Regulatory Recommendation

The Tribunal de Defensa de la Libre Competencia’s faculty to issue a regulatory recommendation (recomendación normativa) is of a markedly administrative and receptive nature. Its objective is to promote free competition by proposing regulatory or legal changes to the official immediately responsible for formulating public policies in the field where those policies are implemented.

This is an administrative and not a jurisdictional attribution because the TDLC does not resolve a conflict of legal relevance, but rather participates in the creation of a public policy. In fact, the TDLC has ruled that it is not an objective of this power to establish a priori a specific category of anti-competitive acts (Regulatory Recommendation No. 14/2014, Section VI, p. 11).

The final task of policy-making corresponds directly to the Ministers of Government, in accordance with their organic-administrative regulations. Therefore, when the TDLC issues these recommendations, it acts as a intermediate promoter, suggesting the implementation of a certain public policy to the official directly in charge of carrying it out.

Furthermore, given its specialization, the TDLC becomes an original driver of public policy. The “original” character is due to the fact that if the public policy is already in effect or currently being formulated, it is not appropriate for the TDLC to exercise this power.

Finally, the TDLC’s regulatory recommendation is receptive, because the Minister of State must express an opinion regarding the proposal. This receptive duty is governed by the principle of publicity, as the Minister must publish the responses or opinions provided on their websites. This response is part of active transparency obligations (Articles 5 and 10 of Law 20,285).

In the case of the Fiscalía Nacional Económica (FNE), the regulatory recommendation serves the same purposes as a mediate and original driver of public policy. Decreto Ley 211 (DL 211, the Chilean antitrust law) also confers this attribution upon the FNE due to its level of specialization. In the Prosecutor’s case, the administrative nature of this power is evident, as all its investigative activity is framed within its status as a decentralized public administrative service (Article 33 of DL 211).

The particularity of the FNE’s regulatory recommendation is that it serves as a mechanism for concluding its investigations. In this sense, Article 39, second paragraph, letter q) of DL 211 expressly provides that a prior investigation or study is an indispensable prerequisite for making such a recommendation.

The regulatory recommendation is addressed in Article 18 No. 4 of DL 211 as a power of the TDLC, stating that the court has the duty:

“…4) To propose to the President of the Republic, through the corresponding Minister of State, the amendment or repeal of legal and regulatory precepts deemed contrary to free competition, as well as the issuance of legal or regulatory precepts when necessary to foster competition or regulate the exercise of specific economic activities carried out under non-competitive conditions. In any case, the minister receiving the proposal must express an opinion on it. The response shall be published on the institutional electronic site of the Court, the Prosecutor’s Office, and the Ministry in question.”

Additionally, the reform to DL 211 by Law 20,945 added letter q) to Article 39, granting the National Economic Prosecutor similar powers:

“The powers and duties of the National Economic Prosecutor shall be: (…) q) To provide a reasoned proposal to the President of the Republic… for the modification or repeal of legal or regulatory precepts… as well as the issuance of legal or regulatory precepts… These types of proposals shall always be based on an investigation or a study on the competitive evolution of markets.”

Thus, the regulatory recommendation is a function shared by the two bodies responsible for applying DL 211 to safeguard free competition. However, a key difference is that the FNE’s recommendation is not contemplative of a “receptive” character; that is, the Minister of State is not required to inform the FNE of the acceptance or rejection of the proposal, unlike the requirements for recommendations formulated by the TDLC.

In Regulatory Recommendation 17/2015, the TDLC stated that this power cannot be exercised without considering the costs and benefits of the new regulation on other legal interests. That is, the recommendation must account for its influence on other regulatory spaces it will affect. Therefore, this power must address other regulatory objectives sought in the specific sector where the recommendation is made.

In this regard, Regulatory Recommendation 18/2016 indicated that the recommendation will be adopted with the understanding that the benefits outweigh the costs of said regulation, which must be determined by the regulator.

According to the first paragraph of Article 31 of DL 211, the rules of the non-adversarial procedure fully apply to the TDLC’s exercise of the regulatory recommendation power.

A point of debate has been whether the final resolution (resolución de término) adopted by the TDLC regarding a regulatory recommendation is subject to a motion for review (recurso de reclamación). The TDLC has argued (e.g., Case Roll ERN 25-2018) that these recommendations are merely administrative activities that fall outside the jurisdictional oversight of the Supreme Court.

However, the Supreme Court holds a different opinion. It has granted “recursos de hecho” (a special kind of appeals that apply when the TDLC doesn’t allow a motion for review to get to the Supreme Court) filed by parties after their motions for review were declared inadmissible by the TDLC. This has allowed the Supreme Court to review the final resolutions that conclude these procedures (Supreme Court Judgment, October 25, 2019, Case Roll 25.013-2019).

It is important to mention that the explicit inclusion of the proposal power within the non-adversarial procedure was introduced by Law 20,945. Prior to this reform, there were cases where this power was exercised within the framework of an adversarial procedure, as occurred with Regulatory Recommendations No. 10/2009 and No. 11/2010.