A new law regulating the general scope of merger control, applicable across all sectors, was approved in January 2021 through Law No 31112, the Merger Control Law. After some delay, these regulations were published on May 30th and, 15 calendar days after the competition agency (INDECOPI) completed is adequacy analysis, the new Merger Control Law became effective as of 14 June 2021.
In March 2021, the Regulations of Law 31112 were approved through Supreme Decree No 039-2021-PCM. Likewise, in June 2021, INDECOPI published the Thresholds Calculation Guidelines Document and the ordinary and simplified notification form.
The Electricity Sector
Merger control legislation in Peru currently only applies to the electricity sector. The relevant regulations are Law 26876 (Antitrust and Antioligopoly Act for the Electricity Sector), enacted on 19 November 1997, and Supreme Decree No 017-98-ITINCI, enacted on 16 October 1998. Moreover, Supreme Decree No 087-2002-EF contains supplementary provisions to Law No 26876 that establish a special procedure for the evaluation of merger transactions resulting from public bidding within the framework of private investment promotion over assets of prior state-owned enterprises.
The entry into force of Law 31112 will repeal the special provisions that apply to the electricity sector, although the procedures pending as of that date must continue to be analysed under those special provisions.
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. Among the aspects that are evaluated to approve these transfers is the possible impact on competition, for which an opinion is requested from the telecommunications sector regulatory agency, OSIPTEL, which also acts as a competition agency exclusively for this sector. Once Law 31112 comes into force, competition concerns will be excluded from the scope of analysis carried out by the Ministry in its evaluation of the effects of these transfers.
The authority in charge of the procedure in the new merger control law is INDECOPI, an administrative entity independent from the executive branch. Its Competition Commission is also the competent body to issue the first instance decision (and it will issue guidelines to inform economic agents about the correct interpretation of the upcoming law). The Technical Secretariat of the Commission is in charge of co-ordinating and instructing the merger control procedure.
Appeals against the Commission’s decision are decided by the Competition Tribunal, putting an end of the administrative proceeding. Furthermore, the Competition Tribunal’s decision is subject to review by a court of law.
Other Authorities Involved in the Review Process
Under the new 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 appropriate Public Services Regulatory Agencies (in charge of issuing the regulations relating to the telecommunication, energy, sanitation and public infrastructure sectors) about the degree of concentration in the specific market and their technical opinion on the possible effects on the market resulting from the transaction under evaluation.
Particularly, in the case of the financial market, the Superintendency of Banks, Insurance and Private Pension Funds Management Companies (SBS), sectoral regulatory authority, maintains its competence to carry out a prior control through a prudential evaluation and a financial stability analysis, while INDECOPI conducts its analysis on competition issues. As a general rule, authorisation by both entities within their areas of competence is necessary for obtaining full clearance.
Involvement of Deposits or Economic Agents from the Stock Market
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 prior control procedure through its analysis on competition issues, while the SMV carries out its prudential evaluation on the matters under its competence. Authorisation of both entities is required.
The notification of the merger transaction is compulsory, providing that the transaction meets the relevant thresholds. There is no exception to compulsory notification if the requirements are met.
Notwithstanding this, Law 31112 allows the parties to conduct voluntary notifications of concentrations falling below the jurisdictional thresholds. It also grants INDECOPI the power to investigate concluded operations on an ex-officio basis. See 2.11 Power of Authorities to Investigate a Transaction.
Under the new merger control law, if a transaction meets the notification thresholds and falls within the scope of the law, but the economic agents involved fail to notify the transaction, they are subject to a fine of up to 500 UIT (Unidad Impositiva Tributaria or UIT) (approximately USD586,600 for 2021), provided such amount does not exceed 8% of the company’s income. See 2.13 Penalties for the Implementation of a Transaction before Clearance.
Given that the new merger control law has just entered into force, there are no records of any fines imposed.
