Competition law in Mexico: overview

A Q&A guide to competition law in Mexico.

The Q&A gives a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures. In particular, it covers relevant triggering events and thresholds, notification requirements, procedures and timetables, third party claims, exclusions and exemptions, penalties for breach, and proposals for reform.

To compare answers across multiple jurisdictions visit the Competition law Country Q&A tool.

This Q&A is part of the PLC multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Competition Q&As visit www.practicallaw.com/competition-mjg.

For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-mjg.

Amílcar Peredo, Basham, Ringe y Correa, S.C.
Contents

Merger control

1. What (if any) merger control rules apply to mergers and acquisitions in your jurisdiction?

Regulatory framework

In Mexico, competition is a federal matter and the regulatory framework is based on the Mexican Federal Constitution, the Federal Economic Competition Law (Competition Act) and its Regulations (Competition Regulations).

Due to a recent constitutional amendment, it is possible that a new Federal Economic Competition Act will be passed (most likely based on the current statute). However, this article will not refer to this new statute as it is uncertain whether this will be passed or what its contents will be.

Regulatory authority

As at the date of this article, the regulatory authority is the Federal Competition Commission (FCC). As a consequence of the constitutional amendment, the Federal Economic Competition Commission (FECC) is due to be created in the second half of 2013, which will assume the current FCC's activities. Any differences between the FCC and the FECC will depend on the legislation to be passed as a consequence of the constitutional amendment (which to this date, has not been presented at the Congress). However, it is likely that most provisions applicable to the FCC will remain when the latter is substituted by the FECC.

The Federal Institute of Telecommunications (FIT), for matters relating to telecommunications, is also due to be created in the second half of 2013 (see Question 12). For purposes of this article, all references to the FCC will apply to the FIT for telecommunications matters unless specifically mentioned otherwise.

See box, The regulatory authority.

 

Triggering events/thresholds

2. What are the relevant jurisdictional triggering events/thresholds?

Triggering events

The Competition Act merger control rules cover concentrations, which include mergers, acquisitions of control or any other action between or among competitors, suppliers, customers or any other economic agents to consolidate corporations, associations, stock holdings, partnership interests, trusts, or assets in general.

Transactions authorised by the FCC are not subject to further review unless the transaction's approval/authorisation was based on (Competition Act):

  • False information.

  • Certain conditions (remedies) which were not fulfilled.

Thresholds

The FCC must be notified if any of the following thresholds are met (Competition Act):

  • One or a series of transactions whose value in Mexico exceeds an amount equivalent to US$93,254,400 (MXN1.16 billion).

  • One or a series of transactions gives rise to a concentration which results in the accumulation of 35% or more of the assets or shares of an economic agent, whose annual assets or sales in Mexico exceed US$93,254,400 (MXN1.16 billion).

  • One or a series of transactions:

    • gives rise to a concentration which results in the accumulation in Mexico of assets or capital equivalent to US$43,518,720 (MXN543,984,000); and

    • two or more economic agents whose assets or annual sales volume, together or separately, are greater than US$248,678,400 (MXN3.10 billion), take part in the concentration.

Limitation period

The Competition Act provides a limitation period of five years for the FCC to investigate a transaction which met the thresholds and one year for transactions which did not meet them, running from the time when the transaction closed.

 

Notification

3. What are the notification requirements for mergers?

Mandatory or voluntary

Notification is mandatory if any of the thresholds are met (see Question 2, Thresholds).

Timing

The parties to the transaction must notify the FCC before (Competition Regulations):

  • The transaction is considered to be carried out under the applicable laws, or the conditions for closing the transaction are met.

  • An economic agent acquires directly or indirectly, the control of another economic agent, or another economic agent's assets, participation in trusts, capital or stock.

Notice must be given before transactions that are carried out abroad have legal or factual effects in Mexico.

Formal/informal guidance

Both formal and informal guidance can be requested by economic agents prior to submitting the notification of a transaction. In both cases, the FCC's opinion is not binding on the FCC.

