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Mexico

Last Verified on Wednesday 13th May 2020

    Competition law enforcement

    • Mexico

      The Mexican competition statutory framework is governed by article 28 of the federal political Constitution, which, in broad terms, forbids “monopolies and monopolistic practices”. Moreover, §28 of the Constitution stipulates that “the law will severely punish, and the authorities will effectively prosecute (…) any agreement, procedure or combination of producers, industrialists, merchants or service entrepreneurs, who in any way act to avoid free competition or competition among themselves or to compel consumers to pay exaggerated prices”.

      Although a general prohibition against “monopolies and monopolistic practices” has been contemplated in the Mexican Constitution since 1857, it was not until 1993 that the first competition act was enacted and the first competition authority was created. For many years, the former competition agency tackled complex challenges to impose a state-priority competition agenda in the country. As a result, the Mexican competition policy was substantially revamped in June 2013, when article 28 of the Federal Constitution underwent a mayor amendment that considerably strengthened the application of the local competition policy.

      Pursuant to these constitutional stipulations, the Mexican competition regime is currently ruled by the May 2014 Federal Economic Competition Law (FECL), which entered into force on 7 July 2014 replacing the former 1993 Competition Act.

      In addition, the following statutes and secondary regulations are also applicable in concordance with the FECL: (i) the Federal Telecommunications and Broadcasting Law (Telecom Law); (ii) the Federal Criminal Code; (iii) the Federal Civil Code, (iv) the Federal Civil Proceedings Code; (v) the Regulatory Provisions of the FECL (there are two types of Regulatory provisions, one issued by the Federal Economic Competition Commission and another by the Federal Telecommunications Institute (IFT) only applicable for the broadcasting and telecom sectors); (vi) the Organic Statutes of both competition enforcers (ie, the Federal Economic Competition Commission (Cofece) and the IFT); as well as (vii) additional non-binding guidelines and technical criteria per the interpretation and application of the previous regulations issued by the enforcers, accordingly.

      In addition, also as a result of the June 2013 constitutional amendment to article 28 of the Federal Constitution, two new competition enforcers were created, replacing the former sole competition agency that was incorporated in 1993. Currently, the current competition enforcers in charge of enforcing the local competition regime, which are constitutionally autonomous bodies (ie, non-dependent constitutional agencies from any branch of power), are the Cofece and the IFT.

      The IFT, in addition to being a regulator agency, is the enforcer of the competition regimen exclusively in the telecom and broadcasting (including TV) arena, and Cofece is in charge of any other industry, market and sector in Mexico. Moreover, Cofece and the IFT have federal jurisdiction and competition enforcement is exclusively limited to their authority, as no state or municipal powers can interfere with antitrust legislation or enforcement.

      Last verified on Wednesday 13th May 2020

  • Merger control

    • Mexico

      Any “concentration” reaching the statutory thresholds must be notified. The FECL (article 61) defines “concentrations” very broadly. Such definition covers any merger, acquisition of control or any other act whereby corporations, associations, shares, equity parts, trusts or assets in general are joined by and among competitors, suppliers, clients or any other economic agents. Therefore, this definition includes joint ventures and acquisition of non-controlling interests, or similar commercial arrangements, although an acquisition by a non-controlling shareholder may be exempted from filing obligations.

      As for the licensing of intellectual property rights, if a strict interpretation of the definition of concentration is made, the licensing of a patent, for instance, may also be considered as a concentration. Patent licensing involves the granting of the right for a licensee to use or exploit the patent for a specific period of time in a particular territory. Personal rights under Mexican law (such as a patent licence) are considered moveable goods (assets, if defined from an economic standpoint). Therefore, as mentioned before, the local antitrust agencies consider as a concentration, inter alia, the acquisition of control of assets without making reference as to whether this control is temporary.

      Similarly, under a strict interpretation of the definition of a concentration, a long-term supply agreement may be considered as such if, as a result thereof, one of the parties acquires control of the other. However, such argument could be debatable, and as far as we know, no filing has been made of a supply agreement as a concentration. However, this should be reviewed on a case-by-case basis.

