Mexico City, April 1st, 2020.
On March 30, 2020, the Federal Economic Competition Commission (“COFECE” for its Spanish initials) issued a press release regarding a warning issued to the National Sugar and Alcohol Industry Trade Association (“CNIAA” for its Spanish initials) and several members of said industry group due to an increase in the price of pure alcohol, its-by-products, and some inputs used in its production, such as molasses. COFECE stated that these price increases could be a result of potential price fixing between competitors.
Given the ongoing health emergency caused by the COVID-19 pandemic, classified as a serious illness by the National Health Council, pure alcohol is in high demand to be used in many products as part of spread mitigation and sanitary control measures; therefore, it is necessary for COFECE to pay close attention to the prices of alcohol and other priority goods deemed necessary to deal with the public health issue and that pricing is not affected by actions which may be in violation of the Federal Economic Competition Law (“LFCE” for its Spanish initials).
COFECE further that CNIAA foster and ensure that its members take pricing decisions individually pursuant to their specific commercial strategies and in the context of a free market and even with the possibility of setting maximum consumer prices. It also mentioned that when competitors coordinate their activities or exchange information to set prices, they incur in de-facto monopolistic practices which are subject to fines of up to 10% of the offender’s annual income, as well as potential prison time and additional fines of up to MXN $ 868, 800¹ (36,507 USD )for the individuals involved.
Finally, COFECE informed the economic agents that, if they have been involved in illegal behavior under the LFCE they can participate in COFECE’s Leniency Program to benefit from a fine reduction in exchange for total cooperation in the ensuing investigation.
Kind regards,
Amilcar Peredo
Fernanda Garza
León Jiménez
Carmina Paredes
cparedes@basham.com.mx