Formal guidance is carried out through a specific proceeding in which an economic agent can consult the FCC on a specific anti-trust-related matter. These proceedings are usually carried out in two or three months.

Informal guidance can be obtained by contacting the individuals within the FCC related to a specific matter. Such contact consists of both telephone conversations and face-to-face meetings.

Responsibility for notification

In principle, notification should be filed by all economic agents involved in the transaction. However, in those cases where this is not possible, only the acquiring party must submit the notification.

Relevant authority

Notifications must be submitted to the FCC (see Question 1, Regulatory authority).

Form of notification

Notifications must be submitted in writing.

There is no standard form for notifications. However, both the Competition Act and its Regulations provide a list of the required documents and information.

Filing fee

There are no filing fees.

Obligation to suspend

Ten days after the parties file a notification, the FCC can issue a stop order, whereby the parties must not close the transaction until the FCC issues a decision (Competition Act).

If the FCC does not issue a stop order, the parties can close the transaction, although this is at their own risk, as the FCC may ultimately decide not to approve the transaction.

 

Procedure and timetable

4. What are the applicable procedures and timetable?

The Competition Act provides a general and a summary process for submitting a notification to the FCC. The summary process applies in cases where it is clear that a transaction will not have a negative effect on competition.

General process

Once the notification has been submitted, the FCC has 15 working days to require the submission of additional information from the parties involved, which in turn must be submitted within 15 working days following the request. However, it is not unusual for the FCC to request further additional information in certain cases.

The FCC must issue its decision within 35 working days after the filing of the notification or after the last submission of additional information. If the FCC does not issue its decision within this period, the FCC will be considered to have no objection to the transaction being carried out.

Summary process

The summary process applies when it is clear that a transaction will not have a negative effect on competition. This is generally when:

  • The acquiring party does not take part in markets related to the relevant market in which the transaction takes place.

  • The acquiring party is not a competitor, currently or potentially, of the party being acquired.

  • Any of the following circumstances applies:

    • the transaction will result in the acquiring party taking part in the relevant market for the first time;

    • before the transaction, the acquiring party did not control the acquired economic agent and as a result of the transaction, the former will increase its share relative to the latter, without this giving it greater power to influence the operation, management, strategy, or principal policies of the company, including the designation of the members of the board of directors or management of the acquired party; or

    • the party acquiring shares, equity interests, or participation units already has control of the company and increases its holdings of the capital of the company.

Under the summary process, within the five working days following the filing of the notification, the FCC's Executive Secretary must either:

  • Accept the notification.

  • Require notice under the general process.

If accepted under the summary process, the FCC must issue its decision within 15 working days following acceptance by the Executive Secretary. If the FCC does not issue its decision within this period, the FCC will be considered to have no objection to the transaction being carried out.

For an overview of the notification process, see flowchart, Mexico: merger notifications (www.practicallaw.com/4-504-5299).

 

Publicity and confidentiality

5. How much information is made publicly available concerning merger inquiries? Is any information made automatically confidential and is confidentiality available on request?

Publicity

Notices of transaction notifications (including the names of the parties) are published on the FCC's website (see box, The regulatory authority) and therefore this information is publicly available. However, the specific information in the notification files is not published at this stage.

Procedural stage

During the procedural stage, all the information contained in the file is confidential. However, once the decision is issued, both the decision and the file are publicly available (excluding any confidential or reserved information (see below, Automatic confidentiality).

Automatic confidentiality

Certain information within the FCC's decisions is automatically kept confidential. There is no automatic confidentiality for information provided by economic agents during the procedural stage. Economic agents must specify which information should be confidential and the reasons for such request.

Confidentiality on request

The parties involved can request certain information to be classified as confidential, explaining the reasons for that request. If the economic agents justify the confidential nature of the information, the FCC must hold such information confidential.

 

Rights of third parties

6. What rights (if any) do third parties have to make representations, access documents or be heard during the course of an investigation?

