Competition and intellectual property in Latin America and the Caribbean

3. Key competition and IP enforcement issues in LAC

As mentioned in the background information of the OECD Recommendation on Intellectual Property Rights and Competition, relevant competition enforcement actions have been pursued across the world against a broad range of practices involving IP rights. Without aiming to be exhaustive, this section focuses on a few competition issues that appear to be particularly relevant for LAC jurisdictions, based on observed enforcement efforts in the region.

3.1. Anti-competitive practices

3.1.1. IP licensing agreements

As mentioned in section 2, IP licensing agreements are a fundamental tool for diffusing innovation, promoting competition for its distribution, as well as stimulating follow-on innovation, even during an IP right’s period of exclusivity. Most IP licensing agreements are vertical contracts between a firm operating in an upstream technology market (the licensor) and a firm operating in a downstream market (the licensee), enabling the integration of licensed property with complementary factors of production and resulting in a more efficient exploitation of IP, benefiting consumers through lower costs and new products. In this context, IP licensing agreements are generally regarded as pro-competitive (OECD, 2019, p. 14[4]). This is particularly relevant for developing countries, which tend to have lower levels of innovation and are therefore more reliant on access to foreign technology, typically through licensing agreements (Drago, 2015[28]).

Nevertheless, IP licensing arrangements can give rise to competition concerns. Globally, there are common areas of convergence on the treatment of IP licensing practices by competition law. These issues were further discussed at the Roundtable on Licensing IP Rights and Competition Law, held by the Competition Committee in 2019 (OECD, 2019[4]; 2019[29]), with the main conclusions summarised below.

Licensing agreements between actual or potential competitors that includes clauses setting prices (e.g. fixed prices or price lists with certain allowed maximum rebates) or restricting output (e.g. limitations on how much a party may produce or sell) amount to cartelisation and are considered per se/by object infringements. However, when such agreements do not involve competitors or do not comprise hard-core restrictions, potential restraints may be ancillary to pro-competitive agreements, being typically assessed under the rule of reason (OECD, 2019[4]).

Field-of-use, territorial or customer exclusivity raise competition concerns mainly if there is a horizontal relationship among licensors, among licensees, or between the licensor and its licensee(s). At the same time, it is widely accepted that such restraints may serve pro-competitive ends. Thus, a finding of whether such clauses infringe competition law must follow the rule of reason analysis (OECD, 2019[4]).

Exclusivity arrangements are also subject to an effects-based analysis. The likelihood that exclusive dealing may have anti-competitive effects relates, inter alia, to the degree of foreclosure created by the exclusive dealing clause in the relevant market, the duration of the exclusive dealing arrangement, and other characteristics of input and output markets – such as concentration, barriers to entry, and the responsiveness of supply and demand to changes in price in the relevant markets (OECD, 2019[4]).

Grant-back clauses make it less risky for a firm to license its technology by ensuring that it will be able to use or appropriate any improvements developed by the licensee. However, exclusive grant-back clauses can reduce the incentives to a licensee to develop a competing technology, while also maintaining or increasing the market power of the licensor – leading some jurisdictions to look at them suspiciously. Non-exclusive grant-back clauses are unlikely to result in harm to innovation or the competitive process (OECD, 2019[4]).

No-challenge clauses impose direct or indirect obligations not to challenge the validity of the licensor’s IP right. Such clauses may be anti-competitive when they are adopted for the sake of ensuring the continued existence of invalid IP rights. The anti-competitive effects of no-challenge clauses are likely to be greatest in the context of non-exclusive licensing arrangements, where they may have the effect of stifling innovation and restricting the diffusion of technologies not protected by IP rights. Non-challenge clauses and termination clauses with similar effects are less likely to be anti-competitive in the context of exclusive licensing agreements (OECD, 2019[4]).

Patent pools (i.e. a combination of patents from multiple IP rights’ holders that are then licensed to third parties) and cross-licences (i.e. where two or more parties grant each other the rights to use their respective IP) are also common licensing practices. These arrangements may benefit both IP owners and consumers, provided they are limited to complementary and/or blocking patents – i.e. situations where each of two or more patents cannot be effectively practiced without infringing the other(s). When patents are substitutes, however, there are increased risks of anti-competitive outcomes, such as collusive arrangements, reducing competition in horizontal technology markets foreclosing competing technologies, and reducing incentives to innovate (OECD, 2019[4]).

One particular area where competition authorities have looked closely is the licensing of standard essential patents (SEPs). Standards are a common set of characteristics for a good or service, facilitating the adoption of a technology, achieving economies of scale and improving firms’ incentives to innovate and invest. Standards enable products to interoperate, making networks (such as the internet) more valuable to users and firms. Standards often rely on proprietary technology protected by patents. In this context, SEPs are patents that are declared by standard-setting organisations as necessary to the implementation of a standard. SEPs raise a tension, as patents protect the owner’s exclusionary right to exploit an innovation, while standards are intended for widespread use in the market (OECD, 2014[5]).

