“One of the main challenges we face is the shifting regulatory landscape in different jurisdictions in the region”

Marcela Ortiz, a senior legal manager for Chile, Peru and Ecuador at online marketplace Mercado Libre, tells us about the changes in labor regulations which have had the greatest impact on the company in recent years and the main challenges faced by e-commerce companies in Latin America.

Publicado lundi, septembre 11 2023
“One of the main challenges we face is the shifting regulatory landscape in different jurisdictions in the region”

Marcela Ortiz

Tell us briefly about your role at Mercado Libre.

I joined Mercado Libre in June 2018, at a time when our local operation was still small, with approximately 160 employees and no local legal team. It was a tremendous challenge, as I assumed not only responsibility for providing legal advice to all of Mercado Libre Chile’s business units, but was also in charge of government relations and public policy. In 2020 I faced the challenge of putting together the local legal team for Mercado Libre and Mercado Pago, which now houses 10 lawyers.

I currently lead the legal commerce team at Mercado Libre, not only in Chile, but also in Peru and Ecuador. Among the main responsibilities we have as a team are to: (i) Analyze, design and legally structure new businesses and projects of Mercado Libre; (ii) Lead commercial agreements with different partners and suppliers, including private and public entities, and also with our users through terms and conditions; (iii) Provide general regulatory support and collaborate in the approach of public policies; (iv) Detect and implement innovations to legal processes to increase the scalability of solutions.

This role has given me the opportunity, on the one hand, to contribute to the growth and development of Mercado Libre Chile ─ which in recent years has been tremendous ─ and on the other hand, to build and lead a first-class team, to respond to important legal challenges the company faces.

How do you think your previous experience contributes to your role today?

Before joining Mercado Libre, I spent seven years in charge of the legal department at financial services company Klap, which offers businesses solutions including card payment, bill payment, top-up sales, meal cards, gambling and correspondent banking.

One of the main challenges in this role was to accompany the business throughout the process of opening up the means-of-payment industry. Back then, Chile had a single acquiring network which, to this day, is vertically integrated to the main banks in the market and, at that time, was the only network recognized by the Central Bank of Chile and the Financial Market Commission (CMF).. This meant that, in order to run a payment-card business, a contract with the issuer was required. After numerous consultations with to the relevant authorities and key industry players, in 2017 the Central Bank updated its retail payment method regulations, adapting them to the needs of the industry in order to, among other things, promote competition.

In addition, during my time at Klap, I participated in projects to obtain Prepaid Card Issuer and Payment Card Operator licenses from the CMF. Leading the legal area of a company that was entering a highly regulated and monopolized market  allowed me to develop, among other attributes, a business-oriented mentality and a creative problem-solving mindset.

Certainly, this previous experience has served me well in my current role. To give you a concrete example, in my early years at Mercado Libre, Mercado Pago, a  financial services subsidiary, became subject to CMF card regulation. As a result, we had to go through an extensive process before the regulators to obtain the necessary licenses as an operator and issuer of prepaid cards. My previous experience in a similar process proved invaluable when navigating this process, allowing us to make the necessary adjustments according to our capabilities, without compromising the operation of the business in the process.

Mercado Libre challenges traditional economic models via new technology and ways of working

 What regulatory changes pertaining to labor law have most affected the company in recent years?

Although several regulatory changes in labor matters have taken place in recent years that have impacted us to a greater or lesser extent, I would like to mention two, the first was the entry into force of Law 21.431 on Digital Platforms, whose objective was to regulate the relations between workers of digital platforms, dependent and independent, and companies of digital platforms, incorporating a special title of the Labor Code. The entry into force of this law coincided with the implementation of a new logistic model at Mercado Libre, which we designed in the wake of this regulation.

The main challenge was the interpretation of some points on which the above law was not completely clear, such as,  the qualification of labor on subordination and dependence, or the way in which certain requirements must be implemented in practice, such as the need to have written and signed contracts with independent workers. To address these challenges, together with external legal experts, we found reasonable interpretations that would allow us to comply with the legal requirements without compromising the way we operate.

The other relevant regulatory change was Law 21,561, known as the "40 Hours Law", which modified the Labor Code to reduce the length of the normal working week from 45 to 40 hours, to be introduced in a staggered manner. The main challenge we anticipate is how to implement it within the deadlines set by the law, while also modifying the shift schedule of the employees in a way that limits the impact on Mercado Libre’s operational productivity. That is why we are actively working on identifying and designing solutions that will allow us to comply with the law while effectively managing these operational challenges.

What are the biggest obstacles facing e-commerce companies in Latin America?