Representations

During the course of an investigation, third parties can make written representations to the FCC. However, third parties do not have a legal right to challenge FCC decisions unless they can demonstrate a legal interest, which, based on FCC and federal court precedents, is unlikely regarding concentrations (see Question 10).

Document access

During the course of an investigation, third parties do not have the right to access documents.

Be heard

Third parties do not have the right to be heard by the FCC.

 

Substantive test

7. What is the substantive test?

The FCC can oppose and penalise any concentration which has the purpose or effect of restraining, injuring or preventing free and open competition in the market of equal, similar or substantially comparable products and services (Competition Act).

 

Remedies, penalties and appeal

8. What remedies can be imposed as conditions of clearance to address competition concerns? At what stage of the procedure can they be offered and accepted?

The FCC can impose conditions on economic agents to approve a transaction. These conditions may require the party to:

  • Carry out or abstain from specific conduct.

  • Transfer specific assets, rights, shares or membership interests to third parties.

  • Eliminate a specific line of production.

  • Modify or eliminate terms or conditions from agreements that the economic agents intend to enter into.

  • Take steps to encourage competitors to participate in the market, as well as to give access or sell assets or services to such competitors.

  • Carry out any other conditions that are intended to avoid the concentration diminishing, damaging, or impeding free and open competition.

The FCC cannot impose conditions that are not directly linked to correcting the effects of the transaction. The parties can offer remedies either:

  • Before the ruling on the transaction is decided by the FCC plenary.

  • During a specific administrative appeal (motion for reconsideration).

As a consequence of the constitutional amendment (see Question 1), it is likely that the motion for reconsideration (or any other administrative appeal) will disappear.

There is no specific proceeding for the offer and acceptance of conditions for the approval of a transaction and such offering does not affect the timing for issuing a decision by the FCC.

 
9. What are the penalties for failing to comply with the merger control rules?

Failure to notify correctly

If a party fails to notify a transaction when required to do so, the FCC can:

  • Order the reversal of the transaction.

  • Impose the following fines:

    • for the economic agent: up to the equivalent of 5% of its revenue in the last fiscal year;

    • for individuals directly involved: a fine of up to US$1,035,680; and

    • for individuals indirectly involved: a fine of up US$932,112.

In all cases, if the sanctioned party does not pay the imposed fines, the FCC can request the tax authority to begin a proceeding to collect payment.

Implementation before approval or after prohibition

If a party closes a transaction in violation of a stop order or after prohibition, the FCC can impose a fine of up to 8% of the economic agent's revenue in the last fiscal year.

Failure to observe

If the FCC imposes remedies when approving a transaction and the parties do not comply with them, the FCC can:

  • Order the reversal of the transaction.

  • Impose a fine on the party of up to the equivalent of 10% of its revenue in the last fiscal year.

 
10. Is there a right of appeal against any decision? If so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties or only the parties to the decision?

Rights of appeal and procedure

All parties with a legal interest have the right to challenge the decision of the FCC (Competition Act). Appeals are made first through a motion for reconsideration (MFR) and afterwards through an amparo action before a federal court. The MFR must be filed within 30 working days following notice of the FCC's decision and must be resolved by the FCC within 60 working days of filing. Against the decision of an MFR, the interested party can file an amparo action with a federal court within 15 working days following the notice of the FCC's MFR decision.

The amparo action's purpose is for a federal court to review the FCC's decision and decide whether or not the decision was issued in violation of the appealing party's constitutional rights. Specifically, this type of amparo action will usually focus on the legal and factual justification for the FCC's decision.

Third party rights of appeal

Under the Competition Act, third parties can only challenge the FCC's decision if a legal interest is recognised, which is rare is the case of implementing a transaction based on FCC and federal court precedents.

 

Automatic clearance of restrictive provisions

11. If a merger is cleared, are any restrictive provisions in the agreements automatically cleared? If they are not automatically cleared, how are they regulated?

