Free Competition Defense Court rejects merger between D&S and Falabella

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SANTIAGO.- Chile's Free Competition Defense Court (TDLC) issued a ruling today regarding requests made by Falabella and D&S stockholders in June of 2007, denying approval for a merger between the two companies.

The court argued that "the requested alliance would produce an enormous change in the market structure, creating a company that would take over integrated retail and practically all of its segments".

In addition, the court mentioned that the company would later be able to transfer market power to other retail areas that it may wish to participate in.

The TDLC explained that "if this were to happen, considering the size of the Chilean economy and the importance of existing entrance barriers to the different areas of the integrated retail market, it would be unlikely that the entrance of a new entity, if it were to happen, would be enough to exert competitive pressure on the market in a timely manner".

The organization also asserted that, if the merger were approved, the competitive conditions within this important sector of the Chilean consumer market would greatly deteriorate.