Background and Relevance
The Mexican Federal Executive has submitted proposed amendments to the Federal Economic Competition Law, aligning with recent constitutional changes. This update aims to strengthen the country’s capacity to investigate and penalize anti-competitive practices by establishing a robust, autonomous, and technically independent Commission for Antimonopoly (CNA).
Key Changes in the New Law
Composition of the CNA
The CNA will now be composed of experts and professionals in the field, who must be ratified by the Senate. This ensures that Mexico has a capable institution to investigate and sanction anti-competitive behaviors, with management autonomy and technical and operational independence.
Investigation Unit Separation
The investigation unit will remain separate from the Plenum, which resolves procedures. The new law grants the authority more tools and means to achieve its objectives, allowing it to use instruments like surveys, data collection systems, and coordination mechanisms with foreign authorities during investigations.
Expanded Conduct Definition
- Information Exchange: The law now considers information exchange between economic agents as illicit, even without a formal agreement, if it aims to collude, segment markets, influence prices, or serve other anti-competitive purposes.
- Monopolistic Relative Practices: The definition of monopolistic relative practices is broadened to include conducts aiming to limit other agents’ ability to compete in markets.
Increased Concentration Control
The new law allows the competition authority to oversee more concentrations, as thresholds for notification are reduced between 12.5% and 17%. Stricter criteria have been established to evaluate efficiencies in mergers, making them attributable only to operational aspects, sustained over time, and resulting in tangible consumer benefits.
Specific criteria have also been set for evaluating mergers and preventing inappropriate concentrations in emerging markets, such as digital ones.
Enhanced Penalties
- Absolute Monopoly Practices: Fines for absolute monopoly practices have increased from 10% to 20% of the agent’s income.
- Relative or Illicit Concentrations: Fines for relative or illicit concentrations have risen from 8% to 15% of the fiscal year’s income.
In some cases, offenders may be disqualified from public procurement contracts for six months to five years.
The new law also reinforces consumers’ rights to file collective actions following firm resolutions.
Key Questions and Answers
- What is the main objective of these amendments? The primary goal is to strengthen Mexico’s competition authority by ensuring its technical independence, maintaining separate investigation and sanction activities, expanding tools and scenarios for investigation and sanction, and increasing the sancion amounts. The focus is on prioritizing consumer rights.
- How will the CNA be composed? The CNA will consist of experts and professionals in the field, who must be ratified by the Senate.
- What changes have been made to investigation procedures? The CNA can now use surveys, data collection systems, and international coordination mechanisms during investigations. Information exchange between economic agents without formal agreements is now considered illicit if it aims to collude or influence prices.
- How have concentration controls been enhanced? The thresholds for concentration notifications have been reduced, and stricter criteria have been established to evaluate efficiencies in mergers. Specific criteria have also been set for evaluating mergers and preventing inappropriate concentrations in emerging markets.
- What are the new penalties for anti-competitive practices? Fines for absolute monopoly practices have increased from 10% to 20% of the agent’s income. Fines for relative or illicit concentrations have risen from 8% to 15% of the fiscal year’s income. Offenders may also be disqualified from public procurement contracts.
- How do consumers’ rights benefit from these amendments? The new law reinforces consumers’ rights to file collective actions following firm resolutions.