Once the FCC clears a transaction, all restrictive provisions in the applicable agreements are also generally deemed cleared, unless they are the subject of remedies imposed by the FCC. Non-compete covenants may be cleared on a case-by-case basis, depending on their scope and duration they are more easily approved when they concern intangible assets such as goodwill.

 

Regulation of specific industries

12. What industries (if any) are specifically regulated?

The FIT) is due to replace the FCC in relation to regulation of the telecommunications industry. To encourage free and open competition, the Constitution provides for a statement of dominance for economic agents within the telecommunications industry, which will have certain consequences for the purposes of asymmetric regulation (that is, where different economic agents in the same industry are subjected to different levels of regulatory restraint).

Although the legal framework on which asymmetric regulation will be imposed is still to be submitted to the Congress, it will have certain restrictions on dominant economic agents, which will either:

  • Prohibit them from engaging in specific conduct which would otherwise be considered as legal.

  • Order them to do something which would not be required of other non-dominant economic agents.

There is also a specific procedure regarding approval by the FCC in relation to public concessions (for example, mining concessions).

 

Restrictive agreements and practices

Scope of rules

13. Are restrictive agreements and practices regulated? If so, what are the substantive provisions and regulatory authority?

Under the Competition Act, restrictive agreements and practices are considered absolute monopolistic practices, which are similar to the operation of the per se rule in US anti-trust law. Conduct classified as an absolute monopolistic practice is automatically unreasonable and illegal without the requirement for further investigation or consideration of market share or possible efficiencies.

In Mexico, only horizontal restraints between competitors are considered absolute monopolistic practices. Such practices include:

  • Price-fixing.

  • Limitations on offer or demand.

  • Territory or customer allocation.

  • Bid-rigging.

There are also criminal sanctions for individuals involved in absolute monopolistic practices (see Question 24, Personal liability).

As at the date of this article, the FCC is the regulatory authority charged with investigating absolute monopolistic practices which, as mentioned before, will be substituted by the FECC. The FIT will be the regulating authority in the telecommunications field after it has been set up (see Question 1, Regulatory authority)

Other forms of potentially anti-competitive practices and agreements are considered to be relative monopolistic practices (see Question 27).

 
14. Do the regulations only apply to formal agreements or can they apply to informal practices?

The regulations apply both to formal agreements and informal practices.

 

Exemptions

15. Are there any exemptions? If so, what are the criteria for individual exemption and any applicable block exemptions?

The FCC, federal courts, and the Supreme Court of Justice consider that when specific anti-competitive conduct takes place within the same economic group, that conduct will not be deemed illegal.

Two or more economic agents will be considered to form an economic group when:

  • A group of companies or individuals:

    • have commercial and financially related interests;

    • co-ordinate their activities to achieve a common objective, or come together to obtain those financial or commercially related interests.

  • One company or individual, directly or indirectly, co-ordinates the activities and can influence decisively or control the rest of the companies or individuals.

In taking into account the existence of an economic group, the FCC considers the activities and practices of the members of the group as if they were decisions made by a single entity and therefore not as:

  • Absolute monopolistic practices within the group.

  • A vertical restraint by the upstream company with respect to the other members of the group.

 

Exclusions and statutes of limitation

16. Are there any exclusions? Are there statutes of limitation associated with restrictive agreements and practices?

Exclusions

The exclusions from regulation are determined on a case-by-case basis and are based on determining whether or not the law applies to a specific agent.

Aside from the above, specific exclusions are provided for in the Competition Act, such as for:

  • The conduct of labour unions.

  • Intellectual property rights.

  • The conduct of public entities when acting as public authorities.

In addition, the FCC has excluded the activities of notaries public, who are not considered as economic agents for the purposes of competition law.

Statutes of limitation

The FCC's authority to investigate and sanction any monopolistic practices or other illegal conduct is limited to a period of five years. This period commences on the date the illegal behaviour occurred.

If the illegal behaviour is continuous, it is possible for the FCC to seek an interpretation that the five-year period commences when the illegal behaviour has stopped.

