Competition in the Airline Industry in South America: Economic Analysis Based on the Study of a Merger Case

Abstract

The deregulation of aviation enhances the importance of antitrust agencies in civil aviation markets in the countries of South America. This paper aims to analyze the main aspects of Court of the Defense of Competition in Chile and of the Administrative Council Economic Defense (CADE) in Brazil on the merger between Chile’s LAN Airlines and Brazilian TAM Linhas Aereas (Brazil). The study is founded in the method of economic Analysis of Law, especially under the bias of the New Institutional Economics, to assess the economic conditions of the merger and the ramifications of the conditions imposed by the agencies, formulating conclusions through inductive-deductive logic. To achieve this goal, initially, it will look to understand the foundations of the New Institutional Economics and its influence to the Economic Analysis of Law, taken here as a method of Economic Law and Competition Law. Then, the most relevant conditions determined by the Court of the Defense of Competition in Chile in the case under discussion and its implications for competition in the sector will be reviewed. Finally, we will evaluate the conditions subsequently imposed by the Administrative Council for Economic Defense (CADE) in Brazil, to understand specifically the relationship between the performances of these administrative bodies in the civil aviation market in South America.