BASHAM NEWS

ANTITRUST: QUARTERLY NEWSLETTER. 3rd QUARTER – 2021

No. 03/2021

 

JULY

COFECE publishes an informative note regarding the work carried out in the liquefied petroleum gas (“LPG”) market.

On July 7th, the Federal Economic Competition Commission («COFECE» for its acronym in Spanish or «Commission») published a report on the actions and efforts carried out in the gasoline, diesel, LPG, turbo gasoline and electricity markets. The Commission reported that there are currently two open investigation procedures in the LPG market at a national level: (i) to determine the existence of effective competition conditions in the sale of LPG to the public and (ii) as to the possible existence of collusive agreements between LPG distribution companies. Likewise, in terms of promoting competition, COFECE recalled the release of the study «Transition to Competitive LPG Energy Markets» in 2018 in which it sought to alert about the concentration of this market. Read more.


Open consultation on the “Preliminary Draft Guidelines for Determining Relevant Markets in the Telecommunications and Broadcasting Sectors».

On July 9th, the Federal Telecommunications Institute (“IFT” for its acronym in Spanish) opened to public consultation the “Preliminary Draft Guidelines for Determining Relevant Markets in the Telecommunications and Broadcasting Sectors”, in order to receive comments. The consultation finished on September 3rd. The Guidelines highlight the importance of determining a relevant market when analyzing market concentrations, as well as generating a guide for economic agents that provides them with legal certainty and security. Read more.


COFECE publishes a report on public consultation of the Draft Amendment to the Regulatory Provisions for the Qualification of Information Derived from the Legal Advice Provided to Economic Agents.

On July 14th, the Commission published the report on the Public Consultation of the Preliminary Draft Modification to the Regulatory Provisions for the Qualification of Information derived from the Legal Advice Provided to Economic Agents, which was open to the general public for comments from May 28th to June 16th. As a result of this consultation, the Commission received three participations, as well as the IFT’s opinion, of which the following aspects stand out: (i) modification or elimination of the requirements of identification and description of privileged documents and files; (ii) reconsideration of the requirement of certifying legal counsel as having a law degree; among others. Read more.


COFECE issues recommendation to CRE on the process to set LPG price regulation.

On July 28th, COFECE published an invitation to the Energy Regulatory Commission («CRE» for its acronym in Spanish) regarding the Ministry of Energy’s publication in the Federal Official Gazette («DOF» for its acronym in Spanish) of the «Emergency Guideline for the Welfare of Liquefied Petroleum Gas Consumers» through which the CRE is encouraged to develop a specific methodology to set maximum prices for the final consumers of LPG. According to COFECE, the issued Guideline is contradictory to the provisions of the Hydrocarbons Law regarding the regulation of prices due to the lack of a statement of absence of effective competition conditions previously issued by the Commission. Read more.


 

AUGUST

The Commission issues white paper on the promotion of clean energy generation.

On August 1st, COFECE published the document «Competition as a means to promote the generation of clean electricity» to highlight the importance of effective competition conditions for the development of clean energy. The Commission’s analysis highlights that Mexico will not meet its commitment to generate clean energy by 2021 in the Paris Agreement, among other reasons, due to (i) lack of speed in the implementation of a regulatory change in accordance with the regulatory amendments made in Mexico in 2013 and, (ii) the latest amendments made to the electricity industry, which in turn inhibits the installation and operation of new generation projects. Read more.


COFECE files constitutional controversy against the Decree of the Advertising Law.

On August 10th, COFECE filed a constitutional controversy before the Supreme Court of Justice of the Nation (“SCJN” for its acronym in Spanish) against the Decree that issued the Law for the Transparency, Prevention and Combat of Unfair Practices in Advertising Contracting («Decree»), considering that it contains certain faculties and provisions that do not fall within the Commission’s competencies as they go against the provisions of Articles 14, 16, 28 and 133 of the Mexican Constitution. COFECE considers that the performance of these functions is not necessarily compatible with its powers to prosecute and sanction conducts that potentially would not affect the operation of the advertising markets. The controversy filed by COFECE was admitted. However, the SCJN did not suspend the effects of the challenged Decree. Read more.


COFECE sanctions several economic agents in the drug distribution market.

On August 16th, the Commission sanctioned the drug distributors Casa Marzam, Casa Saba, Fármacos Nacionales, Nadro, Almacén de Drogas, as well as the Association of Distributors of Pharmaceutical Products of Mexico and other 21 individuals for the execution of several absolute monopolistic practices in the drug distribution market. The total fine amounts to approximately 903 million 479 thousand pesos. In addition COFECE disqualified 10 directors of the sanctioned companies, which maked them unable to serve as directors for set periods. The above, having found evidence that such economic agents entered into agreements to restrict the supply, fix, manipulate and increase the prices of drugs between 2010 and 2016. Read more.


COFECE subpoenas economic agent for possible relative monopolistic practice in the marketing, storage and transportation of oil products case file IO-001-2018.

