Latin American Competition Law
" . . . newcomers to traditionally monopolistic sectors should expect resistance . . . and take into account . . . long . . . anti-monopolistic battles."
When CLB Corporation moved into the Chilean air cargo transport business there was much publicity about the religious beliefs of its American investors. CLB is domiciled in Salt Lake City, Utah and its directors are members of the Church of Jesus Christ of Latter-day Saints, commonly known as the Mormons.
Alpine Air, the Chilean vehicle, is 85% owned by CLB and 15% by a Chilean businessman. The company started operations in mid December 2002 with a fleet of 3 Beechcraft 1900 aircraft. It aimed at the niche market of overnight parcel delivery where, Alpine claimed, there was no one willing or able to operate. Their success was believed to be guaranteed and Jorge Matthei, Alpine Air's vice-president, confidently stated that both his American business partners and he "had a lot of faith in Chile".
Faith or no faith on 2 January 2003, less than three weeks after starting up, Alpine Air announced that it would present a formal complaint to the Fiscalia Nacional Econmica, the local economic competition watchdog, against Lan Chile, the incumbent national carrier. Alpine Air is said also to be considering a civil claim for loss of profits in the Chilean commercial courts.
Alpine Air contends that immediately after it started operations its only competitor, Lan Chile, reduced its prices on transport of cargo to such levels that it completely distorted competition.
Alpine Air argues that the current price of US$ 22 cents per kilo is three to four times below any reasonable market price and therefore Lan Chile is in breach of the domestic Chilean competition and fair trade rules. Lan Chile meanwhile denies these charges and argues that its tariffs vary, as they always have, according to the origin, type of product and destination.
Perhaps the most interesting aspect of this story is the way in which it repeats similar events dating back to 1996. The Chilean market then saw fierce competition between Lan Chile, National, Ladeco and a smaller airline, Aerovias Dap, which operated certain minor routes to southern Chile.
Aerovias Dap resorted to the courts, along similar lines now raised by Alpine Air, and Lan Chile, Ladeco and National were eventually ordered to pay a fine of US$400,000 to the Chilean State. Aerovias Dap, in the meantime forced out of the market, is still waiting for the outcome of...
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