Types of Transactions
Law 31112 and its complementary regulations state that concentrations within the scope of the law can arise as a result of:
Transfer or change of permanent control
The new 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. The term “permanent” has been removed from the definition of a concentration act in the new law. Nonetheless, considering the regulations, the change of control should be intended to be permanent for an operation to qualify as a concentration.
Transactions not considered concentration operations
The new merger control law contains a list of the types of transactions that will not be considered concentration operations subject to notification, which comprise the following situations:
Internal Restructurings or Reorganisations
According to the new 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. See 2.3 Types of Transactions.
Operations Not Involving the Transfer of Shares or Assets
According to the new 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.
According to the new merger control law, the term "control" is defined 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
In the new merger control law, acquisitions of minority interests are not subject to notification, unless they involve the transfer or change of control of a company.
In the new merger control law, there are two thresholds to be met concurrently for a transaction to be mandatorily notified to the Authority:
There are no special jurisdictional thresholds applicable to particular sectors.
The Regulations of Law 31112 state that the authority may 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.
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.
The calculations shall consider the book value of all assets (tangible and intangible) located in Peru, except 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 must be the average exchange rate of the last 12 months prior to the notification, as determined by the Central Bank.
According to the new merger control law, the jurisdictional thresholds shall be calculated considering “the companies involved in the concentration operation”, in the local market. The Regulations of the law establish which entities are relevant for the calculation of jurisdictional thresholds:
Turnovers of Target and Its Economic Group
The new merger control law considers the sales volume or asset value of the economic agents involved in the merger transaction. According to the type of transaction, the income or asset values 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. Therefore, if an economic agent holds sole or joint control of 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.
In the new 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 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 new law establish that companies’ information must reflect their status at the time of notification. No particular mechanism has been pointed out to report changes that may occur during the analysis period, but if these were relevant, they are likely to form part of the additional information that INDECOPI will require at different stages. 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 as a consequence of the companies’ having a direct participation in the Peruvian market through subsidiaries or assets located in Peru; or as a result of the parties having commercial activities and generating income from the country through independent distributors. See 2.6 Calculations of Jurisdictional Thresholds.
The new law does not provide a market share jurisdictional threshold. For reference sake, under the previous merger control law, applicable only to the electricity sector, horizontal concentrations required to be notified when companies that generated, transmitted and/or distributed electric power held a market share equal or greater than 15% directly or indirectly, jointly or separately.
Vertical concentration authorisation was requested if the case involved, directly or indirectly, companies engaging in electric power generation, transmission and/or distribution activities that held, before or after the act that originated the authorisation request, a share equal to or greater than 5% of any of the markets involved.
According to the new 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, in such a way to permanently perform the functions of an autonomous economic entity.
The regulations’ Statement of Reasons further established that transactions as joint ventures and alike must be notified only when they are intended to be permanent and fully functional as an independent economic agent.
INDECOPI has the power to investigate non-notified concentrations that met the jurisdictional thresholds within a limitation period of four years starting from the last act of execution of the concentration.
Investigations under the New Law
Under the new merger control law, INDECOPI has the power to investigate transactions that did not meet the jurisdictional thresholds within a year from their completion on an ex officio basis; when it determines that the concentrations can create a dominant position or that it has the potential to restrict competition.
The regulations of the new law refer to the following examples situations in which INDECOPI could investigate a closed transaction:
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.
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 that have already been approved by the SBS cannot be reviewed by INDECOPI through this process. See 1.3 Enforcement Authorities.
The new 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:
Under the new merger control law, execution of a concentration before the authority’s decision qualifies as a serious infringement to the Law, punishable with up to 1,000 UIT (approximately USD1,173,300 for 2021), provided such amount does not exceed 10% of the company’s income. INDECOPI is also entitled to order the divestment or dissolution of the concentration operation until the conditions existing prior to the transaction are restored.
Under the previous regulation applicable only to the electricity sector, in 1999 INDECOPI imposed a sanction for the implementation of a transaction before clearance. The penalty was imposed by the Commission in 1999 to 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.