On the one hand, SEPs can promote competition by ensuring that patented technologies are widely accessible to third parties, thereby supporting interoperability and encouraging further innovation. On the other hand, they may pose competition risks. The most common competition concern regards the potential for “hold-up” by a SEP owner, excluding other firms from using its patented technology and therefore from implementing a given standard.1 This could occur, for example, by refusing to licence, by refusing to license on reasonable terms or by seeking an injunction forcing implementers to stop using SEPs until a licence has been negotiated. Given these risks, standard-setting organisations often require participants to disclose and license their SEPs free of charge or on fair, reasonable and non-discriminatory (FRAND) terms. However, there is often ambiguity over what constitutes FRAND terms, which usually leads to disputes between SEP holders and standard implementers (OECD, 2019[4]; 2014[5]).

There is no consensus on what role should competition law play in such disputes. Some jurisdictions have considered that injunctions regarding SEP licensing can amount to competition harm, although only in exceptional circumstances. In those cases, the competition assessment has focused on the behaviour of the negotiating parties, establishing that the recourse to injunctions may be anti-competitive where a prospective licensee is willing to negotiate a licence on FRAND terms and to pay royalties that have been determined to be FRAND by a neutral party. Nonetheless, other jurisdictions have been more reluctant to intervene under competition law in SEP licensing matters, considering that the potential concerns extend beyond competition and would be more appropriately addressed through IP or contract law (OECD, 2019[4]; 2015[30]).

While discussions on the licensing of SEPs are still incipient in LAC, CADE has recently examined a landmark case on the topic (see box below). The Brazilian experience underscores the growing importance of this issue and may be informative for other LAC jurisdictions, which could also face similar challenges in the future.

Box 3. Competition approach to SEP licensing in Brazil: Motorola and Lenovo v. Ericsson

In May 2024, Motorola and Lenovo filed a complaint with CADE against Ericsson for abuse of dominance in the 5G network market, requesting the imposition of interim measures. The complainants alleged that Ericsson had refused to license its 5G SEPs in Brazil independently, instead requiring the signature of a global licensing agreement under unfair and discriminatory conditions, which would effectively exclude them from the Brazilian smartphone market.

In December 2024, CADE’s investigative arm (the General Superintendence) rejected the request for interim measures. The complainants appealed the decision to CADE’s Tribunal. However, the parties ultimately signed a global licensing agreement, leading to the withdrawal of the appeal.

In April 2025, CADE’s Tribunal examined the case and ordered the General Superintendence to open a formal investigation. It found preliminary evidence of price discrimination and the imposition of potentially abusive contractual conditions that could exclude competitors from the 5G network market. The Tribunal noted that the private settlement between the parties did not preclude CADE from proceeding with the investigation, given the broader public interest at stake, particularly in the context of SEPs and interoperability standards, in order to ensure that licensing practices do not impede market entry or hinder innovation.

The Tribunal concluded that SEP holders’ licensing strategies may constitute a competition infringement, especially when the patents in question cover essential technologies like 5G and are held by firms with a dominant position. This decision marks a shift in CADE’s approach, as previous cases involving SEPs treated licensing disputes as private matters that did not raise competition concerns.

Source: CADE (2025[31]), CADE investigates Ericsson for antitrust violations, https://www.gov.br/cade/en/matters/news/cade-investigates-ericsson-for-antitrust-violations; CADE’s Administrative Proceeding No. 08700.010219/2024-17, reasoning of the Commissioner-Rapporteur Mr. Gustavo Augusto Freitas de Lima of 29 April 2025.

3.1.2. Copyright collecting societies

Copyright collecting societies2 are typically private, not-for-profit entities with the function of licensing and managing copyrighted works (such as music, literary, audio-visual and graphic works) on behalf of their owners and holders, collecting and distributing royalties. Such societies, however, do not commercially exploit the copyrighted works, but rather license them to others, such as publishers or broadcasters (Gervais, 2019[32]; Yaghi, 2024[33]).

The economic rationale for collecting societies lies in the fact that exercising copyrights on an individual basis may be impossible, if not very costly and therefore highly impractical. For instance, it is not feasible for an author, performer, or producer to negotiate licenses and payment with every individual radio station that plays their music. Likewise, a radio station cannot be expected to obtain permission from each rights holder for every song it broadcasts. Thus, owners of copyrights authorise collecting societies to exercise their rights on their behalf, in particular to grant licences, to monitor uses, and to collect and distribute the corresponding remuneration (WIPO, 2004[11]; WIPO, 2025[34]).

On the one hand, collecting societies may achieve relevant economies of scale and scope in managing, licensing and enforcing copyrights, thereby reducing transaction costs and improving efficiency. On the other hand, they have raised competition concerns in several jurisdictions. The main concern identified by competition authorities relates to the exploitation of copyright owners and users. This is because collecting societies often function as essential intermediaries for accessing copyrights (New Zealand Commerce Commission, 2023[19]), giving them significant market power (and sometimes de facto or even de jure monopoly position) that can allow them to impose licensing terms and conditions in ways that may distort competition. For example, this may be the case when collecting societies require copyright owners to assign all their rights as an exclusive bundle covering all uses (e.g. public performance, mechanic reproduction, TV and radio broadcasting, internet); prohibit individual negotiations between copyright owners and third parties; or apply unfair, non-transparent charges that discriminate among different categories of rights holders or users.