      The FECL includes the following exceptions to the filing obligations even if a particular transaction or agreements qualifies as a concentration (article 93) noting that the Regulatory Provisions of the FECL provide further details as to how these exceptions should be interpreted and applied:

      • corporate reorganisations, where the  parties involved  belong to the same group of economic interest (ie, the same controlled economic group) and no third party participates in the concentrations;  
      • in the event the holder of shares or equity units or equity parts increases its relative participation in the capital stock of a company controlled by such holder since incorporation or since approved by the competition authority;  
      • when the transaction implies the incorporation of administrative or guarantee trusts or any other type of trust where the contribution of assets or shares has no purpose or consequence of transferring such assets or shares to a different company. However, the execution of a guarantee trust must be notified if the filing thresholds are met;  
      • when the transaction concerns legal acts of foreign companies, over stock, partnership interest or participation units, or under trust agreements entered into abroad and related to companies not residing in Mexico for tax purposes, insofar as the companies involved do not acquire control over Mexican companies, nor accumulate stock, partnership interest, participation units or participation in trusts or assets in general within the Mexican territory in addition to those that they directly or indirectly owned prior to the transaction;
      • when the acquirer is a variable income investment firm and the transaction has, as its purpose, the acquisition of shares or other instruments with resources from the placement with the public of shares representing the capital stock of the investment firm, except when, as a result of the operations of the investment firm, the investment company may have significant influence over the decisions of the parties involved in the concentration;
      • Regarding the  acquisition of shares, equity or other documents representing (directly or indirectly) the capital stock of companies listed on a stock exchange in Mexico or abroad, when the acts or successive acts do not allow the purchaser to hold 10 per cent or more of such shares, equity or other instruments, and, in addition, the purchaser has no authority to: (i) appoint or revoke members of the board of directors, or managers of the issuer; (ii) impose, directly or indirectly, decisions in stockholders meetings or similar bodies; (iii) maintain the holding of rights allowing it to, directly or indirectly, exercise the vote of 10 per cent or more of the company in question; or (iv) instruct or influence, directly or indirectly, the management, operation, strategy or the main policies of a company, whether through ownership, through contract or in any other manner; and
      •  when the acquisition of shares, equity or participation in trusts is performed by one or more investment funds with sole speculative purposes, and such funds have no other investments in companies or assets that participate or are employed in the same relevant market of parties involved in the concentration.

      In addition, specifically to the telecom and broadcasting sectors, the transitory articles of the Telecomm Law also provide that as long as there is a preponderant agent (as defined in such law and declared by the IFT) in the telecom and radio/TV sectors, with the purpose of fostering competition and developing long-term viable competitors, concentrations with the following characteristics, shall not require the prior authorisation of IFT:

      • if they generate a sectorial reduction of the Dominance index, as long as the HHI does not increase in more than 200 points; 
      • if it results in a player having a sectorial market shares lower than 20 per cent;  
      • when a preponderant agent does not participate in the concentration; and 
      • the effect of the concentration is not to reduce, diminish or imped free competition in the corresponding sector.

      In this particular scenario applicable only under the Telecom Law, a notice must be filed within 10 business days of closing for the analysis by the IFT.

      The IFT has declared one preponderant agent in the telecommunications sector, as well as one preponderant agent in the radio sector.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The FECL provides that there are certain concentrations that are subject to prior authorisation before the regulators (depending on the particular sector), prior to their closing. These concentrations include those falling under any of the following thresholds:

      • Those transactions involving an act or a series of acts, regardless of the place of execution, amounting in Mexico to the equivalent of 18 million times the measure units or more (ie, around US$65 million as of May 2020);  
      • Transactions involving an act or a series of acts with an accumulation of at least 35 per cent of the assets or capital stock of an economic agent, whose assets in Mexico or annual sales originated in Mexico involve more than the equivalent to 18 million times the measure unit (ie, around US$65 million as of May 2020); or  
      • Transactions involving an act or series of acts with an accumulation in Mexico of assets or capital stock higher than 8.4 million times the unit of measure (ie, around US$30 million as of May 2020), and the transaction involves the participation of two or more economic agents with assets in Mexico or annual sales originated in Mexico, jointly or separately, of 48 million times the measure unit (ie, around US$173 million as of May 2020).

      The first two of these thresholds refer to the target’s assets located in Mexico, the target’s companies with direct operation in Mexico (mainly Mexican subsidiaries or branches) or the target’s sales originated in Mexico. The third threshold considers a combination of sales or assets of the parties in Mexico, and an additional accumulation of assets or sales in Mexico of the target company only.

