Noticias

The National Economic Prosecutor’s Office (FNE) has approved, in Phase 1 of its review and subject to compliance with mitigation measures, the proposed concentration operation involving a public-private joint venture between the Corporación Nacional del Cobre de Chile (Codelco) and Sociedad Química y Minera de Chile S.A. (SQM).

The operation involves an agreement between Codelco and SQM to form a joint venture for the extraction, production, and commercialization of minerals from the Salar de Atacama, primarily lithium hydroxide and lithium carbonate.

The joint venture will operate in two distinct management phases. Between 2025 and 2030, it will be under SQM’s control. From 2031 to 2060, Codelco will assume control.

Competition Concerns and Mitigation Measures

Following an in-depth assessment of the competitive conditions in the lithium carbonate and lithium hydroxide markets, the FNE concluded that the transaction could substantially lessen competition. The operation would create a new structural link between current and future participants in the lithium industry, potentially facilitating coordination and the exchange of commercially sensitive information among competitors.

To address these concerns, Codelco and SQM proposed a set of mitigation measures aimed at restricting the flow of commercially sensitive information arising from the transaction and related agreements. These commitments, which the FNE found proportionate, suitable, and effective, include ongoing reporting obligations that will enable compliance monitoring.

The remedies primarily relate to the governance and control structure of the joint venture, consistent with the FNE’s interpretation of the interlocking directorates provision under Article 3(d) of Decree-Law No. 211 (Chilean Competition Act, DL 211). This provision prohibits individuals from simultaneously holding significant management or administrative positions in two or more competing firms and imposes a strict duty of compliance on economic agents operating as competitors.

These commitments are also in line with the recent ruling of April 14 by the Chilean Antitrust Court, which sanctioned two financial firms and one board member for violating the prohibition on interlocking directorates. The court’s decision stemmed from a complaint filed by the FNE in December 2021.

In the context of the joint venture, the prohibition on interlocking directorates is extended to individuals employed by or having advised lithium market participants within the past year. Furthermore, directors and key managers of the joint venture must formally adopt the commitments made by the parties before the FNE, particularly the obligation to refrain from disclosing commercially sensitive information to third parties.

With respect to the joint venture’s controlling shareholder, in addition to the duty not to disclose the joint venture’s sensitive commercial information to third parties, it must require its appointed directors to assume equivalent confidentiality obligations.

Given the existence of Article 3(d) of DL 211, the measures further require that the controlling shareholder ensure its directors declare that they do not serve as directors or key executives in any competing company in the lithium industry. Any broader commercial ties to competitors must also be disclosed. If no such declaration is received, the FNE must be informed.

This requirement is particularly important given the ownership structure of SQM, one of the joint venture parties, which includes a competitor in the lithium industry.

To monitor adherence to these commitments, the FNE’s Supervision Division will initiate a follow-up investigation upon completion of the transaction.

Scope of FNE’s Authorization

In accordance with its legal mandate, the FNE’s review was limited to assessing whether the transaction would lead to a significant reduction in competition. Therefore, the FNE did not evaluate the financial or strategic merits of the agreement, nor the suitability of the parties’ commercial choices.

The FNE also excluded from its assessment any potential vertical restraints stemming from the potash purchase agreement—whereby SQM would acquire 100% of the joint venture’s potash output—as the agreement is not ancillary to the creation of the joint venture and does not significantly alter the competitive conditions in the potash market.

Nevertheless, in light of existing competitive concerns in the potash fertilizer market, the FNE’s Antitrust Division has initiated a separate investigation to determine whether anti-competitive conduct exists in the domestic potash products market.

The resolution approving the transaction, along with the full mitigation measures, will be published on the FNE’s website once the public versions of the documents are finalized.

About the Parties

Codelco is a Chilean state-owned company with a global footprint in the mining sector. It specializes in the exploration, extraction, processing, and commercialization of copper and its by-products. In alignment with Chile’s National Lithium Strategy, Codelco is developing a new business line dedicated to lithium extraction and commercialization.

SQM is a privately-owned mining company operating globally in the lithium sector. Its core activities include the extraction, refining, and sale of lithium products and other minerals.