An attempt by Chile′s Pal Airlines to block the merger between national flag carrier LAN and Brazil′s TAM is ′totally groundless′ and will damage the country′s court system, says a source close to the proceedings. Pal filed a complaint with the constitutional court on 3 August, arguing that legal standards allowing Chile′s national economic prosecutor′s office, the FNE, to agree on mitigation measures were unconstitutional, and called for an investigation into the merger by Chile′s antitrust tribunal, the TDLC, to be suspended.

Chile′s constitutional court tribunal has said it will consider Pal′s complaint, but would not suspend the investigation.

Pal claims that a ′double hat′ facility created by Chile′s antitrust law to allow the FNE to investigate free trade violations while at the same time reaching agreements on mitigation measures is unconstitutional and creates a conflict of interest.

Should the constitutional court rules in favour of Pal′s complaint, it would dissolve a mitigation agreement proposed by FNE to restrict LAN TAM′s flight paths in order to allow new entrants to the market, and lead to a further delay in the merger process.

A source speaking to Latin Lawyer on the condition of anonymity says Pal is interested in delaying the merger rather than the court′s final judgement.

′This will not only damage the LAN TAM merger, but the whole country and its court system, so why not wait for the TDLC do its job and render the long-waited judgment in the same process like everyone else? Not only is [the filing] presented late, but it was also submitted to a court that has nothing to do with the matter.′

Pedro Pellegrini, antitrust partner at Guerrero, Olivos, Novoa y Errázuriz, agrees. He says that while Pal′s action may be innovative from a ′judicial-strategic′ point of view and never before seen in antitrust cases in Chile, ultimately the filing is ′just a delaying measure looking to create ′open fronts′ or a contingency in the LAN-Tam merger process.′

′It is a kind of ′indirect attack′ with a novel argument not ever seen before, but in our prima facie opinion, which is the same as LAN′s, the principal lien of Pal′s arguments is weak and does not create a legitimate concern,′ he says.

The TDLC is investigating the merger following a complaint filed by Chilean consumer rights group Conadecus in January and is expected release a decision at the end of this month or early September.

That could be pushed back if the constitutional court upholds Pal′s complaint, but LAN is arguing the two issues are separate processes.

′LAN has replied that [Pal′s] claim has no merit because what TDLC is about to rule on is result of the consultation process and not the previous mitigation agreement with the FNE,′ says Pellegrini. ′These are two separate and distinctive processes under our antitrust law and therefore nothing is really pending regarding the article that provides on FNE attribution to reach those types of agreements.′

Pal previously filed a complaint with the TDLC arguing that LAN abused its dominant position in 2010 by offering flights at prices well below cost on the Santiago to Córdoba (Argentina) route at the same time as Pal launched its own service.

Counsel to TAM

General counsel to TAM - 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 and Peter Deutsch

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, 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 LAN in Constitutional Court filing

Claro y Cía

Partners José Maria Eyzaguirre, Cristóbal Eyzaguirre and Felipe Larraín

and Felipe Larraín

Counsel to Pal

Independent practitioner - Mario Fernández

(Latin Lawyer 11.08.2011)

(Notícia na Íntegra)