Mexico: Mexico’s Congress Approves Important Amendments to The Competition Law Which Will Force Companies Operating in Mexico to Review and Change Their Business Practices in Mexico

After 9 months of intense negotiations, Mexican Federal Congress approved last week one of the most important structural reforms in recent history by amending, adding and deleting several provisions of Mexico’s Federal Law of Economic Competition ("FLEC"). We expect that President Fox will promulgate and publish said amendment in Mexico’s Federal Official Gazette any day now, and afterwards, the amendment will be valid and enforceable in Mexico.

The amendment to the FLEC amends 24 articles; it adds 11 new ones and deletes 1 other. The main objective of the amendment is to strengthen Mexico’s Federal Competition Commission ("FCC"), which is the Mexican regulatory agency in antitrust matters, to empower it with the required authority to severely punish monopolistic practices and illegal mergers, as well as allow the FCC to protect with efficiency the process of competition and free access to the Mexican market.

The amendment keeps the basic structure of the current FLEC, but reflects many recommendations from international organizations such as from the Organization for Economic Co-operation and Development (OECD) and is inspired mainly from the EC Competition law.

The reform to the FLEC includes, among other, the following:

  • The authority of the FCC to impose ordinary fines to companies that infringe the FLEC as high as Mx$73,005,000.00 (approximately equivalent to US$6,760,000.00);
  • Introduces new practices that will be prohibited under the FLEC;
  • Repeat offenders, instead of facing ordinary fines, will be subject to the higher of a fine equal to double the ordinary applicable fine, the equivalent to 10% of the prior year sales or 10% of the value of its assets;
  • Upon a third strike offense by offending companies, the FCC, instead of imposing the ordinary economic penalties previously referred, will be able to require to a competent judicial authority to execute a structural measure against the company, such as mandatory divestiture of assets and/or shares or force the reorganization and division of the violating company;
  • Authority is granted to the FCC to impose joint liability for the intellectual authors responsible of a prohibited conduct performed by a company;
  • The FCC is vested with authority to carry out down raids and require from the economic agents the exhibition of information and all types of documents that had been previously requested in an investigation and that had not been completely and adequately delivered. However, the FCC must secure a Court order prior to carry out said dawn raids.
  • Individuals and companies (including their officers) involved with an FCC investigation, are mandated to provide the FCC the information they know or possess and appear to declare and fully cooperate with the FCC investigations;
  • Two different leniency programs are introduced in order for companies to dramatically reduce the amount of their fine liability. The first leniency policy is applicable to relative monopolistic practices (vertical agreements subject to a rule of reason), as well as to mergers that were not notified as directed by the FLEC. This leniency policy is designed to allow companies to autocorrect their activities under the FLEC. The second leniency policy is applicable to absolute monopolistic practices (horizontal agreements prohibited per se). This second leniency policy intends to destabilize cartels among competitors. However, to benefit from any of those leniency programs, companies shall comply with certain specific requirements;
  • Information obtained by the FCC will only be confidential if confidentiality is requested by the owner of such information and evidence of the confidential nature of such information is shown to the FCC. To be able to comply the foregoing, the company shall provide a summary of the confidential information which the FCC will be able to publish;
  • A mechanism is introduced to allow the Federal Executive branch to fix official prices (either maximum or minimum) to products and/or services regarded essential to the national economy or that are of popular consumption, provided that the FCC had resolved that the relevant market is distorted;
  • An increase of the thresholds for the notification of mergers, therefore, less mergers shall have to be notified to the FCC;
  • The obligation for economic agents involved in a merger notification to the FCC to refrain from executing the merger in a period of less than ten (10) days following the filing of a merger to the FCC. The purpose of the prohibition herein is to prevent the closing of a merge that it is likely that the FCC will block, or approve with certain conditions, in its final resolution due to the possible negative effects on the markets to be brought by that merge;
  • A quick proceeding for certain merger notifications where the FCC shall resolve during the following fifteen (15) business days after the FCC receive the merger notification, provided that the FCC accepts the argument and evidence provided by the interested parties that the merger under review has not the purpose or effect to decrease, damage or impede competition or free access to the markets;
  • To grant the authority to the FCC to issue binding opinions to federal agencies, entities and administrations in charge of public policies and programs, as well as about preliminary legal provisions, rules, agreements, orders of regulation and other administrative acts of general character.

The statutory Mexican framework of the Competition Law is substantially strengthen by the amendment to the FLEC and compels companies to review and revise the way they operate in their respective markets. This legislation combined with the energetic leadership brought to the FCC by Dr. Eduardo Pérez Mota, emphasizes the need for all companies and officers to receive the adequate legal counsel in order to accomplish with their new obligations and avoid the imposition of sanctions by the FCC. In terms of Competition Law, the "this does not matter in Mexico" attitude must be vanquished in Mexico, or else, severe consequences will arise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions