules of the Merger Control Law.

Under the current regulations, INDECOPI is empowered to block a transaction or approve it subject to remedies to ensure the maintenance of competitive conditions in the market.

Furthermore, according to the Merger Control Law, the authority can declare null and without effects all acts and contracts entered into by parties executing a blocked transaction or without compliance with the conditions. Also, the law prohibits the registration of blocked transactions into the public registry.

The Merger Control Law establishes that economic agents may present a proposal of commitments aimed at mitigating or avoiding the possible negative effects derived from a transaction. The procedure is stayed until the authority has given its opinion on these commitments. Subsequently, INDECOPI may authorise the transaction under such conditions or under other types of conditions it deems appropriate.

Case Law

To date, two operations have been approved subject to conditions under the current Merger Control Law. Under the previous regime, applicable only to the electricity sector (which operated from 1997 up to 2021), three operations were approved subject to conditions. Further details on these cases are provided below.

Edelnor (1998)

In a case involving the distribution company Edelnor (now ENEL Distribution Peru) the conditions imposed were intended to balance the companies’ voting rights in the decision-making process of the Economic Operation Committee of the National Grid (COES) after the transaction, which is in charge of planning and managing the operation of the electric power generation and transmission system. COES’ highest governing body is the Assembly, which is made up of the National Grid (SEIN) agents, grouped into four subcommittees, including generators, distributors, transmitters and free users. The Commission considered that the new entity as a result of the transaction could gain decisive influence over its corresponding subcommittee.

In this case, the Commission also imposed on Edelnor (ENEL Distribution Peru) the obligation to bid for its energy acquisition among all the existing generators, in order to avoid any preference to its related generators (Edegel, Etevensa and Eepsa).

Consorcio Transmantaro (2006)

In another case, the Commission imposed a remedy by prohibiting the transmission companies controlled by Interconexión Eléctrica S.A. E.S.P. (ISA) to participate in the second call for bidding for BOOT Contracts for Guaranteed Transmission Network Systems, in order to ensure that they present their best offer in the first call for bidding. In addition, the Commission imposed some restrictions on ISA’s transmission companies’ voting rights in order to control their influence over the decision-making process of COES’s transmission companies’ subcommittee.

Luz del Sur (2020)

In a decision taken in April 2020, INDECOPI cleared a major transaction within the distribution and power generation segments (China Yangtze Power Co, a subsidiary of China Three Gorges Corporation acquired Luz del Sur). As part of its decision, INDECOPI imposed as a condition to clear the transaction that Luz del Sur should bid for its energy acquisition among all the existing generators in order to avoid any preference to its related generators. The bid shall be co-ordinated either by Osinergmin (electricity regulator) or through a competitive and transparent process that shall be informed to INDECOPI. This condition intends to assure competition among generation power companies for serving the regulated market.

Hersil (2022)

After the Commission identified the acquisition of the pharmaceutical company Hersil could imply restrictive effects on competition in various markets (such as antiseptics and disinfectants, aminoglycosides and systemic nasal preparations), Pharmaceutica Euroandina (Euroandina), the acquiring company, proposed two types of commitments:

• a main commitment to license to third parties those products sold by Hersil in markets where risks were identified, to ensure the existence of competitive conditions; and
• a transitory commitment, involving the establishment of a pricing policy, to prevent Euroandina from modifying the commercial conditions of the products until its licensing.

Both commitments were qualified as appropriate, necessary, and proportional to reduce the risks to competition identified by the Commission.

Enel Distribución (2024)

In a decision taken in January 2024, INDECOPI cleared a transaction through which China Southern Power Grid International acquired control over Enel Distribution Peru (electricity distribution company) and Enel X (sustainable energy projects). After detecting possible vertical risks, similar to those analysed in the Edelnor and Luz del Sur operations mentioned above, the Commission approved the following conditions to be fulfilled by the acquirer.

• Conduct bids for the purchase of electricity, where the winners will be the bidders offering the lowest prices.
• Not modify essential aspects regulated in the contracts for the acquisition of electric energy after their subscription.
• Keep INDECOPI and the market informed about the bids procedures and their results.

