April 01 2022
Investigations initiated in March 2022 by the Federal Antitrust Commission (“COFECE”).
1. Domestic insecticides.
Domestic insecticides. On March 23rd,2022, COFECE published a notice (each a “Notice”) in which an investigation process has been opened (each an “Investigation”), for the alleged vertical restrictive practices in several markets, which include production, distribution, and commercialization of domestic insecticides in Mexico.
This market is related to relevant household insecticides, commonly used to control disease carrying insects. Products that may be produced as powders, aerosols sprays, gases, liquids, among others, considering that insect-borne diseases are becoming a greater public health problem in Mexico.
2. Retail e-commerce.
On March 31, 2022, COFECE published Notice of Initiation of Investigation in order to determine the possible existence of barriers to competition and free access and/or essential supplies in the retail electronic commerce market. It is suspected that it could be causing anticompetitive effects in Mexico.
COFECE said that there are compelling elements that assume that there is a breach of the conditions of effective competition in the retail electronic commerce market.
3. Our comments and suggestions.
The purpose of initiating an Investigation is to provide any economic agent (each one an “EA”) with collaborating and expressing what is appropriate to their right, in relation to the investigated market.
Vertical restrictive practices are acts, contracts, agreements or procedures carried out by one or several EA who possess substantial power and that have, or may have, the purpose or effect of unduly displacing other market participants, substantially impeding their access, or establishing exclusive advantages in favor of other EA. Some of these practices may be exclusivities, price or treatment discrimination, tied sales, boycotts, raising costs to other EA and refusal of treatment, among others.
Once the investigation has been initiated, COFECE is empowered to exercise powers of verification, including requesting information, carrying out verification visits, and summoning the EAs that participate in or are related to the market subject to investigation to testify.
In these procedures, COFECE usually requests information from the EAs that sell products and/or services related to the market under investigation. In the event that COFECE requests information, it is of utmost importance to comply with said requirement, otherwise, the offending EA will be subject to a fine, in addition to the fact that, during the visits, the EAs are obliged to cooperate and present all the information and/or documentation that the authority requires.
During the visits, the AE are obliged to cooperate and present the information and/or documentation that is required of them.
If the conduct of a relative monopolistic practice is proven, the responsible EA could be sanctioned with fines of up to 8% of their annual income, additional to an order to cease the conduct subject to sanctions.
COFECE is empowered to conduct (on-site unannounced visits at the company’s offices and request information related to the market under investigation). In these events, it is recommended to contact an attorney that has experience on the antitrust market.
If the information required isn’t provided to COFECE, any obstruction or failure to comply with a dawn raid may result in fines and/or criminal penalties.
In the event an EA´s employee is summoned by COFECE, it is recommended to seek for the legal assistance.
COFECE’s investigation should not be understood as a judgement of liability, it is an action towards to verify that the EA are in compliance with the current antitrust Laws.
We look forward to assisting you in any question or inquiry you may have regarding the authority’s antitrust investigation.
At the conclusion of its investigation, COFECE may, in each particular case, order the EA to eliminate the barriers that unduly affect the competition process, and/or order the divestment of assets, rights, partnership interests or shares of the EA, in the proportions necessary to eliminate the anti-competitive effects and issue recommendations to the authorities when there are legal provisions that unduly prevent or distort competition and free concurrence among the other EAs.
Additionally, if a relative monopolistic practice is proven, the responsible EA could be sanctioned with fines of up to 8% of its annual income.