 

Notification

17. What are the notification requirements for restrictive agreements and practices?

Notification

Restrictive agreements and practices are not subject to notification unless they are part of a transaction subject to clearance by the FCC, in which case the analysis will be carried out when reviewing the transaction (see Questions 1 to 12).

Informal guidance/opinion

Although it is possible to obtain formal guidance by requesting an opinion from the FCC involving absolute monopolistic practices before formal notification, the opinion is not binding on the FCC. Informal guidance is also possible, and again has no binding effect.

Responsibility for notification

Not applicable (see above, Notification).

Relevant authority

As at the date of this article, requests for opinions should be made to the FCC (see Question 1, Regulatory authority).

Form of notification

Formal requests for opinions must be made in writing.

Filing fee

There are no filing fees for requesting opinions.

 

Investigations

18. Who can start an investigation into a restrictive agreement or practice?

Regulators

Investigations can be started by the FCC on its own initiative (see Question 1, Regulatory authority).

Third parties

For absolute monopolistic practices, any third party can file a complaint to trigger an investigation.

 
19. What rights (if any) does a complainant or other third party have to make representations, access documents or be heard during the course of an investigation?

Representations

Complainants can make representations in investigations into absolute monopolistic practices.

Document access

No party has the right to access the file during the investigation stage. Once the investigation stage is over and a notice of probable responsibility (NPR) (similar to a statement of objections) is issued, all parties with a legal interest can access the file.

Be heard

Complainants do not have the right to be heard in an investigation of absolute monopolistic practices.

 
20. What are the stages of the investigation and timetable?

The investigation comprises two stages:

  • Stage I. This is the investigation stage, which can last from 30 to 120 working days, and is extendable for up to four additional periods of up to 120 working days (about two years).

  • Stage II. This stage begins with the issuance of an NPR and is dealt with similarly to a court proceeding. Once an economic agent is served with an NPR, it must reply to the NPR within 30 working days. After the economic agent has replied, the FCC can request additional evidence, in which case there is no time limitation. Following the gathering of additional evidence by the FCC, the parties will have ten working days to submit closing arguments, after which the FCC must issue a decision within the following 40 working days.

 

Publicity and confidentiality

21. How much information is made publicly available concerning investigations into potentially restrictive agreements or practices? Is any information made automatically confidential and is confidentiality available on request?

Publicity

All investigations begin with their publication in the Federal Official Gazette, which includes the:

  • File number.

  • Investigated violation.

  • Market in which the alleged conduct occurred.

After the investigation stage is closed, all legal actions within the file are published on the website of the FCC, including the name of the acting party (which usually allows the identification of the defendants).

Once the FCC has issued its decision, its public version (excluding confidential information) is made available to the public through the FCC website. In addition, it is not uncommon in relevant cases for the FCC to issue a press release.

Automatic confidentiality

Certain information relating to parties' involvement with the FCC's decisions is automatically kept confidential, such as:

  • The name of leniency applicants (if applicable).

  • The names and addresses of individuals.

  • Financial and economic information (such as income or market shares).

However, there is usually no automatic confidentiality for information submitted by the parties. If economic agents require information provided by them during the course of the investigation to be kept confidential, they must specify which information should be confidential and the reasons for that request.

Confidentiality on request

The parties involved can request the FCC to keep certain information classified as confidential. Parties must explain the reasons for that request. Provided the economic agents can justify the confidential nature of the information, the FCC must hold such information confidential.

 
22. What are the powers (if any) that the relevant regulator has to investigate potentially restrictive agreements or practices?

During an investigation, the FCC can:

  • Require information and documents from the parties (whether under investigation or not) that it considers relevant and necessary for the investigation.

  • Question witnesses related to the events being investigated.

  • Carry out inspections (dawn raids) at any site.

 

Settlements

23. Can the regulator reach settlements with the parties without reaching an infringement decision? If so, what are the circumstances in which settlements can be reached and the applicable procedure?

Settlements are not possible for absolute monopolistic practices.