      There is no filing obligation if the target or seller company has no presence (assets and sales) in (or into) Mexico. However, there is no de minimis doctrine. If any of the thresholds are met, then the transaction must be filed, even if one of the parties has insignificant presence or sales in (or into) the country. Moreover, such analysis should include all companies that make up the economic group, and not only the parties directly involved in the transaction.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The general rule is that a joint filing is required. In fact, the FECL provides that all economic agents directly participating in the transaction shall make the filing. However, the FECL allow for the acquirer to make the filing independently if it can demonstrate that the other parties are unable to do so (legally or de facto), and such impossibility is duly evidenced and argued before the enforcer.

      Filing fees are applicable of around MEX$190,020. Filing fees are updated on a yearly basis.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Yes, the parties are not allowed to close a transaction pending the review by the regulators and until a final clearance resolution is personally notified.

      Formally speaking, the FECL does not provide for an alternative. In practice, we have seen discussions in several cases to execute a hold separate agreement with respect to Mexico, where the parties would not give material effects to the international transaction in Mexico until the enforcer issues its resolution. However, Cofece has made clear that this is not an alternative that it wishes to pursue and that such approach might constitute a violation of the FECL.

      Moreover, as long as the transaction is not cleared and closed, all involved parties shall act independently and take unilateral decisions at all times in order to avoid gun-jumping consequences.

      Last verified on Wednesday 13th May 2020

    • Mexico

      If a transaction between foreign companies involves the indirect acquisition of Mexican subsidiaries or assets located in Mexico, the transaction must be notified, provided any of the referred statutory thresholds is met. An indirect acquisition is deemed to exist if, for instance, a company abroad is acquired and the acquired company has subsidiaries in Mexico.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The FECL contemplates two clearance procedures. Under the first and most commonly issued (article 90), the enforcer must issue its resolution within 60 business days counted from the date of receipt of the notification or the submission of the additional information requested to the involved parties. Hence, if the enforcer has not issued a resolution at the end of such term, it shall be understood that the enforcer has tacitly approved the proposed transaction (afirmativa ficta). Likewise, the 60 business-day period may be extended once in exceptional cases for another 40 business days. In practice, the enforcer normally issues requests of information, which interrupts the 60-day term.

      Generally, requests for information are made in different stages: (i) within 10 business days from filing, where the enforcer may issue a request of basic information granting the parties another 10 business days to respond; and (ii) within 15 business days following filing (if no basic information request was made), or following the date the parties submit their response to the basic request.

      Enforcers mays also issue additional requests for information once the foregoing has occurred. This second set of requests normally involves data required for substantive analysis. The enforcer grants 15 business days to respond, although extensions to this term are common.

      During the clearance process, contacts with the enforcer’s staff are common prior to actually filing and required during the process. Such contacts will depend on the confidentiality and complexity of the transaction, but enforcers are generally open to discussions. Likewise, the FECL allows for interviews with the Commissioners. When an interview is requested, all Commissioners must be invited thereto, and all scheduled interviews are listed on the enforcer's webpage.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The FECL also contemplates a fast-track process (article 92). This particular procedure can only be invoked when the parties prove that they are notifying a concentration that notoriously does not the purpose nor will have the effect diminishing, damaging or impeding competition. In these cases, the enforcer must resolve the filing within a term of 15 business days from the date the enforcer formally acknowledges receipt of the filing through issuing a clearance resolution (which must be made within five business days following the date of the filing).

      However, only some cases are eligible for the fast-track process, provided the acquirer does not participate in any related market and it is not an actual or potential competitor of the target. The scenarios are:

      • The transaction implies the participation of the acquiring party in the relevant market for the first time. Consequently, the relevant market’s structure shall not be modified and will only involve the total or partial substitution of the acquired economic agent by the acquiring party;  
      • If prior to the transaction, the purchaser holds no control over the acquired agent, and as a consequence of the transaction, the former increases its relative participation in relation to the latter, without attaining more power to influence the company’s operation, administration, strategy and main policies, including appointing board members, directors or managers; or  
      •  If the purchaser has control of a company and increases its relative participation in the capital stock of such company.   

      In practice, this is a complex procedure as it entails a hazardous process to demonstrate that a particular transaction qualifies as a fast-track one. Generally, the sole discussion of whether a transaction qualifies as a fast-track one or not delays the process, and could add additional time to the whole clearance procedure if the enforcer decides it does not qualify as such, as such determination would force the parties to make a new filing under the normal procedure explained above. 