Another related concern is the potential foreclosure of competition by preventing the emergence of alternative licensing models, such as competing collecting societies or independent rights management platforms. For instance, individual copyright holders may be prohibited from licensing their rights on their own or from using other collecting societies or licensing arrangements.

This is particularly relevant in the context of the digital economy, which has provided copyright holders with new ways to manage and negotiate their rights. Indeed, the emergence of digital platforms and social networks, on-demand access services and search engines has substantially changed the commercialisation of cultural content, reducing production and distribution costs for artists and easing consumer access. While artists previously depended on agreements with large studios and production companies, today independent production and distribution are more accessible. Digital tools such as blockchain, non-fungible tokens (NFTs) and smart contracts have further reduced costs of tracking and process automation, and introduced new monetisation models, enabling artists to more easily manage rights and negotiate directly. As a result, the efficiencies traditionally associated with copyright collective management (e.g. reduction of high transaction costs and information asymmetry) may be less prominent in this new context. Nevertheless, this evolution may also incentivise incumbent copyright collecting societies to extend their market power into the digital space, potentially hindering the development of alternative licensing models and new market entrants (Cabello, Rivero and Viecens, 2022[35]).

Several competition authorities, such as in Argentina3 and Colombia, have investigated and sanctioned collecting societies for abusing their dominant position.4 The box below illustrates the Colombian experience.

Box 4. SAYCO cases in Colombia

SIC investigated Sociedad de Autores y Compositores de Colombia (SAYCO) for abusing its dominant position in the market for copyright management. SAYCO, the only authorised collective management organisation for copyrights in Colombia, was accused of restricting competition by obstructing independent management of copyrights and tying the administration of certain rights to the acceptance of broader mandates.

The investigation revealed that SAYCO required copyright holders to assign all public communication rights to its management, preventing them from selectively managing certain rights independently. Moreover, it allegedly imposed contractual terms that made individual management impractical and hindered the entry of alternative rights management organisations. SIC also found that SAYCO’s agreements forced users to acquire comprehensive copyright packages, even when they only required specific rights, thereby limiting consumer choice and increasing costs.

In November 2016, SIC found SAYCO guilty of anti-competitive conduct and ordered it to modify its contractual practices to allow copyright holders to manage their rights individually, if they chose to, and to eliminate the obligation to assign all rights collectively. Additionally, SIC imposed a fine totalling USD 1.02 million on SAYCO and one of its former executives for facilitating these restrictive practices.

In 2022, SIC opened a new investigation against SAYCO for similar practices, focusing on persistent barriers to individual rights management. According to SIC, SAYCO only apparently complied with the 2016 order, employing a series of practices and tools that ultimately made access to alternatives to collective management overly burdensome.

Although the statement of objections echoes the previous case, the new investigation has a broader scope, encompassing digital and multi-sided market dynamics and recognising the emergence of innovative business models for individual management. It highlights how SAYCO allegedly continued to obstruct individual licensing by using rigid, pre-designed contracts that left no room for flexible management. Moreover, SIC flagged misuse of information that allegedly helped SAYCO strengthen its position in the market segment in which it participates.

Source: SIC, Resolución No. 76278, of 3 November 2016, https://www.sic.gov.co/sites/default/files/estados/RESOLUCION_76278_SAYCO.pdf; SIC, Resolución No. 1079, of 19 January 2022, https://www.sic.gov.co/sites/default/files/boletin-juridico/Resolucion.pdf

Furthermore, although collecting societies are often also entrusted with setting license fees and other licensing conditions – typically justified on the grounds of efficiency – such practices could also be regarded as a collusive behaviour, particularly when they involve standardising prices. In fact, by establishing uniform prices on behalf of competing rights holders, collecting societies may effectively engage in horizontal price-fixing. This can undermine competition among copyright holders and restrict the free negotiation of prices and other key licensing terms, which should ideally be shaped by market dynamics. This concern has been particularly relevant in Brazil, as illustrated in the box below.

Box 5. Copyright collecting societies in Brazil

In 2013, CADE sanctioned the Central Office of Collection and Distribution (ECAD) and six associations representing copyright holders for engaging in cartel conduct. Although ECAD is legally responsible for overseeing the collection and distribution of copyrights in Brazil, the legislation does not grant it the authority to set copyright fees or to impose standardised rates through fixed price lists. In fact, the associations, which represent copyright holders, should negotiate license fees independently from ECAD and from competing associations. CADE concluded that ECAD and the associations had jointly set fees for the public performance of musical works, literary musical works and phonograms, resulting in anti-competitive effects. According to CADE, market-based price negotiations would better reflect users’ needs and enhance economic efficiency.

