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On October 26, the plot of the conflict between the Association of Retail Brands and the big shopping centers had a turnaround and the Supreme Court will have the last word.
It all started when on March 18, the government – through the Minister of Economy, Lucas Palacios – announced the closure of the malls nationwide, after the State of Catastrophe was decreed, product of the Coronavirus. From that moment on, the differences between tenants and shopping centers became more acute. The breaking point occurred when the tenants questioned a series of charges that the malls decided to keep – despite having their doors closed – such as common expenses and the promotion and advertising fund. But the relationship between the two was already bruised by the effects of October 18. The fear of looting in those days forced the early closure of the commercial premises and some tenants did not agree with the measure.
The fact is that on October 26, the Tribunal for the Defense of Free Competition (TDLC) decided to reject the query presented by the Association of Retail Brands -which represents about 100 brands-, which It sought to know if the lease contracts with shopping centers cause risks and anti-competitive effects. The court declared the inquiry inadmissible, considering that the alleged facts were a contentious dispute. The group filed a claim and yesterday entered the Supreme Court.
Faced with the conflict, Mallplaza – the largest shopping center operator in the country – which concentrates 65% of the leasable area in the Metropolitan Region hired the services of a specialist in free competition litigation: the lawyer Nicole Take, partner of FerradaNehme. The study that advises conglomerates, such as VTR Liberty Latin America and Walmart assumed the defense of the Falabella subsidiary and on October 25, through a letter that has only eight pages, he requested to declare the union’s consultation inadmissible.
For Mallplaza, the matter submitted for processing before the TDLC “is devoid of all merit” and is clearly contentious. Ultimately, in his opinion, the application “abounds in imprecise and generic references that seem to refer to the thousands of contractual and commercial relationships that exist between the operators of shopping centers in Chile and their tenants.” On the other hand, he denied the accusations raised by the consultation as “strangulation of margins” and “clauses that limit competition.
For the Falabella subsidiary, the retail union’s petition seeks to “strategically hold Mall Plaza responsible, in a vague and voluntarily unspecific way, but no less clear about its real intentions, for a series of assumptions and anti-competitive acts, which of course , the company strongly denies ”. “With that, It is intended to deprive our represented company of something so fundamental and basic in our legal system such as its right to defense and to provide supporting evidence, and to require AG Retail to prove its allegations”Mallplaza warned.
Meanwhile, the defense of Parque Arauco -controlled by the Said Group- is represented by the study Claro & Cía. It is one of the most recognized law firms in the market that deals with highly complex conflicts in civil headquarters and in particular in free competition: it advised CMPC in the collusion of paper derivatives and represents Entel in the fixing of the resolved 5G spectrum by the TDLC. By means of a document that appears in the file, on October 21 – like Mallplaza – it also requested to declare the inquiry inadmissible.
In his opinion, the Retail Brands union “refers in a broad, imprecise and generic way to all the contractual relationships between each of the shopping center operators and each of the tenants ”. In fact, he said that the request made by the union would require the review of more than 3,000 contracts.
“The reality is different and much more varied, as the data shows. Only in the case of Parque Arauco, according to a preliminary estimate, the universe of contractual relationships would amount to 3,372, from 2015 to date, including modifications and assignments. Extrapolating this figure to the total number of shopping center operators referred to in the Request, the total number of contractual relationships ‘consulted’ would be tens of thousands, ”said Parque Arauco.
On October 29, the members of the Retail Brands Association met. Although within the group there is confidence that the Supreme Court will reverse the TDLC resolution, ordering that the consultation be carried out; The fear also persists that his sentence will confirm what was ruled in the first instance. The group brings together more than 100 brands such as Guante, Cardinale, Gotta, Komax and Palumbo, among several others.
In the videoconference, in which the lawyer participated José Miguel Gana, partner of Gana y Gálvez -who advises the union in the consultation- it was explained to the union members that the process before the Supreme Court will be “long” and could take six months. The idea is to insist on opening a consultation process that reviews the contracts and general rules with the malls, since If this issue is determined to be contentious, it is highly probable that each of the associates will be forced to file lawsuits regarding the alleged infringements of free competition.
“The effect is undoubtedly diluted, because a contentious process would lead to each associate having to present the evidence of their case. We agreed to wait for the Supreme Court’s resolution and in the opinion of our lawyers it should be positive because there is a precedent from 2016 where indeed the highest court ordered the TDLC to initiate a consultation, “said an executive of the union who requested that his identity be reserved.
In its appeal, the Retail Brands Association recalled the Supreme Court ruling that allowed the National Corporation of Consumers and Users of Chile (Conadecus) to reverse the TDLC ruling that in 2014 had refused to open a non-contentious process on vertical integration in the gas market. In this process, Conadecus was advised by the lawyers Mario Bravo and Cristián Reyes.
On that occasion, the highest court in the country concluded that a third party with a legitimate interest, such as the representation of consumers, can initiate a consultation procedure, alerting about the risks to free competition that a situation causes, as long as it does not request the application of sanctions.