 

Penalties and enforcement

24. What are the regulator's enforcement powers in relation to a prohibited restrictive agreement or practice?

Orders

The FCC can order the party under investigation to cease the restricted agreement/practice.

Fines

Companies found guilty of engaging in absolute monopolistic practices can be fined up to 10% of their revenue in the last fiscal year.

In all cases, if the sanctioned party does not pay the imposed fines, the FCC can request the tax authority to begin a proceeding to collect payment.

Personal liability

Individuals involved in absolute monopolistic practices can be fined:

  • For direct involvement, up to US$1,035,680 (MXN12,952,000).

  • For indirect involvement, up to US$932,112 (MXN11,656,800).

Individuals engaged directly in such conduct may also be subject to criminal liability and imprisonment from three to ten years. An additional criminal fine ranging from US$5,178 (MXN64,760) to US$15,535 (MXN194,280) may also be imposed.

Immunity/leniency

A leniency programme is available for parties and their current and former employees. To be granted full immunity, the party applying for leniency must fulfil all of the following requirements:

  • Be the first of the undertakings to provide the FCC with sufficient proof of the existence of the practice.

  • Co-operate with the FCC fully and continuously in the investigation and any resulting administrative proceeding.

  • Take all necessary steps to end participation in the practice.

In addition, a sliding scale of leniency is available. Second, third, and fourth applicants can receive fine reductions of up to 50%, 30% or 20%, respectively, provided they:

  • Co-operate with the FCC fully and continuously in the investigation and any resulting administrative proceeding.

  • Take all necessary steps to end participation in the practice.

  • Provide information that adds value to the information already held by the FCC.

Impact on agreements

Any agreement or provision that constitutes an absolute monopolistic practice will not have any legal effect and can render the entire agreement void.

 

Third party damages claims and appeals

25. Can third parties claim damages for losses suffered as a result of a prohibited restrictive agreement or practice? If so, what special procedures or rules (if any) apply? Are class actions possible?

Third party damages

Third parties can claim damages in a civil court caused by absolute monopolistic practices.

Special procedures/rules

The procedural rules are contained in the Federal Code of Civil Procedure, which applies to all federal civil cases, including claims for damages caused by illegal conduct.

Class actions

Since August 2011, class actions have been available in Mexico for damages caused by anti-competitive conduct. However, so far no cases have been brought to court.

 
26. Is there a right of appeal against any decision of the regulator? If so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties, or only to the parties to the agreement or practice?

Rights of appeal and procedure

See Question 10.

Third party rights of appeal

For investigations of absolute monopolistic practices, in several cases the FCC and the federal courts have stated that third parties do not have a legal interest to be able to file a motion for reconsideration nor an amparo action against the FCC's decisions considering such parties do not take part in the proceeding as a party but rather as an informant, although there is no binding case law for this. However, this could change as a consequence of a new amparo law, which came into force in April 2013 since the new amparo law (Ley de Amparo, Reglamentaria de los artículos 103 y 107 de la Constitución Política de los Estados Unidos Mexicanos) does not require that an applicant be a party to a proceeding in order to appeal through an amparo action.

As a consequence of the constitutional amendment (see Question 1), it is likely that the administrative appeal (motion for reconsideration) will disappear, leaving only the amparo action.

 

Monopolies and abuses of market power

Scope of rules

27. Are monopolies and abuses of market power regulated under administrative and/or criminal law? If so, what are the substantive provisions and regulatory authority?

Monopolies and abuses of market power are considered relative monopolistic practices under the Competition Act and the Competition Regulations and are investigated and penalised by the FCC (see Question 1, Regulatory authority).

There is no criminal liability for relative monopolistic practices and there is no state regulation. Relative monopolistic practices are similar to conduct analysed under the rule of reason in US anti-trust law. For such conduct to be illegal, certain requirements must be met:

  • The economic agent or agents carrying out the conduct must have market power in the relevant market.

  • The object or effect of the conduct must be to:

    • improperly displace other economic agents from the market;

    • substantially hinder them from entering the market; or

    • establish exclusive advantages in favour of one or more persons.

