BASHAM NEWS

ANTITRUST: QUARTERLY NEWSLETTER. 2nd QUARTER - 2021

No. 02/2021

 

APRIL

The Commission updated the Concentration Notification Guidelines.

On April 8thThe Federal Economic Competition Commission (the "Commission") updated the Concentration Notification Guidelines, through the Federal Official Gazette ("DOF" for its initials in Spanish) to provide a greater certainty to economic agents with respect to the analysis of notified concentrations. Among the updates are: treatment of collaboration agreements between economic agents (Joint Ventures), economic agents obligated to notify a concentration that involves multiple buyers, calculation of notification thresholds and relevant information for companies in precarious economic situations, among others. Read more.


The Commission recommends Congress about the amendments to the Hydrocarbons Law.

On April 12thThe Commission sent to the Mexican Congress its opinion regarding the proposed reform to the Hydrocarbons Law, through which it states that if the initiative is approved as proposed, it would cause legal uncertainty for economic agents participating in the hydrocarbons, oil and petrochemical value chain, and will enable restrictions to the supply of related products and services. Among the potential negative effects to the value chain are disincentives to entry of new competitors and the reduction of supply by modifying the permit regime; the reduction of competitors and supply by introducing prior verification of required storage capacity; and a change to tacit denial instead of tacit approval of requests for assignment of permits. Read more.


The Commission files constitutional controversy against the amendment to the Electric Industry Law.

On April 22ndThe Commission filed a constitutional controversy with the Supreme Court of Justice of the Nation ("SCJN") against the Decree that amends the Electric Industry Law (the "Decree"). The Commission considers that the measures established in the Decree are contrary to the Mexican Constitution and would eliminate competition in the electricity market. The Commission seeks to challenge (i) the elimination of the criterion of economic dispatch of power plants, which unduly advantages the Federal Electricity Commission ("CFE" for its acronym in Spanish); (ii) the violation of the rule of open and non-discriminatory access to the distribution and transmission networks and (iii) the consent for CFE to acquire energy through non-competitive methods; among others. Read more.


The Commission subpoenas an economic agent for its possible responsibility of abuse of dominance in the federal ground passenger transportation service at the Mexico City Airport.

On April 27thThe Commission subpoenaed an economic agent to a trial-like proceeding after finding evidence of a possible abuse of dominance practice known as refusal to deal, in the provision of the federal land passenger transportation services at Mexico City airport and others. Read more.


 

MAY

Federal Telecommunications Institute denies extension of Disney's deadline to divest Fox Sports in Mexico.

On May 6th the Federal Telecommunications Institute ("IFT" for its acronym in Spanish) denied the request made by The Walt Disney Company and First Century Fox, Inc. to extend the suspension period of the divestiture term for the sale of the Fox Sports Mexico business. The IFT's denial was justified in consideration of the current circumstances due to the COVID-19 pandemic and the reactivation of economic activities and various sporting events, for which reason the suspension period ended on May 7. Read more.

The Commission investigates possible abuse of dominance practices in the generation, wholesale distribution and supply of electric energy and associated products market.

On May 6tha notice of investigation stemming from a complaint of possible relative monopolistic practices in the generation, wholesale distribution and supply of electric energy and associated products was published in the DOF. This investigation is being performed under an independent process from the constitutional controversy filed by the Commission against amendments to the Electric Industry Law. Read more.


The Commission subpoenas economic agents for possible collusion in the drafting of professional soccer players.

On May 6thThe Commission subpoenaed several economic agents after finding evidence of possible collusion in the market for the drafting of professional soccer players. This investigation is particularly important because it sets a precedent for anti-competitive behavior that has negative effects on worker mobility and salary determination. This marks the beginning of the trial-like proceeding through which the parties involved will be able to defend themselves against accusations made by the Commission. Read more.


Domo and Gape sue the Commission for favoring Grupo Modelo and Heineken.

On May 13thDistribuidora Domo and Distribuidora Gape de Tamaulipas filed a complaint with the Mexican Attorney General's Office against the Commission for alleged omissions, deficiencies and possible collusion regarding the decision to close the investigation for relative monopolistic practices opened in 2010 in connection to discounts and incentives to customers in exchange for exclusivity in the distribution, commercialization and sale of beer. Read more.


Federal judges grant suspension against the amendment to the Hydrocarbons Law.

On May 17thTwo specialized judges in administrative matters specialized in Economic Competition, Broadcasting and Telecommunications, granted a general suspension to the application of article 57 and fourth and sixth transitory articles of the Decree that amends the Hydrocarbons Law. The federal judges granted such suspension considering that those articles could have negative effects in the competition and free market access in the hydrocarbons, petroleum and petrochemicals markets. Read more.


The Commission issues white paper Transition towards competitive energy markets: Clean Energy Certificates in the Mexican electric industry.

On May 18tthe Commission published the final version of the document Transition towards competed energy markets: The Clean Energy Certificates in the Mexican electric industry, which is the result of a public consultation performed last January. In this document the Commission considers that, despite having committed to a 35% clean energy generation by 2021 in the Paris Agreement, Mexico will only reach 29.8% of clean energy use. Read more.