      Last verified on Wednesday 13th May 2020

    • Mexico

      Failing to file a concentration reaching the statutory thresholds may result in significant fines (ie, fine up to the equivalent of 5 per cent of the offenders’ annual income) and other problematic consequences. In addition, if during the investigation process it is determined that the transaction qualifies as an illicit concentration, additional fines may be imposed (ie, a fine up to the equivalent of 8 per cent of the offenders’ annual income), as well as additional orders (ie, ordering the undoing of specific legal acts) or the order to divest or unwind the corresponding concentration. Penalties may be imposed to involved parties, as well as to those individuals ordering or executing the transaction.

      The parties are bound to act independently as long as clearance and closing does not occur. Exchange of sensitive information among the parties, which may lead to anticompetitive conduct is also prohibited and would be investigated as a cartel violation.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The notification itself is not publicised. However, whenever there is an interim resolution (eg, a request of information) during the process, the file number and the name of the parties are listed in the website of the enforcer. Once the filing process has concluded, third parties may have access to the file, except for confidential information. In addition, a public version of the final resolution is published. In some cases, the authority has issued press releases on the general aspects of a resolution.

      Last verified on Wednesday 13th May 2020

    • Mexico

      There are two processes under which the enforcer may investigate concentrations: (i) the filing process, and (ii) the investigation of concentrations which have the purpose or effect of reducing, damaging or impeding competition defined by the FECL as “illicit concentrations”.

      Over a standard filing process, the enforcer may request any information it deems fit (see question 19 for details on these requests and the effects on timing to resolve). Information requests are normally made to the parties, but in complex cases, third parties such as competitors, suppliers or clients may be requested to produce information that the enforcer deems required for completing its analysis.

      As to illicit concentrations, enforcers may investigate any transaction or concentration that is considered contrary to the FECL, including those transactions or concentrations that not reach statutory thresholds.

      Enforcers can launch investigations: (i) within one year from the closing of a transaction, if the transaction was not subject to filing; (ii) within 10 years, if the transaction was subject to filing, but the parties failed to make the filing; or (iii) within 10 years if clearance was obtained through false information, or if the parties fail to comply with conditions imposed by the enforcer.

      During investigation procedures, the enforcer (through the Investigative Authority) may request information to the parties or third parties, and request interviews with key officers, management or any other employee. In addition, the enforcer may perform dawn raids (ie, unannounced verification visits).

      In recent, more notorious cases, information has been requested to competitors to assess and confirm the size of markets subject to review, general market conditions (including potential barriers to entry), the effects of a particular transaction to the competition process and market share data. This information plays a heavy role on the authority’s assessment of a transaction and serves as a method to verification of the information provided by the interested parties.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Yes. The enforcers are allowed to request any information required for their analysis. This may include internal presentations of a particular transaction, market analysis and surveys among other documents.

      Last verified on Wednesday 13th May 2020

    • Mexico

      During the filing process, third parties are not allowed to participate nor are granted any right. Such parties may assist enforcers by submitting data and documents that they consider relevant to the case, but will have no access to the file.

      Notwithstanding,, in some very specific cases(ie, Televisa/Radio Acir and Ferromex/Ferrosur), third parties have been able to intervene in the process as a result of constitutional control proceedings (amparo) before federal courts, claiming that the articles that the enforcer’s used to support dismissals were unconstitutional as they violated fundamental due process rights. A good example of this situation involved a case reported by the media in which mayor TV player, Televisa, submitted constitutional challenges to the resolutions issued by Cofece with respect to the Disney/Fox merger as it requested to be part of the process. 

      Finally, third parties may file claims requesting the enforcer to investigate alleged illegal concentrations, only if these have not (or are not) the subject matter of a filing.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Enforcers focus on different aspects such as unilateral and coordinated effects, as well as portfolio effects. Generally, enforcers will first focus on the combined market shares of the parties and whether the acquirer (or resulting entity), as a result of the transaction, may acquire or increase existent market power, a situation that could diminish or damage the competition process.

      Enforcers will then focus on whether the transaction may have an exclusionary purpose or effect, establish barriers to entry, and impede access to related markets or to essential facilities. To this end, the enforcer analyses both the relevant and related markets.

      Consequently, enforcers would look into whether the transaction may have as its purpose or effect to substantially facilitate the commission of a monopolistic practice (whether horizontal cartels, or abuse of dominance). If the parties submit an analysis of efficiencies, this shall also be considered by the enforcer. 

      In addition, in recent cases, Cofece has also review in more depth potential vertical issues arising from a particular transaction.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Not formally. However, a transaction with no horizontal or vertical overlaps should be cleared without any questioning by the authority (except, maybe, with respect to limitations to non-compete provisions). In addition, transactions where combined market shares are lower than 30 per cent should not raise any concerns, but must be analysed on a case-by-case basis.

      The FECL includes the notion of collective dominance, so this factor is also analysed by the enforcers, especially in highly concentrated markets.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Economic efficiencies are an integral part of the analysis. However, the parties have the burden to prove such efficiencies. If the parties do not argue and evidence efficiencies during the process, the authority will not include them as part of the analysis. The analysis is based only on competition issues, so no transaction is rejected on the grounds of job protection, national security or other national interests. 

      National interests are considered by foreign investment authorities when authorisations are required because a de-mexicanisation of a company exceeding certain asset values.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Remedies can be negotiated during the process prior to the enforcer issuing a resolution. The process under the new FLEC require for the regulator to communicate the parties the concerns they might have on the specific transaction. This communication must be made at least 10 business days prior to the date the matter is to be listed for discussion by the commissioners, to allow the parties to propose remedies. The proposal of remedies interrupts the 60-day term for the authorities to resolve.

      The enforcer prefers to impose structural remedies rather than behavioural. Structural remedies are easy to enforce as the enforcer requires the parties to file a divestment programme and report on compliance. Considering this, behavioural remedies are less common, but in some instances have been imposed. Enforcement of behavioural remedies has included the appointment and report of independent auditors, strict policies as to the exchange of information between officers or directors, or the filing by the parties of documents evidencing compliance.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Resolutions of the competition enforcers may only be challenged through an amparo proceeding before federal courts. As part of the constitutional reforms, specialised competition tribunals have been created that will hear and resolve of any challenges to resolutions issued by Cofece and the IFT.

      Amparo proceedings are to be resolved by specialised district judges, and can be appealed before specialised circuit courts. The term for a final and definitive decision varies from case to case, but it may it will take several months to be resolved.

      Last verified on Wednesday 13th May 2020

  • Cartel Enforcement

    • Mexico

      Any tacit or express agreements, understandings or combinations with the purpose or effect is to (i) fix or manipulate prices, (ii) restrict output; (iii) divide or segment markets, territories or customers, (iv) bid rigging (both in public and private procurement), and (v) exchanges of information with any of the foregoing purposes or effects. Under the FECL, such behaviour is treated as an absolute monopolistic practice, which are per se prohibited.

      Last verified on Wednesday 13th May 2020

    • Mexico

      As mentioned in question 20, the FLEC considers both the purse and the effect of a potential practice.

      In fact, conducts executed abroad that have an impact in the Mexican markets or consumers could be investigated and sanctioned per the effects occurred in Mexico.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Any investigation from any of the two enforcers would be conducted by their corresponding investigative authority (ie, prosecutor), an internal body that is independent from the decision-taking body (ie, the Plenary of Commissioners).

      Current investigative include the following:

      • written requests for information and documents, which can be address either potential offenders or any third party that might or could be involved with the conducts under investigation;  
      • dawn raids, which can be performed at the offender’s business (ie, offices, headquarters, plants, etc) and do not need to be previously announced nor require a judicial approval. Dawn raids can last up to two months (which can be prorogued for additional two months in case of need), although standard practice is for dawn raids to be performed in one single day; and  
      • formal appearances or depositions of any individuals that could or might be related with the investigated conduct, where constitutional rights to no-self-incrimination or due defence are limited.

      In addition, it is worth highlighting that the investigative phase of a cartel investigation can last up to approximately 600 business days and the statutory framework contemplates relevant sanctions in case of non-compliance to this investigation tools such as, among others, (i) accumulative monetary fines per each day the requested party fails to comply with the request and (ii) during dawn raids, criminal sanctions to those who oppose, impede or obstruct the raid or destroy, alter or hide documents and information (ie, the Criminal Federal Code contemplates a 1-to-3 year imprisonment penalty) and the presumption that any accusation formulated in the Statement of Objections will be assumed as true by enforcers.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The FECL (article 127) contemplates that corporations directly involved in illegal behaviour can receive a fine up to the equivalent of the 10 per cent of their annual income.