  • That efficiencies generated by the conduct do not outweigh its anti-competitive effects.

The Competition Act considers, among others, the following to be relative monopolistic practices:

  • Exclusive dealing.

  • Territory or customer allocations between non-competing agents.

  • Tied sales.

  • Price discrimination.

  • Boycotts.

  • Refusal to deal.

  • Resale price maintenance.

Except in a few cases, these practices are carried out between non-competing agents.

These practices are explained in more detail in Question 29.

 
28. How is dominance/market power determined?

Market power in a relevant market is determined by considering essentiality (that is, how essential the economic agent is within the relevant market). An assessment of essentiality is made by considering the (Competition Act):

  • Parties' share of the relevant market and if they have the power themselves to fix prices or restrict supply in the relevant market, without competitors being able to frustrate this power.

  • Existence of entry barriers and factors that may conceivably alter such barriers or the ability of other competitors to supply the market.

  • Existence of, and the power held by, competitors.

  • Possibility of economic agents and their competitors obtaining access to sources of raw materials.

  • Recent behaviour of the economic agents taking part in the market.

 
29. Are there any broad categories of behaviour that may constitute abusive conduct?

Relative monopolistic practices include (Competition Act):

  • Market allocation or supply restrictions between non-competitors.

  • Resale price maintenance.

  • Tied sales.

  • Exclusive dealing.

  • Granting incentives or discounts subject to exclusivity.

  • Predatory pricing.

  • Cross subsidising.

  • Price discrimination.

  • Refusal to sell.

  • Boycotts.

  • The action of one or more economic agents whose purpose or effect, directly or indirectly, is to increase costs and hinder the production process of, or reduce the demand faced by, competitors.

 

Exemptions and exclusions

30. Are there any exemptions or exclusions?

The same rules apply as for restrictive agreements and practices (see Questions 15 to 16).

 

Notification

31. Is it necessary (or, if not necessary, possible/advisable) to notify the conduct to obtain clearance or (formal or informal) guidance from the regulator? If so, what is the applicable procedure?

Although it is possible to obtain formal guidance by requesting an opinion from the FCC involving relative monopolistic practices, the opinion is not binding if the FCC later decides to conduct a full investigation.

 

Investigations

32. What (if any) procedural differences are there between investigations into monopolies and abuses of market power and investigations into restrictive agreements and practices?

Investigations

Investigations of relative monopolistic practices can only be triggered by a third party deemed affected by the conduct (or by the FCC by right of office) and cannot be triggered by members of the public.

Commitments

The parties under investigation can offer commitments to suppress the investigated conduct with the intention of terminating the investigation in advance (this privilege can only be invoked once every five years). To invoke this privilege, economic agents must show that the:

  • Offered commitments will restore or protect free and open competition.

  • Offered means are appropriate and economically viable to end the investigated conduct and will be carried within an appropriate time frame.

If the FCC considers the commitments to meet the above requirements, it can either:

  • Close the file without imposing a fine on the investigated parties.

  • Hold the parties liable for the illegal conduct and impose a fine.

If the FCC does not accept the commitments, the proceeding will continue its normal course.

Complainants

Complainants in relative monopolistic practices cases have the right to make representations and to be heard. If the FCC does not respond directly to the complainant, the complainant can challenge the FCC's decision through a motion for reconsideration and later through an amparo action.

As a consequence of the constitutional amendment (see Question 1), it is likely that the motion for reconsideration (and any other administrative appeal) will disappear, leaving only the amparo action (see Question 26, Third party rights of appeal).

 
33. What are the regulator's powers of investigation?
 

Penalties and enforcement

34. What are the penalties for abuse of market power and what orders can the regulator make?

The FCC can order the investigated economic agent to cease the investigated practice. The FCC can also fine the companies engaged in the relative monopolistic practices up to 8% of their revenue in the last fiscal year.

The administrative fines applicable to individuals involved in a relative monopolistic practice are the same as those for absolute monopolistic practices (see Question 24).