CADE also found that ECAD’s internal regulations imposed disproportionate and unfair conditions for the affiliation of new associations, such as minimum percentages of members and IP rights ownership, amounting to an abuse of dominance. CADE highlighted that these barriers hindered the establishment and operation of competing associations representing copyright holders.

CADE imposed fines totalling around USD 19 million and required reforms to ECAD’s governance structure to incorporate stronger competition principles in the collective management of copyrights in Brazil.

In February 2025, CADE opened a new investigation against the collective management organisation Ubem for similar anti-competitive behaviour. Ubem is allegedly engaging in collective negotiations and enforcing uniform price charts in the market for musical synchronisation in audiovisual projects. CADE imposed an interim measure prohibiting Ubem from collectively negotiating licensing prices and contractual terms on behalf of its main affiliated members, and from using or imposing standardised price charts.

Source: CADE (2013[36]), The Central Office of Collection and Distribution and Copyrights associations are condemned for Cartel formation, https://www.gov.br/cade/en/matters/news/the-central-office-of-collection-and-distribution-and-copyrights-associations-are-condemned-for-cartel-formation; CADE (2025[37]), CADE launches administrative proceeding to impose interim measure in music licensing market, https://www.gov.br/cade/en/matters/news/cade-launches-administrative-proceeding-to-impose-interim-measure-in-music-licensing-market

3.1.3. Misuse of IP regulatory system

Competition concerns may also be raised when IP holders exploit the IP regulatory system to prevent or hinder new entry. Indeed, firms may subvert the intended function of the IP framework, turning it into a tool for distorting competition – a practice often referred to as regulatory gaming (Dogan and Lemley, 2009[38]).

In particular, this is the case of so-called evergreening, where IP holders use various strategies to extend expiring IP rights in order to maintain their exclusivity powers over products subject to IP protection. If the IP owners hold market power, such conduct may amount to an abuse of dominance, allowing them to preserve their market position and block or delay the entry of potential competitors.

Common evergreening strategies include practices by dominant pharmaceutical companies aimed at delaying or preventing the entry of generic products into the market, thereby avoiding competition with their branded drugs. For example, patent holders with market power may extend their market exclusivity by obtaining subsequent patents for minor modifications to existing medications, typically without relevant therapeutic improvements (e.g. changes in the colour or shape of a tablet, or the introduction of a capsule form when only a tablet version was previously available), just before the expiration of the original patent. Additionally, pharmaceutical companies may launch follow-on or second-generation medicines, while discontinuing the first-generation medicines or adopting advertising tactics to push patients and prescribing physicians onto the new version, making it very difficult or impossible the commercialisation of generic medicines (Lawrance and Hunt, 2017[39]; Feldman and Lemley, 2022[40]). It should be noted that these practices may also be associated with the use of misleading information to IP agencies, in order to support the obtention or extension of their exclusive rights.

The introduction of new products or incremental innovation is not in itself anti-competitive, nor is it prohibited by IP law. Indeed, applying for patents is a lawful right, and the development of new or improved products can bring significant benefits to consumers. In addition, it may be legitimate business behaviour to employ strategies aimed at limiting the impact of generic competition. Nevertheless, such practices cannot be acceptable when they depart from competition standards, for instance if their sole objective is to prevent consumers from accessing alternatives, such as a generic version of a branded drug. Thus, it is not the introduction of a new product that renders the conduct anti-competitive, but rather the strategic exploitation of the IP regulatory framework with an anti-competitive objective (Lawrance and Hunt, 2017[39]; Leurquin, 2021[41]). The fact that such practice is associated with the provision of misleading information to IP agencies reinforces its anti-competitive nature, although this behaviour may also constitute a distinct but related competition infringement.

Competition authorities have remained vigilant against anti-competitive behaviour involving the misuse of the IP regulatory system. In some jurisdictions, such as the European Union and the United States, competition law has already been enforced to tackle such practices. For instance, in a landmark case, the European Court of Justice has confirmed a decision issued by the European Commission that found that a patent holder had abused its dominant position to exclude from the market competing manufacturers of generic products by making use of regulatory procedures to delay the authorisation of competing generic products and by using misleading statements to extend its exclusivity of patented medicines.5

Although still relatively uncommon in the LAC region, Chile has been at the forefront by investigating and settling a case involving anti-competitive patent strategies, as described in the box below.

Box 6. Anti-competitive manipulation of the IP system: the GD Searle case in Chile

In June 2016, the Chilean National Economic Prosecutor’s Office (FNE) initiated legal action against G.D. Searle LLC, a subsidiary of Pfizer, alleging that the company engaged in anti-competitive practices to delay the entry of generic competitors into the market for Celecoxib-based pharmaceuticals. FNE argued that Searle strategically manipulated the patent system to prolong its exclusivity over Celecoxib, initially benefiting from a first patent and subsequently obtaining a second patent that further extended its market power. The authority claimed that Searle employed delaying tactics, failed to disclose key information to Chile’s patent office, and used legal threats to discourage generic competition. The company sent warning letters to competitors, filed an unfair competition lawsuit against Synthon Chile Ltda., and secured exclusive agreements with a major pharmacy chain to block rival products. According to FNE, these conducts significantly hindered competition, leading to a limited reduction in drug prices – between 6% to 13% – compared to the typical sharper declines observed following the entry of generics.