      The variation as to whether enforcers apply the full 10 per cent equivalent fine or impose a reduce portion, will depend on specific factors contemplated also by the Regulations of the FECL (article 130). These include factoring the damage caused, the signs of intentionality, the participation of the offender in the affected markets (ie, market share), the size of the affected market, the duration of the practice, as well as the economic capacity of the offender. 

      Moreover, in cases of recidivism (second or more offenses and subject to further requirements met), the FECL (article 127) also contemplates the possibility of the enforcers for doubling the corresponding fine or, at the discretion of the enforcer, a potential order to divest assets, which has never been applied in Mexico.

      In addition, corporations, trade associations or any other economic agent that indirectly intervened in the conduct by means of contribution, encouragement, facilitation or induction, may also receive fines up to MX$17 million.

      Finally, once an investigation has been terminated and offenders have executed all means of extraordinary legal defence before the judiciary, the local statuary framework, along with civil legislation applicable in Mexico, allow third parties (ie, consumers, competitors, etc), to initiate either individual or collective actions (class actions) against offenders per the damages caused.

      Last verified on Wednesday 13th May 2020

    • Mexico

      In addition to corporations, individuals involved in the sanctioned conducts can also be subject to administrative fines as follows:

      • Those individuals who intervene directly in the conduct, or on behalf of corporations, can face considerable fines up to MX$17 million and an up-to five years disqualification sanction; and
      • Those individuals who intervene indirectly in the conduct by means of contribution, encouragement, facilitation or induction, may also receive a fine up to MX$15 million.

      Likewise, individuals can also be held responsible and be sued by civil actions. As with corporations, once an investigation has been terminated and offenders have executed all means of legal defence before the judiciary, the local statuary framework, along with civil legislation, allow third parties to initiate either individual or collective actions (class actions) against offenders per the damages caused.

      More importantly, the Federal Criminal Code (article 254, bis) contemplates a minimum five, maximum 10-year imprisonment term for offenders.

      Criminal prosecution is relevant in Mexico due to the fact that criminal actions can be initiated at the sole discretion of the enforcers, once the Statement of Objections is issued (ie, the initial accusation through which the investigative phase is terminated), so offenders will have to defend themselves not only before administrative charges before the enforcers but also in the criminal arena before the Attorney-General.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The local statutory framework contemplates a comprehensive leniency programme, which was introduced around 10 years ago and has been recognised by Cofece as the most effective tool to identify cartel behaviour.

      Mexico’s leniency programme is similar to programmes from other jurisdictions such as the United States or Europe. Basically, the programme provides immunity to those offenders (to corporations or any other individual that apply individually or collectively) who self-report the conduct before the enforcer. Benefits will depend on who was first to request leniency.

      In general terms, the first applicant will receive a reduction of the fine equivalent to around MX$86.88 and immunity over other consequences such as criminal prosecution or disqualification. The rest of the applications will receive proportionate fine reductions (ie, 50 per cent to the second place, 40 per cent to the third place, etc), and will also receive immunity over other sanctions such as criminal prosecution or disqualification. However, if leniency is revoked or lost by a first applicant, benefits are not passed to other applicants.

      The leniency programme does not provide immunity over civil actions, which once the afore-mentioned requirements are completed, can be imitated against offenders subject to the leniency programme.

      Finally, leniency can be requested at all times during the investigation but before the investigation docket is formally closed.

      Last verified on Wednesday 13th May 2020

    • Mexico

      No, the FECL does not contemplate any settlement possibility. Once an investigation is launched, it will result in either the issuance of a Statement of Objections and a potential final resolution, or in the closing of the investigation in the absence of evidence of any wrongdoing.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The investigation period cannot last less than 30 business days or exceed 120 business days. However, the 120-days investigation period may be extended up to four times for periods up to 120 business days each.

      Once the investigation phase is over, the investigative authority will have 60 business days to present its conclusion of the investigation (whether to close the investigation or issue a Statement of Objections) for the Plenary of Commissioners. Hence, the Plenary of Commissioners will have a 30 business day period to issue its recommendation.

      With the notification of the Statement of Objections, the adversarial phase commences and the alleged offenders will be granted the opportunity to defend themselves and provide evidence against any alleged accusations. The Investigative Authority is part of this phase, and also has the right to make any allegations it deems fit.

      Once the adversarial phase is concluded and in those cases where the Plenary of Commissioners render a final decision imposing liability, offenders can challenged it through a constitutional challenge (ie, amparo indirecto), which needs to be filed within 15 business days of the notification of such decision. As explained above, this challenge must be filed before specialised courts only.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Information in the file cannot be made public during the investigation, and no party has access to the file during the investigation period. Once the Statement of Objections is issued and served, the impeached parties will be granted access to the relevant dockets of the investigations excluding information that is considered sensitive and confidential.

      Third parties do not have access to any of the dockets. However, third parties may cooperate during the process either through formal requests of information made by the authority or voluntarily by providing information.

      Last verified on Wednesday 13th May 2020

    • Mexico

      As explained in question 28, yes it is through a constitutional challenge (ie, amparo indirecto), which needs to be filed within 15 business days after the offender is notified with a final decision. Once such constitutional challenge is resolved, the losing party (ie, offender or the enforcer) can further appeal such decision through a subsequent constitutional appeal, which also needs to be filed within 15 business days before specialised courts.

      Yet, for such challenges and appeals to be resolved definitely, it generally can take specialised courts from at least a year to several years depending on the merits of the case.

      Last verified on Wednesday 13th May 2020

    • Mexico

      A requirement for civil actions to proceed against cartel violations is that such violations need to be sanctioned by the enforcers and then later confirmed by the judiciary (in case appeals are filed) under the res iudicata principle.

      In such terms, any third party that has suffered direct damage as a result of the illegal conduct, may initiate (either individually or collectively) a civil action. However, civil legislation in Mexico provides that damages need to be “real” (ie, material) and “direct”, and cannot be assumed nor multiplied in any sort of manner. Likewise, claimants have the obligation to prove the existence of the damage despite the fact that the illegal conduct has already been evidenced by enforcers, in order to have the right to be compensated in the proper way.

      Moreover, each offender will need to be sued specifically and such claim would also generally fall under the jurisdiction of specialised courts.

      Last verified on Wednesday 13th May 2020

    • Mexico

      No. Because of legal restrictions provided in the statutory framework, enforcers have the undisputable obligation to guarantee confidentially of the leniency applicants at all times and even when the matter is terminated, which includes the identity of the applicant and all information and documentation provided.

      Recent practice has been that, in some cases, the Investigative Authority requests leniency applicants to formally submit evidence within the formal investigation docket but without making any kind of reference to the leniency docket or application.

      Last verified on Wednesday 13th May 2020

  • Abuse of dominance/unilateral conduct

    • Mexico

      Once the relevant market has been defined, the enforcers shall consider the following elements to determine whether a specific player (or players) has substantial power (or joint substantial market power) in that specific relevant market:

      • market shares of the specific players and of its competitors (there is no specific market share that would be indicative of market power, as this needs to be analysed on a case-by-case basis);
      • whether the player in question has the ability to fix prices or restrict output without its competitors being able to counteract such power;  
      • the existence of barriers to entry;  
      • the existence and power of competitors;  
      • the possibility for accessing essential input; and
      • recent behaviour from all active market players.

      Last verified on Wednesday 13th May 2020

    • Mexico

      There is a three-step analysis provided by the FECL to determine if a particular conduct qualifies as a “relative monopolistic practice”, which is the local term to identify those conducts that involve unilateral or vertical restraints. The three-step analysis is as follows:

      • the player in question is declared to have substantial market power (whether individual or joint) in a particular relevant market;
      • the conduct in question is one set forth in the 13-specific closed list of illicit conducts provided in the FECL known as “relative monopolistic practices” (including, for instance, predatory pricing, cross-subsidies, exclusivities, etc), and that such conduct has the purpose or effect to foreclose or displace other agents from a market, or grant undue exclusive advantages in favour of one or several players; and
      • There are no efficiency gains generated from such conduct, which evidence that pro-competitive effects of a specific restriction surpass anticompetitive ones.   

      Last verified on Wednesday 13th May 2020

    • Mexico

      Only the following conduct may be considered relative monopolistic practices: (i) vertical segmentation of markets, territories or customers; (ii) imposing resale prices or other resale conditions; (iii) tying; (iv) exclusivities; (v) unilateral refusal to deal or supply; (vi) group boycotts; (vii) predatory pricing; (viii) anticompetitive discounts or unjustified preferential treatment; (ix) cross-subsidies; (x) price discrimination; (xi) increase of rivals costs or obstructing rivals' productive process or reducing demand; (xii) discriminatory access to essential facilities; and (xiii) margin squeeze.

