Unconditional approval for $3 billion merger between Chilean financial institutions Bicecorp and Grupo Security

Compass Lexecon provided economic advice to Bicecorp and Grupo Security in the context of the merger of the two holding companies and their subsidiaries. The deal was notified to the Chilean competition authority (‘FNE’), which approved it after an extended Phase I investigation in October 2024.

Situation

In January 2024, Chilean holdings Bicecorp and Grupo Security announced their plans to merge. The new entity would become one of Chile’s most important financial conglomerates, valued just over USD 3 billion, with around USD 40 billion in combined assets and activities across banking, insurance, asset management and non-bank financing.

External counsels from Bicecorp (Pellegrini & Rencoret) and Grupo Security (Barros & Errázuriz) called upon the expertise of Compass Lexecon to provide economic advice in the context of this transaction.

Our Role

A team from Compass Lexecon assisted Bicecorp and Grupo Security during the notification process at the FNE, as well as during the subsequent Phase I investigation.

Outcome

After an extended Phase I investigation, the FNE ruled out that the merger wasn’t suitable to substantially reduce competition in each of the segments in which the parties are active.

• Based on a preliminary structural analysis, the FNE ruled out competition concerns in most of the overlapping activities (consumer and business banking, FX trading, international transfers, derivatives, interbank loans, leasing, factoring, provision and distribution of life insurance products, brokerage, asset management and sale of mortgage loans to third parties), concluding that the Parties would remain facing competitive pressure from multiple rivals after the merger.
• In several segments where the merger exceeded concentration thresholds (ATMs, collective life insurance plans, origination and administration of mortgage loans and asset securitization), the authority investigated the competition dynamics and ruled that the merger would not bring out competition concerns in those segments.
• Lastly, the FNE ruled out any vertical or conglomerate concerns arising from the merger.

The FNE approved the transaction in October 2024, without need for any remedies.

The Team

Compass Lexecon’s team was led by Fernando Coloma Ríos and included Daniel Urdaneta, Diego Tello, Ignacio Frixone and Francisco De la Lastra.

They advised Bicecorp’s external legal counsel from Pellegrini & Rencoret, headed by Julio Pellegrini, Pedro Rencoret and Catalina Sierpe, as well as Grupo Security’s external legal counsel from Barros & Errázuriz, headed by Francisco Bórquez, Catalina Villalobos and Virginia González.