Searle initially defended its actions, arguing that its secondary patent had been legitimately obtained and that its business strategies were commercially justified. However, after negotiations, the parties reached a settlement approved by the Competition Tribunal (TDLC) in November 2016. Under the agreement, Searle committed to granting a free, non-exclusive, irrevocable, and sublicensable license to any competitor seeking to manufacture or sell Celecoxib-based products in Chile. Additionally, Searle agreed to withdraw its lawsuit against Synthon Chile Ltda.; terminate its exclusive contract with Laboratorios Saval S.A., which authorised the marketing of Celecoxib-based products in exchange for a royalty; cease promotional activities for its secondary brands for two years; and publicly disclose the settlement terms. The TDLC approved the agreement, emphasising that it would foster competition by enabling other laboratories to enter the market without facing legal uncertainty.

Source: TDLC approving the settlement between FNE and G.D. Searle LLC (Case 310-16), 10 November 2016.

However, the assessment of such practices is not straightforward. It requires competition authorities and courts to understand the complexities of the IP system and determine whether the patent framework has been instrumentalised to produce anti-competitive outcomes, balancing harm to competition and pro-competitive benefits. In this connection, addressing these concerns may be more effective through IP law, by ensuring innovation is legitimately protected without unduly extending exclusive rights beyond what is necessary. Co-operation between competition authorities and IP agencies is therefore crucial to prevent anti-competitive practices stemming from the misuse of the IP regulatory system, both in the enforcement of competition law and in the design of more pro-competitive IP regulations, as discussed in section 4.

3.1.4. Sham litigation

As a general principle encompassed by the rights of petition and access to justice, anyone can petition governmental or judicial authorities to defend their rights. Such conflicts typically result from genuine disputes between parties, for instance regarding the interpretation or application of the law. Accordingly, the use of litigation processes (whether judicial or administrative) is typically not subject to competition law scrutiny. Nevertheless, litigation processes can be used for purposes other than those for which they were originally intended. In particular, dominant firms may abusively use litigation processes to maintain or extend their market power and hinder competition, leading to higher prices, restricted output, and reduced innovation. While such practices arise from private disputes between competitors, their effects extend beyond the litigants, impacting competition more broadly, including suppliers, distributors, purchasers, and consumers. This unorthodox use of litigation solely to impose costs on competitors can constitute an anti-competitive behaviour, referred to as sham or vexatious litigation (Lianos and Regibeau, 2017[42]; Hovenkamp, 2005[43]).

However, distinguishing between legitimate and abusive use of litigation processes is not straightforward. There are two main approaches to define the boundaries of sham litigation. A narrower approach characterises sham litigation as a series of unfounded legal actions or a single baseless claim, i.e. situations in which the litigant is not motivated by succeeding on the legal merits. Under this view, a lack of reasonable basis for the lawsuit arises in cases of misrepresentations of facts or law to tribunals, perjury, fraud or bribery, but also when the litigation actions are objectively baseless or lack probable cause (i.e. no reasonable litigant could realistically expect success on the merits). By contrast, a broader approach focuses on the underlying economic purpose of the litigation. It seeks to assess whether the plaintiff’s primary goal is to use the legal process as a tool to supress competition (Lianos and Regibeau, 2017[42]).

Competition authorities have developed specific legal tests to assess sham litigation cases, often mixing both approaches mentioned above. For instance, the United States adopts a two-part test, combining both an objective and a subjective approach. First, the lawsuit must be objectively baseless. Only if the first condition is met a court may assess the litigant’s subjective motivation in order to determine “whether the baseless lawsuit conceals an attempt to interfere directly with a competitor’s business relationships, through the use of the governmental process – as opposed to the outcome of that process – as an anticompetitive weapon”.6 Similarly, in the European Union, two cumulative conditions are required to identify a sham litigation behaviour: (i) the undertaking in a dominant position brings a lawsuit “which cannot reasonably be considered as an attempt to establish its rights and can therefore only serve to harass the opposite party” and (ii) the lawsuit “is conceived in the framework of a plan whose goal is to eliminate competition”.7

Although sham litigation can arise in various contexts, most cases involve IP disputes. Indeed, such cases often refer to patent and copyright litigation (e.g. attempts to block the entry of potential competitors), where meritless rights are deliberately used in legal proceedings for strategic purposes aimed at suppressing competition (Lianos and Regibeau, 2017[42]). Several factors help explain this, including the relevance of IP rights in key sectors of the economy – such as the pharmaceutical and information and communications technology (ICT) industries; the presumption of validity typically granted to IP rights, which allows rights holders to exclude third parties from using their inventions and creations; and the complexity of IP law, which often demands a high level of expertise to properly assess such cases.

