Full Chilean anti-trust review clouds LAN-TAM merger timeline

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The Chilean anti-trust court Tribunal de Defensa de la Libre Competencia (TDLC) has confirmed that Chile's Oneworld airline LAN and Brazil's Star Alliance member TAM will, in effect, need to submit their planned merger process for a full consultation process whose duration LAN calls "impossible to assure".

The TDLC accepted in late January a request from the consumer rights organisation CONADECUS to evaluate the competitive impact of the potential merger.

According to LAN, this new decision means that the TLDC has opted to decline "to analyse the out-of-court agreement reached between LAN and the Fiscalía Nacional Economica [Chile's Economic Public Prosecutor] in January this year", ordering that "the transaction should be submitted to the ordinary consultation proceeding before the anti-trust court".

LAN affirms that it is "not possible" to predict how long the anti-trust evaluation will last, estimating that its eventual approval will take place "not earlier than the last quarter of this year". If finally approved, this would delay the beginning of the actual merger until early 2012.

In Brazil, the merger process has recently been approved technically by the country's CAA (ANAC), but is also still awaiting the hearing with the competition watchdog CADE. However, given that TAM, while being Brazil's domestic market leader, is not occupying as a dominant market position as LAN enjoys in Chile, it is not expected that the Brazilian authorities will add further complications to the process.