The National Economic Prosecutor's Office (FNE) reached an out-of-court agreement with Cencosud, Manfred Paulmann and Asesorías Alpa to end an investigation into "interlocking." The three actors will have to pay around US$ 1.2 million for the benefit of the public.
The National Economic Prosecutor's Office (FNE) said it reached an out-of-court agreement with Cencosud, Manfred Paulmann and Asesorías Alpa. This was done in order to end an investigation into "interlocking", where the three actors agreed to pay money for the benefit of the tax authorities for a total of $1.2 billion (around US$ 1.2 million).
The agreement was submitted to the Free Competition Defense Tribunal (TDLC), which will have to decide whether to approve it or not.
Interlocking is defined as “the simultaneous participation of a person in positions of director or relevant executive in two or more competing companies.” It should be noted that this practice is prohibited because it violates free competition.
A previous case related to this was that of Hernán Büchi, for his simultaneous participation in Banco de Chile, Consorcio and Falabella.
There is also the FNE's request against Juan Hurtado Vicuña, as he is a member of both Consorcio and LarrainVial.
Cencosud reaches agreement with FNE over interlocking case
According to the FNE, the accusations arose through an investigation that began in September 2023, which targeted a concentration operation in which Cencosud would acquire assets from ARS, a subsidiary of Asesorías Alpa.
In the out-of-court settlement, it was acknowledged that Manfred Paulmann simultaneously served as a director at Cencosud and a relevant executive at Alpa from July 2021 until this date. It is also acknowledged that Manfred served as a director of ARS - and also at Cencosud - between July 2021 and May 2022.
“As established in the out-of-court agreement, Cencosud and Asesorías Alpa have participated in the retail market in convenience stores, gas station stores, and other neighborhood stores and warehouses. In the case of Cencosud, through its Spid brand, and in the case of Asesorías Alpa, together with its subsidiary ARS, through the Breti (which was acquired by Cencosud in August 2023) and Maxi K formats, which it continues to operate,” the FNE details in a statement.
Fines and measures
Given all of these facts, if the TDLC gives the green light to the out-of-court settlement, Cencosud will pay $870 million (US$937,000) for tax benefit; Asesorías Alpa will pay $280 million (US$301,000) and Paulmann will pay $50 million (US$53,870).
In addition, the parties will undertake to take measures to “protect free competition in the market and ensure that the conduct is stopped.”
In this regard, the National Economic Prosecutor, Jorge Grunberg, pointed out that "companies must understand the fundamental importance of the prohibition of interlocking and strictly comply with it."
The prosecutor said that they will continue to monitor compliance with the interlocking bans, in order to promote healthy competition between companies.
For its part, Cencosud pointed out in an essential fact to the Financial Market Commission (CMF) that such agreement establishes that the company "has acted in good faith, under a different understanding than that expressed by the FNE regarding the scope of horizontal interlocking and the notion of competing companies."
“This out-of-court settlement – in which Cencosud SA and director Manfred Paulmann do not acknowledge liability – was chosen because we want to prioritise energy and resources in our strategic plan and in the future of our business,” they added, noting that the agreed payment “will not have significant financial effects” on the company.