LAC jurisdictions generally treat sham litigation as a potential form of abuse of dominance,8 although there are relatively few precedents. For instance, the Andean Community has addressed the matter by providing an analytical framework that outlines the criteria to be assessed in determining the existence of an anti-competitive infringement through sham litigation.9 The box below describes some IP-related sham litigation cases in Brazil, where the topic has been frequently discussed, and a jurisprudence has developed, largely influenced by the US approach.

Box 7. Sham litigation cases involving IP rights in Brazil

Shop Tour

In 2010, CADE imposed a fine of over BRL 1.7 million on Box 3 Vídeo e Publicidade for abusing its IP rights through sham litigation aimed at excluding competitors. The companies, which operated a televised tourism sales platform (Shop Tour), filed a series of lawsuits against a rival for alleged copyright infringement. CADE found that the lawsuits were objectively baseless and formed part of a broader strategy to eliminate a competitor from the market. Applying the bad-faith standard from civil procedural law, CADE concluded that the lawsuits were not intended to succeed on the merits but rather to harm a rival through the legal process itself.

Eli Lilly

In 2015, CADE fined Eli Lilly BRL 36.6 million for abusing the judicial system to improperly extend its monopoly on the cancer drug Gemzar (gemcitabine hydrocholoride). The company filed contradictory and misleading lawsuits seeking to delay or expand its patent protection beyond the originally claimed production process. Eli Lilly also omitted essential information about the patent’s expanded scope and related administrative proceedings before the Brazilian IP agency (INPI), thereby misleading the courts. These tactics resulted in an injunction that blocked generic competitors from entering the market between July 2007 and March 2008, leading to significantly higher prices.

Ediouro

In 2016, CADE settled an investigation with Ediouro Publicações S/A, which was accused of engaging in sham litigation related to its IP rights and entering into restrictive judicial agreements that effectively hindered competitors in the magazine market. As part of the settlement, Ediouro committed to cease the investigated practices, implement measures to prevent further occurrences, and pay a financial contribution of BRL 1.7 million.

Source: CADE’s Administrative Proceeding No. 08012.004283/2000-40; CADE (2015[44]), Eli Lilly fined in BRL 36.6 million for sham litigation, https://www.gov.br/cade/en/matters/news/eli-lilly-fined-in-brl-36-6-million-for-sham-litigation; CADE (2016[45]), CADE signs six Cease and Desist agreements in the midst of investigations on anticompetitive practices, https://www.gov.br/cade/en/matters/news/cade-signs-six-cease-and-desist-agreements-in-the-midst-of-investigations-on-anticompetitive-practices

Unlike Brazil, Chile has adopted a stricter approach to sham litigation involving IP rights. Although the Competition Tribunal (TDLC) has sanctioned other sham litigation cases, those related to IP rights have been dismissed on the grounds that the competition authority lacks the competence to assess the technical plausibility of a patent claim, which falls within the jurisdictions of the civil courts (Irarrázabal, 2025[46]; Iglesias, 2024[47]).

3.2. Merger control

IP rights are often a crucial element considered by competition authorities and courts when reviewing mergers. The sub-sections below explore how these rights are examined during the analysis of the competitive effects of the merger and in the design of remedies.

3.2.1. Competition analysis

As mentioned in section 2, IP rights can be relevant in the definition of relevant markets and the assessment of the competitive effects of a merger. IP rights play a key role in merger review particularly when they are core assets driving the transaction, which is often the case in highly technological sectors, such as pharmaceuticals and information and communications technology (ICT).

In general, IP rights may be considered when assessing barriers to entry (e.g. whether having access to IP is essential to enter the market) and the potential for anti-competitive effects arising from the merger.

On the one hand, mergers involving IP rights may be pro-competitive, improving economic efficiency, enabling integration of complementary technologies and leading to more efficient exploitation of IP, ultimately benefiting consumers through lower prices and the development of new products (U.S. Department of Justice and the Federal Trade Commission, 2017[20]).

Nevertheless, such transactions may also raise competition concerns. For instance, in horizontal mergers, competition may be substantially lessened if the transaction is likely to eliminate incentives for innovation. This may be the case in mergers primarily aimed at eliminating a future competitive threat (so-called “killer acquisitions”) or in transactions between major competitors that result in high market concentration and anti-competitive unilateral effects (OECD, 2023[3]; 2020[48]).

When it comes to vertical mergers, the assessment often focuses on whether the merged firm has both the ability (i.e. whether it controls an important or unique asset and there are no alternative sources of supply) and the incentive (i.e. whether it stands to profit) to foreclose downstream rivals that compete with the acquired company, thereby maintaining or increasing its market power by eliminating competitive constraints. This may occur by denying downstream competitors access to an essential IP right (total foreclosure) or by significantly deteriorating the conditions under which such an input is provided, for example by increasing prices or lowering quality (partial foreclosure) (OECD, 2019[49]).