What companies like Mercado Libre are attempting challenges traditional ways of doing things in various areas of the economy,  by building technology and ways of working that are new.  In these situations, most of the time the applicable regulation has not been designed with these new business models in mind or is only in the works. For the same reason, I believe that one of the great challenges faced by e-commerce companies in Latin America is the atomization, dispersion and lack of legal certainty of the regulations that apply to them or that are being designed.

As we all know, regulation can be extremely useful and necessary to protect various legal assets, to enhance market competition and to protect citizens from the different types of abuses they may suffer. However, a bad regulation can generate the complete opposite effect and not only harm companies that are providing necessary services to society, but ultimately harm the consumer too.

In that sense, just as there is technological convergence, I see a clear trend towards regulatory confluence in the different countries of the region. Of course, we have differences in the details of the regulations and for that we have local legal teams and recourse to first-class external advisors. But on the major issues, we are increasingly seeing regulations converge, which generally considers the same principles and legal assets to be protected.

For example, this has been a big year for fintech industry regulation in Chile. The enactment of the Law was a tremendous step for the fintech ecosystem in our country, but, at the same time, the formal introduction in Chile of legal-economic concepts such as open banking and open finance, interoperability, digitalization of money and new investment mechanisms from crowdfunding to crypto-assets. These legal institutions transcend the Chilean regulation itself, and you can find them, at different stages of development,, in countries like Mexico, Brazil, Argentina, Colombia and Ecuador.

Therefore, for the type of industry in which Mercado Libre and Mercado Pago operate, one of the main challenges we face is the shifting regulatory landscape in the different jurisdictions. Some are advancing faster and more decisively in one aspect, others in others. But all of them are working, at their own pace and from their own context, to protect and promote similar kinds of legal assets.

From my perspective, this climate of regulatory convergence can be an opportunity, as well as  a challenge, for the industry, because it gives us the ability to help  law-makerss at  different stages of the regulatory process by  showing what has worked and what has not worked in other countries, and to encourage a more collaborative and constructive  position for the regulation, which takes the business perspective into account.

The entry into force of Chile’s Digital Platforms law coincided with the implementation of a new logistic model at Mercado Libre

What qualities do you value most in an external legal advisor?

An ability to compete in the ecommerce industry and fintech business, design and offer disruptive and innovative technological products and solutions, which did not previously exist in Latin America, and doing so in a company whose cultural pillar is the permanent search for greater innovation in processes, dynamics and internal work methodologies.  As a legal team, being able to adapt to permanent change requires a flexible legal team with different types of skills and capabilities, the very same qualities we look for in an external advisor.

So, the main aspect is that the external legal advisors we work with know how to operate as an extension of our team. That is why, during the search process for a law firm, we make sure that we not only consider specialized and highly experienced lawyers in the different areas we require ─ in fact, these characteristics are a basic requirement that Mercado Libre expects from all its advisors throughout the region ─ but also look for professionals who are capable, responsive  and have the necessary openness to understand and take into account the company’s business and culture when providing us with advice. We look for them to be able to provide us with customized, sophisticated deliverables and solutions that are not only feasible to implement from a legal, but also a practical, point of view,  but focus on the needs of our business and, especially, our users.

Today the local legal team is designed to mirror the two major business units of Mercado Libre, which we call “the yellow world”, and includes everything related to our Marketplace (with the different e-commerce satellite solutions), in addition to the operations and logistics vertical, and then there is “the blue world”, which is the fintech wing that offers different financial solutions to our users. For both verticals we have the support of several law firms and lawyers who are recognized specialists at national and international level, to help us in the analysis and design of the different initiatives.

Among the most significant, non-confidential projects on which they have accompanied us recently are Arriendo Online, which is a project that allows users interested in renting a property to manage the scheduling of visits and book online properties through the platforms belonging to Portal Inmobiliario and Mercado Libre Chile; the launch of Mercado Libre Extra which is a crowdsourcing logistics model that creates a cloud of autonomous carriers that provide their transfer services through an app for the shipment of users’ packages; the launch of Meli Air, which is Mercado Libre’s fleet of aircraft operated in partnership with an airline; Exclusive Electric Fleet (electric vans) to transport packages in the last mile; the launch of Mercado Pago Crypto, which is an initiative that allows Mercado Pago users to buy, sell and transfer cryptocurrencies (Bitcoin and Ethereum) quickly and easily via our app, and which is in the process of obtaining its Mercado Pago Corredores de Seguros SpA insurance broker license from the Commission for the Financial Market; design of the financing structure that allows Mercado Pago the securitization of coupons, among others.