Open consultation on the draft regarding the Study of competition in the public service of rail freight transportation.

On May 24ththe Commission opened to public consultation a preliminary version of the "Study of competition in the public rail transportation service" ("Study"), in order to receive comments to improve it. This term expired on June 26th. The Study highlights issues such as the consequences of privatization in the railroad sector; problems arising from the characteristics of this sector such as asymmetries in market access; fragmentation of the railroad transportation network; a lack of clear criteria to extend specific concessions; absence of regulation for the access to tracks in which the exclusivity of concessionaires expires and a lack of information to exercise efficient regulatory oversight by the Railroad Transportation Regulatory Agency. Read more.


The Commission begins an investigation into effective competition conditions in the distribution of liquified petroleum gas at the national level.

On May 31stThe Investigation Authority of the Commission started a special proceeding to determine whether effective competition conditions exist in the distribution of liquefied petroleum gas (LP gas) in Mexico. This ex officio investigation by the Commission could open the door to enactment of fee, price and tariff regulations in the liquefied petroleum gas distribution market by the Energy Regulatory Commission ("CRE" for its initials in Spanish). Read more.


 

JUNE

The Commission sanctions Praxair for failure to comply with commitments made in the industrial oxygen, nitrogen and argon markets.

On June 1stThe Commission sanctioned Praxair Mexico for failing to comply with its commitment to restore competition in the markets for bulk distribution of oxygen, nitrogen and liquid industrial argon. The total fine amounts to approx. 238 million pesos (approx. USD 12 million). These commitments were acquired by Praxair after it requested an early termination of the trial-like proceeding to which it was subject from 2014 until 2018. Among the failed commitments are (i) not amending a customer's contract to include the commitments; (ii) failing to submit information related to the lists of contracts, communications and (iii) failing to include stipulations of automatic renewal without modification to the initial mandatory term of contracts in favor of third parties. Read more.


New Advertising Law grants new attributions to the Commission.

On June 3rdThe Law for the Transparency, Prevention and Combating of Unfair Practices in Advertising Contracting was published in the DOF, aimed to promote transparency in the advertising market. This new law contains specific obligations for agencies, media and other economic agents participating in advertising. According to this new law, any claim arising from these provisions must be processed and addressed by the Commission. Read more.


IFT clears sale of Fox Sports Mexico to Grupo Lauman.

On June 8thThe IFT cleared the sale and purchase of shares and notified concentration through which The Walt Disney Company and Twenty-First Century Fox transferred the Fox Sports business in Mexico to Grupo Lauman. The Fox Sports sale is the result of the conditions imposed by the IFT to Disney and Twenty-First Century Fox on March 11.th2019 to reduce the risks in the market for the provision and licensing of audiovisual content, as well as the refusal to extend the term requested to the IFT by Disney on May 6, 2019.th, 2019. Read more.


The Commission is the appropriate authority to analyze online search services, social networks and cloud computing.

On June 18thThe First Collegiate Circuit Tribunal on Administrative Matters Specialized in Economic Competition, Broadcasting and Telecommunications recognized the Commission as the appropriate authority to investigate the online search services, social networks and cloud computing services markets. This decision is the result of the request made in January by the Commission to the Federal Judicial Power ("PJF" for its initials in Spanish) to determine the appropriate authority to analyze the markets that were part of the investigation opened by the IFT in October 2020. Likewise, the PJF determined that the IFT is the competent authority to analyze the mobile operating systems market. Read more.


The Commission thanks Sergio Lopez, head of the Investigative Authority, for his work.

On June 30thThe Commission thanked and recognized the efforts and work made by Sergio Lopez Rodriguez who served as head of the Investigative Authority ("AI" for its initials in Spanish) for the last 4 years. Mr. Lopez previously held various positions at the Commission since becoming a member in 2001. The AI of the Commission is the unit responsible for handling investigations of monopolistic practices and unlawful concentrations, as well as special proceedings to determine essential inputs, barriers to competition or lack of competitive conditions in the markets. Bertha Leticia Vega Vázquez, who until then was the General Director of the Coordination Office IA, was appointed as interim head of the IA. Read more.


Open consultation on the preliminary version of the amendments to the regulatory provisions on the use of electronic media before the Commission begins.

On June 30thThe Commission opened a preliminary version of the amendments to the regulatory provisions on the use of electronic media before the Commission to public consultation. The main purpose of this preliminary version is to strengthen the current regulations regarding the use of electronic media before the Commission and takes into consideration acquired institutional experience. The consultation will be open until July 19th. Read more.

 

Our Antitrust team is at your service to answer any questions regarding this document.

 

S I N C E R E L Y,

 

Amilcar Peredo

peredo@basham.com.mx

 

Rodolfo Barreda

rbarreda@basham.com.mx

 

Fernanda Garza

fgarza@basham.com.mx

 

León Jiménez

ljimenez@basham.com.mx

 

Carmina Paredes

cparedes@basham.com.mx