1. – Should aggressive employers and entrepreneurs ponder significant risks when taking decisions to avoid violating the Competition Law?
The object is to protect the efficient functioning of markets by protecting the process of competition and free market (Article 2), thus does not protect competition. The competition law has several objectives seeking to benefit the most efficient providers in the market that offer better products and services to consumers, which may also involve the loss of output or market share of worst competitors.
2. – Which business practices are specifically punished by competition law?
Pursuant to Competition Law, our firm’s lawyers guide our clients landscape through all facets of the merger process through strategic counseling, however, absolute and relative monopolistic practices are prohibited (Articles 9, 10-13a) by the law, such as concentrations (from mergers and acquisitions), when the resulting company, as a result of such operation, acquired substantial and unfair power in the relevant market (Articles 16 to 19).
3. – Is the size of a company relevant within violations submitted under grounds of competition law?
Competition law does not refer to legal entities by their size or market participation. Although monopolies are prohibited by Mexican Constitution through Article 28, and also by Article 8 of the Federal Competition Law, there aren’t penalties provided for having a monopoly. Pursuant to Mexican competition law, it is prohibited to abuse of dominant power, substantial or relative, individually or together with effects on market competition and market efficiency (Articles 10-19 FLEC). Therefore, our client’s size is irrelevant for incurring in violations to competition law.
4. – What are absolute monopolistic practices? Are they always prohibited in Mexican Legal System?
Monopolistic practices are agreements between competitors to fix prices, sharing markets, agreeing on specific amounts of production of goods or services to be produced and/or distributed, or for appointing collusion in public tenders. These types of behaviors are always forbidden in our country, regardless of their effects over the market (Article 9). These offenses may be punished with imprisonment of 3-10 years in accordance with Article 254 bis of the Federal Criminal Code).
5. – What are relative monopolistic practices?
Are they always prohibited in Mexican Legal System? Relative monopolistic practices or abuse of dominant position are vertical agreements entered in between two or more companies that are not at the same level of the production chain and but that have effects on competition. In order to be awarded a penalty under an administrative declaration in competition matters, it is crucial that (i) one of affected competitors effectively have substantial or joint control power within a specific relevant market, (ii) that such practice is carried out within Mexican territory, and (iii) that any harmful effect outweigh proactive possible effects on competing and market efficiency.
6. – How are sanctioned anticompetitive practices?
Unfair competition practices on absolute monopolistic practices are punishable by up to 10% of the taxable income of the company in such year and imprisonment of 3-10 years, however, in the case of relative monopolistic practices, pursuant with criminal law, might be awarded up to a 8% of taxable income, in the case of monopolistic practices.
7. – Are mergers and acquisitions prohibited in competition law? How does competition law defines such figures?
Mergers are defined as the act by which two or more economic agents “concentrate” their assets, and thus, as a common practice, are not prohibited by competition law, unless it may damage or affect fair competition, according to what may be declared or conditioned after a proceeding by the Commission, where appropriate, solving to ban prohibiting such concentrations, in accordance with Articles 16 to 19 and 30 of competition law.
8. – Which is the competent authority to enforce Competition Law?
The organization responsible for the application of antitrust law is the Federal Competition Commission (CFC), an agency within the Ministry of Economy, with technical and operational autonomy to issue its decisions (Article 23).
9. – Is there an appeal venue against decisions issued by the CFC?
An appeal for reconsideration may always be voluntarily initiated before the same authority as an administrative proceeding, or the right holder may choose to mandatory follow a cancellation action submitted under the administrative federal courts for economic competition venues, and lastly, the “Amparo” extraordinary appeal writ and instance, to review constitutional validity. (Article 39).
10. – Are there “mercy” programs for persons that unwillfuly committed an unfair business practice?
Mexican competition law confidentially allows legal entities to voluntarily inform the Commission absolute monopolistic practices, this may lead to a substantial reduction of penalties and fines. For offenses related with relative monopolistic business practices, or prohibited concentrations, investigates companies may impose formal commitments to refrain from such practice, terminating such procedure with a reduction in fines, as far as conditions match with the ones established through Article 33 of competition law.
11. Is it possible to initiate a civil action seeking to recover profits or damages based on violations to competition law?
Pursuant to Article 38 of competition law, anyone that verifies a legitimate interest in seeking the recovery of profits and damages based on unfair competition liabilities, regardless of whether the Commission has issued a final decision. It is easier to understand the above-mentioned factors from individual claims, however, in collective actions, it is indeed crucial to wait for issuance as res judicata of the Commission’s final verdict in accordance with Article 588 of the Federal Code of Civil Procedures.
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