      As explained before, the regulators may determine the existence of individual or collective or joint dominance (substantial power). These conducts are not per se illegal, and are reviewed under a standard similar to the Rule of Reason applied in the United States.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The most relevant point to consider on discounts is whether exclusivity is requested as a condition for such discount. Likewise, discounts and rebates can also represent an antitrust risk when granted on a preferential basis to certain firms in particular, or when they are imposed a prerequisite not to deal with other third parties.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Current investigative powers include the following:

      • written requests for information and documents, which can be addressed either potential offenders or any third party that might or could be involved with the conducts under investigation;  
      • dawn raids, which can be performed at the offender’s business (ie, offices, headquarters, plants, etc) and do not need to be previously announced nor require a judicial approval. Dawn raids can last up to two months (which can be prorogued for additional two months in case of need), although standard practice is for dawn raids to be performed in one single day. However, dawn raids have not been used in investigations related to abuse of dominance; and
      • formal appearances or depositions of any individuals that could or might be related to the investigated conduct, where constitutional rights to self-incrimination or due process are limited.

      The investigative phase can last up to approximately 600 business days and the statutory framework contemplates relevant sanctions in case of non-compliance with this investigation tool.

      Last verified on Wednesday 13th May 2020

    • Mexico

      The FECL (§127) contemplates that corporations can receive a fine up to the equivalent of 8 per cent of the offender’s annual income. The process to determine the fine, and the rules applicable to recidivism and divestment of assets are the same as those in question 23. In addition, corporations, trade associations or any other economic agent who indirectly intervened in the conducts by means of contribution, encouragement, facilitation or induction, may also receive fines up to MX$17 million.

      Last verified on Wednesday 13th May 2020

    • Mexico

      As explained before, the analysis carried out when determining the possible abuse of dominance is similar to the Rule of Reason analysis applied in the US, and thus efficiencies favourably affecting the competition process can be argued. It is, however, the burden of the defence to prove any such efficiency. 

      Normally, abuse of dominance cases are argued claiming the following typical errors in addition to potential procedural defences:

      • wrong definition of the relevant market;
      • absence of market/substantial power;
      • that the elements of the specific practice are not satisfied;
      • existence of efficiencies; and
      • absence of actual damage.

      Last verified on Wednesday 13th May 2020

    • Mexico

      Yes. Before the issuance of a Statement of Objections, the player in question may request the reduction of a fine if it evidences its compromise to suspend, conclude or correct the practice to restore the competition process; and offers remedies, which need to be legally and economically viable, that are ideal and sufficient to concluding the effects of the practice. However, this benefit can only be claimed once every five years.

      Last verified on Wednesday 13th May 2020

  • Cooperation with other authorities

    • Mexico

      Considering that a portion of cartel cases and merger control filing include an international impact or effect that involves Mexico, local enforcers have executed cooperation agreements with mayor competition enforcers around the world and have the legal authority (with certain limitations as explained further on) to coordinate efforts per the investigation and sanction of cartel behaviour and merger control analysis.

      Some examples of inter-agency cooperation agreements between local enforcers (especially Cofece) include US antitrust authorities and the Canada Competition Bureau. In fact, Cofece has conducted certain training especially for criminal cartel enforcement with the Antitrust Division of the US Department of Justice. 

      Cooperation agreements executed by the Mexican authorities are limited to local legal boundaries and restrictions. Non-public information and evidence that the Mexican competition authorities obtain directly from the cartel members during their prosecution cannot be shared with other authorities if such information or evidence is protected under local confidentiality laws or without gaining the consent or waiver of the investigated party (which will be highly unlikely to occur). 

      A similar circumstance arises in the context of, for example, extradition cases. Although Mexico could eventually agree to extradition requests, as its local legislation and international treaties formally contemplate such authority, there are several hurdles, such as: (i) complying with the statuary formalities under the extradition principles and rules, (ii) the complexity of local procedure to endorse the extradition, (iii) the inconsistency between international treaties and local and foreign legislation; and (iv) the lack of formal legal binding obligations between nations to force extradition.

      Last verified on Wednesday 13th May 2020

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