One of the essential steps in mergers and acquisitions transactions is the legal auditing process that is carried out prior to the execution of the transaction in question. The purpose of this auditing process is to identify any current or future risks that may affect the transaction, by means of an exhaustive review of relevant information of the companies involved.
Therefore, it is important to consider Article 53 of the Federal Antitrust Law (Ley de Federal de Competencia Económica) (the "Law"), which states that absolute monopolistic practices consisting of contracts, agreements, arrangements or combinations between competing economic agents, whose effect or object is the exchange of information, are considered illicit.
Now, we know that it is common in mergers and acquisitions transactions for the parties involved to be competing economic agents, so the exchange of relevant information during the legal auditing process could trigger the assumption mentioned in the paragraph above if it is not carried out correctly.
For this purpose, the Federal Antitrust Commission (Comisión Federal de Competencia Económica) (the "COFECE") issued the Guidelines for the Exchange of Information among Economic Agents (Guía para el Intercambio de Información entre Agentes Económicos) (the "Guidelines"), whose purpose is to provide guidance to economic agents regarding the elements considered by the COFECE while evaluating any exchange of information that takes place with the purpose of preventing threats to the competition process and free competition in the market.
According to the Guidelines, the COFECE pays special attention to the exchange of strategic information between competitors. The Guide establishes that strategic information is generally related to pricing, discounts, promotions, sale conditions, lists of customers or suppliers, production capacity, input, inventory, investments, supply projections, revenues, profit margins, sales, among others.
In addition to paying special attention to strategic information, the COFECE also carries out a detailed review of several elements that are related to the nature and characteristics of both the information and the exchange, such as the following:
(i) The type and commercial value or strategic importance of the information;
(ii) Aggregation of the information;
(iii) How old the information is;
(iv) Frequency of the exchange of information; and/or
(v) Availability of the information to the public or to other economic agents.
In view of the foregoing, it is of utmost importance to consider not only the provisions of the Law, but also the recommendations of the Guidelines while exchanging any type of information between competing economic agents during legal auditing processes in order to avoid falling into an illicit scenario under the Law and become subject to a sanction by the COFECE.
References:
https://www.diputados.gob.mx/LeyesBiblio/pdf/LFCE_200521.pdf
https://www.cofece.mx/wp-content/uploads/2020/11/GuiaFacilLecturaIntercambiodeInfoAE.pdf
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