On that occasion, the Commission imposed a solidarity fine of 150 UIT (approximately USD189,483) 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 said 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. Also, in the decision 0794-2011/SC1-INDECOPI, the Competition Tribunal ruled that Enel violated the provisions of the law, upon having executed the transaction after notification of the operation, but before the Commission issues a decision on the matter, and imposed a 100 UIT penalty (approximately USD126,322).
As the new regulations have not entered into force yet, there is no relevant case law referring to the implementation of a transaction before clearance. Nonetheless, according to the new regulations, a sanction for implementing a transaction before clearance would be made public since the decisions issued by the Commission for the Competition 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 new merger control law provides no exceptions for the suspension of the implementation of the transaction until clearance is obtained.
The previous merger control regime applicable to the electricity sector had special provisions for transactions derived from private participation in state-owned enterprises. According to this regulation, the selection committee in charge of carrying out the bidding will define the moment, within this process, in which the prior authorisation must be requested by the companies before INDECOPI. The regulation provides that this moment must be “preferably” prior to the awarding the concession, as long as it does not affect the competition in the bidding.
The regulations of the new merger control law establish that INDECOPI shall issue an opinion within the procedures for the constitution of public private partnerships if the entity in charge of such procedure determines that competition plays a role in the design of the project, and that potential competition risks may arise from it. For the purposes of this procedure, INDECOPI has the power to require the parties provide all the relevant information necessary for the analysis.
Under the new merger control law, there are no provisions that allow the implementation of the transaction before clearance.
However, under the previous regulations 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. This way, the transfer of the said 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 new regulations, the transactions that fall 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 new 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 new 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 new merger control law, a fee should be paid to submit the notice. The amount has not yet been established but it will be determined by applying the methodology in force as provided for by the government through a Supreme Decree issued by the Presidency of the Council of Ministers. 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 new merger control law provides two scenarios:
Under the new law and is regulations, the minimum information to be submitted with the notification is the following:
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 new merger control law, submitting incomplete, incorrect, false, fraudulent or misleading information at any stage of the procedure qualifies as a very serious infringement to the law punishable with a fine of up to 12% of the turnover of the parties in the preceding fiscal year.
According to the new merger control law, the first stage is the notification phase: after the submission, the Commission’s Technical Secretariat 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 Commission’s Technical Secretariat declares the application admissible or inadmissible within a period of five working days.
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 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. This period could also be extended for 15 additional working days, if the parties involved require hearings.
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 maximum 90 working days to make a decision.
Timeline for Clearance
Under the new merger control law, the approximate term of the procedure is 190 working days at first instance, and 115 working days on appeal.
According to the new merger control law, prior to the filing of the application, the economic agents involved in the transaction may contact the Commission’s Technical Secretariat, either jointly or separately, in order to consult whether their merger transaction falls within the scope of the law, which information must be submitted with their application, and other related aspects. The Technical Secretariat's opinion is not binding on the Commission.
Information provided by the parties, including prior consultation with the authority, are confidential.
Under the new merger control law, once a notification is presented, the Technical Secretariat 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 new law.
See 3.8 Review Process.
Under the new 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 Regulation of Law 31112, an economic agent may submit a simplified notification in the following situations:
In the new 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.
According to the new 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). This regulation indicates that the relevant market is composed of the product market, the good or service subject of conduct and its substitutes, and the geographic market, 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.
INDECOPI is expected to take into consideration relevant case law from other jurisdictions with the implementation of the new law.
According to the new merger control law, the procedure is intended to analyse whether or not the transaction causes a significant restriction to competition in the markets involved. The law does not set out specific competition concerns that will be assessed. However, it expressly states that the mere creation or strengthening of a dominant position is not enough to prohibit the operation.
According to the new 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:
Under the new merger control law, the authority is forbidden from considering non-competition issues in the assessment of a concentration. In this sense, Law 31112 states that INDECOPI does not consider in its evaluation 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.
