Friday, 28th October 2011 by Gareth CorfieldChilean domestic airline PAL has withdrawn its appeal before the country′s Supreme Court against the merger of rival Latin American carriers LAN and TAM.

If antitrust issues are solved, a LATAM plane could be departing from airports soon (Credit: Nina Chantrasmi)

PAL, formerly known as Principal Airlines, dropped the suit without a formal explanation.

In a press release issued on Tuesday, LAN said it had agreed to pay PAL the equivalent of 3.6 million euros in costs and expenses, and that PAL had agreed to desist from future actions against the merger.

LAN and TAM′s US$3.7 billion merger, which will form the LATAM group, was announced in August 2010. Since the announcement, a handful of antitrust issues have emerged with the deal. In January 2011 the Chilean consumer rights organisation Conadecus filed a complaint about it, claiming it would have a negative impact on routes across Latin America.

In September the TDLC imposed 11 conditions on the merger. At the beginning of October LAN and TAM announced they would challenge three of the conditions, at which point PAL filed its own complaint.

PAL disagreed with TDLC′s allocation of flight slots to LATAM at Brazilian airports, claiming it would block new entrants into the Latin American airline market. The airline also questioned the independence of the compliance oversight, as the National Economic Prosecutor′s office (FNE) is outsourcing the work to an external consultant, with LAN paying for the process.

After suspending the deal to investigate Conadecus′ complaint, the TDLC prohibited LATAM from being a member of the same airline alliance as its regional rival AviancaTaca, which is a member of Star. TAM and LAN are members of the Star and Oneworld alliances respectively.

The deal awaits the approval of Brazil′s Council for Economic Defence.

Counsel to TAM

General counsel - Luiz Claudio Aguiar

US

Clifford Chance LLP

Partners Anthony Oldfield and Sarah Jones and associates Anand Saha and Kristyn Walker

Brazil

Machado, Meyer, Sendacz e Opice Advogados

Partners Antonio Corrêa Meyer, Carlos José Rolim de Mello, Raquel Novais and Fernando Tonnani and associates Fabio Falkenburger and Paula Magalhães

Barbosa Müssnich & Aragão

Partner Barbara Rosenberg and associates José Inácio de Almeida Prado Filho and Rafael Smizd

Chile

Cariola, Diez, Pérez-Cotapos & Cía Ltda

Partners Francisco Illanes, Pedro Deutsch and Juan Cristóbal Gumucio

Counsel to TAM′s shareholders

Turci Advogados

Partners Flávia Turci and associates Carlos Fujita and Ana Matsuda

Counsel to LAN

General counsel - Cristián Toro

US

Sullivan & Cromwell LLP

Partners Sergio Galvis, Duncan McCurrach and Juan Rodriguez and associates Carlos Pelaez, Felipe Capella and Rachael Dugan

Brazil

Pinheiro Neto Advogados

Partner Alexandre Bertoldi and associates Vânia Marques Ribeiro Moyano and Roberta Stettinger Bilotti Demange

Chile

Claro y Cía

Partners José Maria Eyzaguirre and Felipe Larraín

Counsel to TAM in the Constitutional Court filing

Cariola, Diez, Pérez-Cotapos & Cía Ltda

Partners Florencio Bernales and Juan Cristóbal Gumucio

Counsel to Pal

Independent practitioner - Mario Fernández

(Latin Lawyer 28.10.2011)

(Notícia na Íntegra)