On August 17th, the COFECE subpoenaed an economic agent participating in the trade, storage and transportation of oil products in Mexico, as well as related services, for possibly engaging in anticompetitive practices consisting in the establishment of different prices and conditions of sale or purchase for different sellers or buyers under the same conditions. This marks the beginning of the trial-like proceeding through which the economic agent involved will be able to defend itself against accusations made by the Commission. Read more.


COFECE issues report on Public Consultation of the Preliminary Draft Amendments to the Regulatory Provisions on the Use of Electronic Media before the Commission.

On August 17th, the Commission issued the Report on the Public Consultation of the Preliminary Draft of Amendments to the Regulatory Provisions on the Use of Electronic Media before the Federal Economic Competition Commission, which remained open to the general public for comments from June 30 to July 19. As result of this consultation, the Commission received two participations, as well as the opinion of the IFT, of which the following aspects stand out: (i) granting the possibility for SITEC system users to choose which procedural steps will be conducted electronically and which will not; (ii) concerns regarding document verification; (iii) the possibility of modifying deadlines due to errors in the system for uploading documents; among others. Read more.


The Commission issues white paper «Study of competition in the public railroad freight transportation service».

On August 31st, the Commission published the final version of the document » Competition study in the public railroad freight transportation service», which is the result of the comments generated in the public consultation held last May. In this document, COFECE estimates that competition in the Mexican railway system is extremely low and that this network operates in a disjointed manner, which in turn causes a low efficiency in the services offered in the related markets. Consequently, COFECE made 25 recommendations to Mexican lawmakers and regulatory agencies to promote greater competition and efficiency in the sector, which are grouped into three categories: (i) remove obstacles to creating and taking advantage of existing rights-of-way; (ii) promote interline services to resolve bottlenecks; and (iii) strengthen the design of the Rail Transport Regulatory Agency. Read more.


COFECE issues emergency Regulatory Provisions to Handle Complaints regarding the Advertising Law.

On August 31st, the COFECE published the Emergency Regulatory Provisions for the Processing and Handling of complaints regarding Possible Violations of the Law of Transparency, Prevention and Combating of Undue Practices in Advertising Contracting,  to provide legal certainty and security to economic agents in proceedings that COFECE will carry out in this regard. Some relevant aspects are (i)  investigations based on the Advertising Law must be triggered by a complaint and will be in charge of the Investigative Authority of the COFECE; (ii) in order for the complaints to proceed, the persons filing them must have a legal interest; (iii) the investigations may be carried out in up to 5 periods of 120 working days each; (iv) once the investigation is completed, a proceeding will be carried out in the form of a trial and; (v) the Board of Commissioners will be the competent authority to resolve the matter. Read more.


 

SEPTEMBER

Manuel Haro, Head of COFECE’s Investigative Authority.

On September 1st, the Board of the Commission appointed José Manuel Haro Zepeda as new Head of the Investigative Authority who will serve a period of four years. COFECE’s Investigative Authority is in charge of handling investigations for monopolistic practices and unlawful concentrations as well as other special procedures under the FECL and other laws. Read more.


COFECE clarifies information regarding required votes for the Board Resolutions.

On September 3rd, the Commission published a press release which clarified that (i) according to the Commission’s Organic Statute, sessions of the Board of Commissioners are valid with the attendance of at least four commissioners, provided that at least three vote and; (ii) according to the FECL, the vote of five commissioners is required for the resolutions of procedures to determine barriers to competition and essential inputs, the appointment of the Head of the Investigative Authority and the issuance of Regulatory Provisions. Read more.


Brenda Gisela Hernández Ramírez, assumed the role of Acting Presiding Commissioner due to vacancy in the Commission’s Board.

On September 10th, Commissioner Brenda Gisela Hernández assumed the role of Acting President  of COFECE’s Board due to a vacancy. This transition is a result of the end of the second and last term of Alejandra Palacios Prieto as Presiding Commissioner, who was ratified by the Congress in October 2016. The Acting Presiding Commissioner mentioned that an orderly transition and emphasizing the continuity of the Commission’s work is a priority in favor of competition and adherence to due process. Read more.


COFECE sanctions 17 Liga MX clubs, the Mexican Soccer Federation and 8 individuals for colluding in the soccer player transfer market.

On September 23rd, the Commission imposed fines for a total of 177.6 million pesos to 17 Liga MX soccer clubs for their responsibility in absolute monopolistic practices. Likewise, it sanctioned the Mexican Soccer Federation and 8 individuals for contributing to these practices. The conducts consisted of the imposition of maximum ceilings on the salaries of female soccer players and segmenting the players’ market by establishing a mechanism that prevented them from freely negotiating with new teams (commonly known as the «gentlemen’s agreement»). The Mexican Soccer Federation stated in a joint press release with the clubs, that they reiterate their commitment to abide by the resolution issued by COFECE. They also stated that they have no intention of challenging the resolution and that they will assume responsibility for the sanctions decreed therein. 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

 

Fernanda Garza

fgarza@basham.com.mx

 

León Jiménez

ljimenez@basham.com.mx

 

Carmina Paredes

cparedes@basham.com.mx