Under the new regulations, INDECOPI is empowered to block the transaction. INDECOPI can also approve the transaction with conditions to prevent damages to competition.
Furthermore, according to the new 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 of the conditions. Also, the law prohibits the registration of blocked transactions into the public registry.
The new merger control law establishes that economic agents may at any time present a proposal of commitments aimed at mitigating or avoiding the possible negative effects derived from a merger 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. The type of commitments that can be submitted or the conditions that can be imposed has not been limited.
According to the new merger control law, the proposed commitments must be suitable for mitigating or avoiding the possible negative effects derived from the merger transaction.
The new merger control law recently entered into force. Therefore, there is no case law on typical remedies imposed by the Commission. Under the previous regulation applicable only to the electricity sector, there have only been three cases in which the Commission has imposed conditions on the approval of a transaction.
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 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 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.
Luz del Sur (2020)
In a recent decision, dated 10 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 or through a competitive and transparent process that shall be informed to INDECOPI. This condition intents to assure competition among generation power companies for serving the regulated market.
According to the new merger control law, the parties may propose conditions to the authority at any time during the procedure before the final decision is issued. In that sense, the parties can propose commitments to mitigate or reduce potential negative impacts on competition, and the authority can accept them and authorise the transaction under that conditions.
The new merger control law recently entered into force, therefore, there is no case law on conditions and timing for divestitures imposed by the Commission. No structural conditions have been imposed under the previous regulation applicable only to the electricity sector.
According to the new 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.
The new merger control law recently entered into force, therefore, there is no case law on prohibitions or remedies applied in foreign-to-foreign transactions.
Under new regulations, no special provisions for related arrangements have been considered.
Under the new merger control law, third parties with legitimate interest can participate in a 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 new merger control law establishes the duty of public entities to provide information to the Authority, at its request.
Also, according to the new 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 merger 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. However, the new law makes no further reference to the Authority’s power to contact private third parties for other purposes within the framework of the procedure.
The new merger control law states that the confidentiality of information 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.
According to the new law, only the parties and third parties with legitimate interest incorporated in the procedure can access the file of the case. The new merger control law provides that the authority shall keep reserve of all the information received during the merger control review process, avoiding any risk against that could affect the legitimate interest of the companies involved. They are forbidden to disclose any business secrets or to make an undue use of the information.
Related to competition matters, the Third Final Complementary Provision of Legislative Decree 1034 (Competition Law) establishes that the Technical Secretariat 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, such as Chile, Mexico, France and USA.
The agreements that INDECOPI has signed refer to co-operation in matters of promotion of competition and other matters of its specialty.
The new merger control law establishes that INDECOPI may sign memoranda of understanding or other inter-institutional agreements with other national or foreign entities in order to seek for inter-institutional co-operation.
Under the new 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 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, for executing the transaction before clearance. In the second instance, the Competition Tribunal reduced the fine to 100 UIT.
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 anticompetitive effects of the merger 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 new merger control law does not give legal standing for third parties to appeal any type of INDECOPI's decisions within merger control procedures.
Law 31112 was published in January 2021, and it came into force on 14 June 2021. This law overturned Law No 26876 (Antitrust and Antioligopoly Act for the Electricity Sector), enacted on 19 November 1997. This new law entails a major change to the Peruvian competition policy, since it will implement a merger control regimen of general scope applicable to all economic activities.
As the new merger control recently entered into force, there are no relevant recent enforcement records.
Given the caselaw in the electricity sector under current regulations, INDECOPI's main concerns have been related to possible vertical effects of mergers. In that sense, as mentioned, in a recent decision, INDECOPI imposed a condition in a major transaction involving the distribution and power generation segments. This decision shows that the concern of the authority was to protect competition among power generation undertakings in the context of a vertical merger.
The main concerns of the authority will be focused on the implementation of the new merger control regime. Pre-notifications will be a key tool to clarify several aspects of the new law particularly referred to the qualification of a notifiable transaction.