An illustrative example where both types of concerns were raised is the Bayer/Monsanto transaction, which was reviewed by several LAC jurisdictions. This merger led to a higher concentration of IP rights, particularly in seeds and crop protection products. Given that the merging parties operated in multiple overlapping markets, the transaction raised significant concerns about a potential reduction of innovation in biotechnology. In addition, it gave rise to vertical concerns related to the integration of complementary assets across the agricultural value chain. The box below outlines how competition authorities in the region addressed these concerns when designing remedies.

IP rights may also be considered when merging parties invoke efficiency gains. In this regard, it is necessary to assess whether and to what extent the transaction is expected to enhance the parties’ ability to innovate. It is equally necessary to evaluate whether such an outcome could be achieved through other less restrictive means, such as IP licencing arrangements. Competition authorities and courts have rejected claims related to R&D and innovation where parties could have gained access to know-how and IP to develop an alternative independently, especially through licensing arrangements (OECD, 2025[50]). As discussed below, this is a common remedy adopted in merger cases involving IP rights.

3.2.2. Remedies

IP-related remedies are commonly imposed by competition authorities in merger review when IP rights are a critical asset or the key barrier preventing competition post-merger. Indeed, according to the OECD Recommendation on Intellectual Property Rights and Competition, it is crucial to design effective and appropriate competition law remedies in IP-related competition cases.

In this this context, the merged firm may be required to provide one or more market participants with all relevant and necessary IP rights, either by sale or licensing. The sale of IP rights is typically favoured over licensing, as it entails the full divestiture of the asset, being considered a structural remedy that enables a competitor or new entrant who acquires the divested assets to exert competitive pressure effectively post-merger. Licensing of IP may also be considered a structural remedy when it is exclusive, irrevocable, and non-terminable with no ongoing royalties. In such cases, the licensee has more incentives to differentiate its products and engage in investment and marketing, presenting a stronger competitive force in the market. However, in some circumstances the merged firm may need to retain the IP rights to realise efficiencies from the transaction, especially when such rights cover a broad range of products. In these cases, a non-exclusive licence can be foreseen as a way of preserving competition. When licensing arrangements establish an ongoing relationship between the licensor and the licensee in a way that the licensee’s competitive behaviour may be influenced by the licensor (for instance, in relation to upgrades or supplies), the remedy is more likely to be characterised as a structural/behavioural hybrid form of remedy, as it requires some degree of monitoring. In such circumstances, disputes between the licensor and the licensee may also arise, for example when the licensed IP rights cover products outside the relevant market in question or when the remedy involves licensing on FRAND terms (ICN, 2016[51]).

Requiring merged companies to license on FRAND terms is indeed a common remedy, particularly in vertical mergers, where the transaction may raise entry barriers for competing firms operating in downstream or upstream markets. This remedy aims to prevent post-merger foreclosure by ensuring rivals are not denied access or subjected to discriminatory licensing conditions (OECD, 2019[49]). However, implementing such a remedy can be challenging in practice, for instance when it comes to defining what constitutes “fair”, “reasonable” and “non-discriminatory” terms, and setting appropriate royalty rates (OECD, 2019[29]; 2014[5]).

When designing IP-related remedies, competition authorities should co-operate with IP agencies in order to ensure information exchange and understanding of the markets. Co-operation with IP agencies may also be valuable to ensure the effective implementation of the remedies. Likewise, as highlighted by the OECD Recommendation on Intellectual Property Rights and Competition, co-operation with other competition authorities may be necessary, particularly when IP rights have a multijurisdictional nature, in which cases the remedies will have an impact in another jurisdiction.

In LAC, the design of remedies is the dimension where competition authorities have been more active related to IP rights in merger control. Competition authorities have focused particularly on trademarks, given the degree of customer loyalty associated with competitors’ trademarks and the potential anti-competitive effects arising from the concentration of such IP rights within a single company following the transaction (Leurquin, 2021[41]). Nevertheless, remedies involving other IP rights, particularly patents, have also been imposed on a few occasions. The box below highlights some relevant cases in this regard.

Box 8. Examples of IP-related merger remedies in LAC

Bayer/Monsanto in LAC (2018)

The acquisition of Monsanto by Bayer in 2017 was reviewed by several competition authorities worldwide, including in Latin America, with IP-related remedies imposed to address competition concerns, both in the global and local markets.

For instance, in Brazil, CADE approved the transaction subject to conditions, as competition concerns were identified in relation to horizontal overlaps and the strengthening of vertical integrations in the markets for soybean seeds and transgenic cotton. The main remedy consisted of divestiture of all Bayer assets related to its soybean seeds and cotton business, including patents and trademarks. Behavioural remedies were also imposed, requiring the merged firm to licence IP rights on FRAND terms and prohibiting the use of exclusive sales channels, tying or bundling.

In Chile, FNE imposed similar structural remedies (including those related to IP rights) to address horizontal concerns identified in the vegetable seed market (specifically in watermelon, melon, onion, pepper, lettuce, and cucumber seeds). Additionally, in light of conglomerate risks identified in the market for non-selective herbicides based on ammonium glufosinate, FNE imposed behavioural remedies, preventing the merged entity, for a period of five years, from establishing exclusive arrangements for the commercialisation of its brand, as well as from engaging in tying and bundling practices.

