A new Federal Economic Competition Law recently approved by the
Mexican Congress is to become effective on July 7, 2014. The new
law comes after an amendment to Article 28 of the Mexican federal
constitution, which bans monopolies and monopolistic practices and
seeks to strengthen competition in Mexico.
Following is a brief description of some of the main areas of the
new law.
An autonomous body will be in charge of investigation proceedings.
By doing this, the new law creates a mechanism to guarantee
independence of the commissioners in their decision-making
process.
A new internal comptroller body will be in charge of reviewing the
liabilities of the public officers working in the Competition
Commission, among other things. In addition, new guidelines will
seek to prevent ex parte contact with commissioners and set the
grounds for hearings, among other things.
The new law includes a process that aims to resolve competence
conflicts between the Competition Commission and the Federal
Telecommunication Institute, the two main Mexican competition
agencies. The Competition Commission has authority to issue
regulations and criteria.
Two new conducts have been included in the list of relative
monopolistic practices: (i) the narrowing of margins, and (ii)
denial or restriction of "essential" raw materials or
supplies. A procedure has been created to determine and regulate
the existence of "essential" raw materials, and the
Commission will have powers to divest or break down assets.
In connection with the merger control thresholds, the new law
allows use of domestic (as opposed to worldwide) turnover or assets
for transactions involving two or more entities in the acquisition
of additional assets or stock in Mexico. This change is likely to
reduce the number of transactions that require a merger control
notice based partially on the size of the participants to a
transaction.
It will no longer be possible to close a transaction without
clearance from the Commission (or the expiration of the applicable
waiting period). The regular waiting period has been extended to 60
business days.
Finally, decisions of the Commission will be challengeable only
through amparo indirecto proceedings (judicial review).
The full text in Spanish of the new competition law can be
consulted here.
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.