These commitments were qualified as appropriate, necessary, and proportional to reduce the risks to competition identified by the Commission.

Remedies Typically Used

As it can be seen from the case law, both under the previous and current merger control regimes, INDECOPI has preferred to opt for the use of behavioural remedies (bidding and product licensing), aimed at mitigating the identified risks to competition.

According to the Merger Control Law, the proposed commitments must be suitable for mitigating or avoiding the possible negative effects derived from the transaction.

As explained in 5.2 Parties’ Ability to Negotiate Remedies, the Merger Control Law allows the parties to propose remedies to the authority either in Phase I or Phase II of the procedure. In Phase I, the parties can submit their proposed remedies within 15 working days from the date of the notification. In Phase II, the parties have a term of 40 working days from the date of the notification of the resolution for the beginning of Phase II to present their proposed remedies.

The regulations of the Law establish that the National Directorate can guide applicants on the feasibility of proposed remedies throughout the procedure.

As indicated in 5.2 Parties’ Ability to Negotiate Remedies, under the current Merger Control regime there are two cases in which conditions were required by the Commission; however, these did not include structural remedies (meaning full divestitures), but behavioural (such as carrying out bids and trade mark licensing). Additionally, as explained, no structural remedies have been imposed under the previous regulation, applicable only to the electricity sector.

According to the Merger Control Law, if the decision is not issued within the prescribed term then the “positive administrative silence” operates, which means that the authorisation for the transaction is considered to be granted.

To date, under the Merger Control Law, there is no case law on prohibitions or remedies applied in foreign-to-foreign transactions.

Under the Merger Control Law and its regulations, no special provisions for related arrangements have been considered.

Nonetheless, both the Ordinary Notification Form and the Simplified Notification Form require the notifying agent to identify any clause or provision related to the transaction that may restrict competition, such as non-competition clauses or exclusivity agreements on the concentration’s relevant contracts. For instance, in the Hersil (2022) operation mentioned in 5.2 Parties’ Ability to Negotiate Remedies, the Commission analysed non-competition clauses as ancillary to the transaction.

Under the Merger Control Law, third parties with legitimate interest can participate in the procedure, have the right to access to the file of the case, and can obtain copies of information that is not classified as confidential by the Commission. Further, they can submit relevant information about the transaction without being considered parties to the procedure.

Third parties can ask for their intervention in the procedure only within a term of ten days after the Commission publishes a brief summary of the reasons justifying the transition to the second phase of the procedure. In the case of the ex officio review, the limit is ten days from the publication of the Admission Resolution.

The Merger Control Law establishes the duty of public entities to provide information to the Authority, at its request.

Also, according to the law, the Commission must publish a brief summary of the reasons justifying the transition at the beginning of Phase II of the procedure, so that third parties can contribute with relevant information to the analysis of the transaction. It also provides the possibility of the Authority to inform third parties of the commitments proposed by the notifying parties, as long as it is deemed necessary for their assessment.

The Merger Control Law states that a declaration of confidentiality of the information submitted in the procedure may be obtained subject to the filing of a special request, a procedure regulated in Legislative Decree 1034 (Competition Law). To this end, the Confidentiality Guidelines of the Competition Commission apply. These guidelines set forth the specific cases in which certain types of information call for confidential treatment, such as commercial secret.

According to the law, only the parties and third parties with legitimate interest incorporated in the procedure can access the file of the case. The Merger Control Law provides that the authority shall keep reserve of all the information received during the merger control review process, avoiding any risk that could affect the legitimate interest of the companies involved. The authority is forbidden to disclose any business secrets or to make undue use of the information.

Related to competition matters, the Third Final Complementary Provision of Legislative Decree 1034 (Competition Law) establishes that the National Directorate may exchange information, including information deemed confidential, with the competition agencies of the countries that are parties to an international co-operation agreement. For that purpose, INDECOPI has subscribed many co-operation agreements with competition agencies in various jurisdictions, such as Chile, Mexico, France and the USA.

The agreements that INDECOPI has signed refer to co-operation in matters of promotion of competition and other matters of its specialty.

The Merger Control Law establishes that INDECOPI may sign memorandums of understanding or other inter-institutional agreements with other national or foreign entities to seek inter-institutional co-operation.

Under the Merger Control Law and its regulations, the first administrative instance decision can be appealed to the Competition Tribunal within 15 working days, counted from the notification of such decision.

The merger approval procedure is administrative in nature. In this connection, all decisions by INDECOPI’s last administrative instance can be appealed by the parties to the judiciary through a contentious-administrative action, as established in the Contentious-Administrative Proceeding Act, approved by Supreme Decree No 011-2019-JUS. In this case, the decision issued by INDECOPI’s Tribunal ends the administrative instance.

See 8.1 Access to Appeal and Judicial Review.

Under the sole system of administrative acts appeals, the term to file an appeal before the judiciary is three months counted as from taking cognisance of, or being served with, the contested action.

Under the Merger Control Law, no decision has been known yet to be subject to judicial review. However, under the previous regulations applicable to the electricity sector, only one administrative appeal has been known to exist. This appeal was filed by Enel against the imposition of a fine of 1000 UIT (approximately USD1.4 million for 2024), for executing the transaction before clearance. In the second instance, the Competition Tribunal reduced the fine to 100 UIT (approximately USD135,526 for 2024).

Notwithstanding the foregoing, in 2013, the economic group formed by Interconexión Eléctrica S.A. E.S.P. (ISA) obtained the reversal of the conditions imposed by the Commission to mitigate the possible anti-competitive effects of the transactions entailed by the acquisition of Consorcio Transmantaro by said economic group. Even though this was not an appeal, it resulted in the review and lifting of the conditions imposed, given that the Competition Tribunal found that there had indeed been changes in circumstances that diluted the concern that had initially given rise to the conditions.

The Merger Control Law does not give legal standing for third parties to appeal any type of INDECOPI’s decisions within merger control procedures.

The Peruvian Legal Framework has no ex ante foreign investment control regime. The only requirement a foreign investor has to comply with is the registration of the investment in PROINVERSION’s registry (Private Investment Promotion Agency) in order to, among others, sign a Legal Stability Agreement (mainly to protect the investment from changes to the tax and labour regimes in existence at the time of agreement). These benefits are contained in Legislative Decree No 662.

In relation to foreign subsidies, Peru has no prior control regime in force. Nonetheless, Peru is a member of the World Trade Organization and has signed the Agreement on Subsidies and Countervailing Measures approved by this organisation. Accordingly, INDECOPI, the public entity of which the Peruvian Competition Agency is a part, also has a special division in charge of prosecuting dumping and subsidies practices (the Dumping, Subsidies and Elimination of Non-tariff Trade Barriers Commission (CDB)). This CDB has the power to impose countervailing measures when necessary. However, this is an ex-post review independent from the merger control procedure.

As indicated in 1.1 Merger Control Legislation, the Merger Control Law came into force on 14 June 2021. This law repealed Law No 26876 (Antitrust and Antioligopoly Act for the Electricity Sector), enacted on 19 November 1997, and it implemented a merger control regime of general scope applicable to all economic activities. Since its entry into force, no amendments have been made to the Merger Control Law.

As indicated in 3.8 Review Process, as of 15 May 2024, INDECOPI has received 54 merger filings. 41 of these concentrations were approved unconditionally in Phase I, two were approved with conditions in Phase II, and five were withdrawn by the parties. As of 15 May 2024, according to the authority and public records, six transactions are still under review, of which 3 are in Phase II (related to the sugar, construction materials and telecommunications sectors).

To date, the main concerns of the authority are focused on the implementation of the Merger Control Law regime. The possibility set out in the law to make consultations to INDECOPI particularly referred to the qualification of a notifiable transaction, the scope of application of the law or the information to be submitted, is proving to be a key tool in this stage of implementation of the law. Nevertheless, the analysis carried out by the authority under the Merger Control Law has been characterised by its technical nature and strict compliance with legal timeframes. This approach has been followed in the operations analysed by the authority related to various sectors such as electricity, hydrocarbons, mining, telecommunications, hotels, pharmaceuticals, food, finance, and automobiles, among others.