Nidera/Syngenta merger in Argentina (2023)

In January 2023, CNDC recommended the Secretariat of Trade to approve the acquisition of Nidera Seeds Argentina by Syngenta Crop Protection subject to the divestment of several assets, as CNDC found that the merger would significantly increase concentration in the Argentine sunflower seed market, raising the risk of unilateral anti-competitive effects. The Secretariat of Trade ultimately ratified CNDC’s recommendations.

The merged entity was required to divest a range of assets related to the sunflower seeds market, including inventories of several hybrid seeds, IP associated with their production, as well as relevant trademarks. CNDC considered this divestiture package sufficient to enable Nuseed S.A. to emerge as a vigorous and effective competitor to the merged firm, thereby preserving competition in the sunflower seeds market.

Chema/Sika merger in Peru (2024)

In October 2024, Indecopi conditionally approved the acquisition of Grupo Chema by Sika Peru. Indecopi identified a few relevant markets where horizontal overlaps between both parties raised serious competition concerns, such as chemical additives for mortar, bonding agents, concrete products, and premixed tile mortars.

In order to mitigate such competition concerns, Indecopi imposed a series of conditions, including: (i) the permanent divestiture of some Chema trademarks; (ii) the licensing of other Chema trademarks for a seven-year period to an independent third-party that could effectively compete in the markets where the competition risks were raised; and (iii) the authorisation to use the Chema brand logo and the commercial image of the licensed brand’s products for a period of five to seven years. In addition, the merged firm was prohibited from commercialising products of the licenced brands for an additional period of three years, to ensure the new company can consolidate itself as an effective competitor in the market without Sika’s direct competition. The merged entity was also prohibited from changing the prices of the affected products during the divestiture and licensing process.

Source: CADE (2018[52]), CADE approves with restrictions Bayer’s acquisition of Monsanto, https://www.gov.br/cade/en/matters/news/cade-approves-with-restrictions-bayer2019s-acquisition-of-monsanto; FNE (2018[53]), FNE aprueba con medidas adquisición de Monsanto por parte de Bayer, https://www.fne.gob.cl/fne-aprueba-con-medidas-adquisicion-de-monsanto-por-parte-de-bayer/; CNDC (2023[54]), Desconcentración en el mercado de semillas de girasol – Operación Syngenta / Nidera, https://www.argentina.gob.ar/noticias/desconcentracion-en-el-mercado-de-semillas-de-girasol-operacion-syngenta-nidera; Indecopi (2024[55]), El Indecopi autoriza con condiciones una operación de concentración empresarial en el mercado de materiales de construcción, https://www.gob.pe/institucion/indecopi/noticias/1041735-el-indecopi-autoriza-con-condiciones-una-operacion-de-concentracion-empresarial-en-el-mercado-de-materiales-de-construccion

Notes

← 1.  Other competition concerns include facilitating exclusion and quantity constraints, promoting co-ordinated prices, picking a winner that would not maximise social welfare, picking a winner through deceit (so-called patent ambush), and yielding asymmetric cost impacts (OECD, 2014[5]).

← 2.  Also called collective management organisations (CMOs) or authors’ societies (WIPO, 2004[62]).

← 3.  In 2018, the Secretariat of Trade, following the recommendations of the National Commission for the Defence of Competition (CNDC), imposed a fine of ARS 42.7 million (approximately USD 1.5 million) on the Argentinian Society of Music Authors and Composers (SADAIC) for abusing its dominant position by charging excessive and discriminatory fees to certain hotels for the secondary reproduction of music (Secretariat of Trade decision No. RESOL-2018-371-APN-SECC#MP of 26 June 2018, based on CNDC opinion No. 43 of 17 May 2017). However, this decision was overturned by the Federal Civil and Commercial Court of Buenos Aires, and this ruling was subsequently upheld by the Supreme Court (Peña and Rossi, 2018[64]; Toom and Ortiz, 2018[65]).

← 4.  For cases in Europe, see (Yaghi, 2020[63]).

← 5.  Case C-457/10-P (AstraZeneca v. Commission), judgement of the European Court of Justice (First Chamber) of 6 December 2012.

← 6.  Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993).

← 7.  Case T-111/96 (ITT Promedia v. Commission), judgement of the Court of First Instance (Fourth Chamber, Extended Composition) of 17 July 1998.

← 8.  For example, Peru explicitly includes sham litigation in the list of abuse of dominance prohibited by the Law on the Repression of Anticompetitive Conducts (Legislative Decree No. 1034 of 2008, article 10.2.f).

← 9.  Andean Community Court of Justice, decision of 11 December 2020, process 02-IP-2019. In particular, the court has ruled that sham litigation is a form of abuse of dominance, consisting of the abusive exercise of the right to legal regulatory proceedings. In order to assess such anti-competitive practices, national competition authorities should examine the purpose, motivation, or intent behind the legal actions, in order to determine whether they were conceived as part of a plan aimed at restricting competition.