There is no criminal liability in relative monopolistic practices.

 

Third party damages claims

35. Can third parties claim damages for losses suffered as a result of abuse of market power? If so, what special procedures or rules (if any) apply? Are class actions possible?
 

EU law

36. Are there any differences between the powers of the national regulatory authority(ies) and courts in relation to cases dealt with under Article 101 and/or Article 102 of the TFEU, and those dealt with only under national law?

Not applicable.

 

Joint ventures

37. How are joint ventures analysed under competition law?

There is no specific legal definition for joint ventures in Mexico. These agreements are treated as concentrations by the FCC (see Questions 1 to 12).

 

Inter-agency co-operation

38. Does the regulatory authority in your jurisdiction co-operate with regulatory authorities in other jurisdictions in relation to infringements of competition law? If so, what is the legal basis for and extent of co-operation (in particular, in relation to the exchange of information)?

Mexico has signed a number of treaties and co-operation agreements with other countries in relation to economic competition. These treaties/agreements govern the extent to which Mexico and the authorities in other jurisdictions co-operate in relation to investigations of infringements of competition law.

 

Proposals for reform

39. Are there any proposals for reform of competition law?

Economic competition in Mexico has been the subject of many relatively recent changes. Among other things, an amendment to the federal Constitution for the purpose of strengthening the legal position of the FCC has been proposed, which may require a new Competition Act. However, there is no way of anticipating when this might occur at present.

 

Online resources

Federal Competition Commission (FCC)

W www.cfc.gob.mx

Description. Official site for the FCC. No official or unofficial English translations are available.



The regulatory authority

Federal Competition Commission

Head. Eduardo Perez-Motta (Chairman)

Contact details. Av. Santa Fe 505, piso 24.Col. Cruz Manca, Del. Cuajimalpa, México, D.F.
T +52 55 2789 6500
F +52 55 2789 6672
W www.cfc.gob.mx

Outline structure. The FCC is made up of five commissioners (which will increase to seven when the FECC is established) who make their decisions based on the findings and analysis carried out by each division within the FCC:

  • Legal affairs.

  • Litigation.

  • Economic studies.

  • Concentrations.

  • Absolute and relative monopolistic practice investigations.

  • Public tenders and privatisations.

  • Regulated markets and planning.

  • Co-ordination and international affairs.

The FCC's Executive Secretary heads all the divisions within the FCC.

Responsibilities. Each division deals with its own specific areas (see above, Outline structure).

Procedure for obtaining documents. The FCC can request documents from economic agents formally or informally. Involved parties and third parties can also request documents from the FCC in writing in those cases where they are entitled to access the requested information.



Contributor profiles

Amílcar Peredo, Partner

Basham, Ringe y Correa, S.C.

T +52 55 5261 0499
F +52 55 5261 0496
E aperedo@basham.com.mx
W www.basham.com.mx

Professional qualifications. Mexico, 1996

Areas of practice. Anti-trust.

Recent transactions

  • Acting for Motorola in obtaining clearance by the FCC for the acquisition of its handset business by Google.
  • Acting for The Coca-Cola Company as major shareholder of Jugos del Valle in obtaining clearance for the acquisition of Santa Clara.
  • Acting for Takeda Pharmaceutical in obtaining clearance for the acquisition of Nycomed.
  • Acting for BASF in obtaining clearance with respect to a joint venture with INEOS.
  • Representing The Coca-Cola Company in several investigations of relative monopolistic practices.
  • Representing clients in ongoing cartel investigations in the markets for LCD screens, auto-parts, shipping and health services.

Non-professional qualifications. Law degree, Universidad Nacional Autonoma de Mexico; LL.M, Georgetown University Law Center.

Languages. Spanish, English

Professional associations/memberships. Lex Mundi; Club de Abogados; National Association of Corporate Lawyers (ANADE).

Publications. Competencia Económica, Teoría y Práctica (Economic Competition, Theory and Practice), Porrua, 2004.


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