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UPDATE 3-Chile pharmacy admits price-fixing; peers deny it

* FASA says it fixed prices with Salcobrand, Cruz Verde

* Salcobrand, Cruz Verde deny participation

* Anti-monopoly tribunal calls April 1 audience

* Government voices “indignation” (Adds state prosecutor, Finance Minister comments)

By Antonio de la Jara

SANTIAGO, March 25 (Reuters) - One of Chile’s leading pharmacy chains has admitted to collusion with rivals to push up prices and agreed to pay a $1 million fine, triggering angry denials from the competitors and government indignation.

Farmacias Ahumada SA FAS.SN, or FASA, admitted late on Tuesday that some of its executives had coordinated prices with its competition, Chile's state prosecutor on antitrust issues said on its website (www.fne.cl).

“Chile’s second-biggest chain of pharmacies, FASA ... agreed to pay the equivalent of more than $1 million after its executives participated in a pact to raise prices in a coordinated manner and with (competitors) Salcobrand and Cruz Verde,” the state prosecutor said.

Chile’s anti-monopoly tribunal called on the three pharmacy chains to attend a hearing on April 1.

The price-fixing took place between November 2007 and March 2008, it added. The three chains account for the lion’s share of the Chilean market.

“It is unprecedented for a member of a cartel to come forward voluntarily ... recognize what has happened and collaborate,” state anti-monopoly prosecutor Enrique Vergara told reporters on Wednesday. “This will discourage more cartels from forming in the future.”

Government spokeswoman Carolina Toha voiced government indignation and Hernan Calderon, president of Chile’s Consumer Association, said his organization could gather information for a collective lawsuit.

Salcobrand dismissed Farmacias Ahumada’s admission as “infamy,” while Cruz Verde said there was no coordination over prices.

“We categorically deny the accusation made by FASA, which seeks to involve us in the said pact,” Salcobrand said in a statement overnight. “Salcobrand has taken no part whatsoever in this illegal action.”

Cruz Verde said in a separate statement that it “does not know why Farmacias Ahumada said there was price coordination,” adding it had not coordinated prices with its competitors.

Health Minister Alvaro Erazo said the sector needed to be better regulated and that consumers needed to be compensated.

“It is impossible for collusion to have occurred at only one pharmacy chain,” Erazo told television station TVN. “The gesture made by Farmacias Ahumada needs to serve as a good example for other pharmacy chains to follow.”

Finance Minister Andres Velasco said Chile was showing it is serious about preventing monopolistic practices and correcting them.

“To me it is a historic case in efforts to ensure the market works well and works for everyone,” Velasco said. “Avoiding monopolies and collusion is the essence of the market system.” (With reporting by Rodrigo Martinez and Ariel Miranda; Writing by Simon Gardner; Editing by Gary Hill)

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