Enforcement of competition regulations in Mexico is undertaken by the Federal Competition Commission (FCC). The FCC is empowered to clear concentrations that exceed certain thresholds, prevent and punish the performance of monopolistic practices and issue binding opinions, among many others. Its powers and the scope of its activities are mainly prescribed by the Federal Law on Economic Competition (FLEC) and its regulations.

The FCC conducts investigations with regards to:

• abuse of dominance (rule of reason anti-competitive practices);
• cartels (per se or absolute monopolistic practices); and
• prohibited concentrations.

The FCC may:

• order the suspension, correction or suppression of the practice being dealt with;
• impose penalties or fines;
• establish conditions; and
• rule on divestment.

Under the FLEC, fines are indexed to the minimum salary wages in Mexico City (MSWMC - in January 2011 this was 59.82 Mexican pesos). Fines for firms are up to 1.5 million times the MSWMC (about US$7.48 million at the exchange rate at the time of writing) depending on the penalised conduct).

Fines for individuals are up to 30,000 times the MSWMC (about US$150,000).

In case of recurrence, the FCC may impose a fine up to twice of the corresponding amount or, alternatively, equal to 10 per cent of the firms’ annual sales or assets.

Absolute monopolistic practices
In 2010, four investigations were initiated for per se anti-competitive practices: two ex officio and two following third-party complaints. The markets involved were: (i) the production, distribution and marketing of corn flour and tortillas in Chiapas; (ii) the provision of freight services in the state of Baja California Sur; (iii) the production, distribution and marketing of consumables and services of air transport ticket sales and reservations in Mexico; and (iv) the production, processing, distribution and marketing of flexible transmission methods of alternating power sources in Mexico.

On 23 June 2010 the FCC confirmed the decision whereby six pharmaceutical companies had been found guilty for the commission of absolute monopolistic practices in connection with the sale of medicines to the Mexican Institute of Social Security (IMSS), thus confirming the fines imposed.

Likewise, in June 2010, the FCC confirmed resolutions imposing fines on shareholders of PCTV, a company that acquires TV broadcasts to be subsequently transmitted on restricted TV services. Such economic agents were found liable for refusing to provide acquired TV broadcasts to their competitors and for dividing markets by allocating territories.

Relative monopolistic practices
In 2010 the FCC initiated seven investigations for relative monopolistic practices, out of which six started following third-party complaints. The markets involved were: (i) home improvement products in retail stores; (ii) airport services and ancillary services at the international airport of Mexico City; (iii) the production, distribution and marketing of beer; (iv) the supply and marketing of home furniture in Jalisco; (v) advertisement space in magazines and other media regarding the marketing of real state; (vi) leasing of local and domestic long-distance dedicated access services to carriers; and (vii) the production, processing, distribution and marketing of exported guava.

In November 2009 the FCC imposed fines on Grupo Televisa for refusing to supply its TV signals to Tele Cable Centro Occidente SA de CV and Maxcom Telecomunicaciones SA de CV, in order to broadcast the signals through their restricted television networks. In 2010 the FCC decided on appeal by Grupo Televisa against the former resolution to reduce the fine originally fixed at 47.5 million Mexican pesos.

Dominance declaration
In January 2010 the FCC declared Radiomóvil Dipsa SA de CV (commonly known as TELCEL) as an economic agent with significant market power in the national market of mobile telephony.

Legislative developments
On 29 July 2010 a bill amending article 17 of the Federal Constitution was published in the Official Gazette, providing that secondary laws shall regulate actions and procedures for the accurate protection of collective rights. Its main objective is the achievement of a harmonious framework in class actions by establishing the mechanisms for claiming damages. This bill was passed by the Senate on 2 December 2010, and sent back to the House of Representatives for approval, which is still pending at the time of writing.

In compliance with the amendment, on 7 September 2010 the Senate presented a bill amending, among others, article 38 of the FLEC, which introduces the possibility for all economic agents affected by an anti-competitive practice to take individual or collective action.

Another bill passed by the Senate on 2 December 2010 proposes, among other things, increasing penalties through a new method of calculation taking into account the agent’s income, thus making the penalty a deterrent to practices affecting free competition by economic agents. This bill is currently before the House of Representatives for its approval.

Finally, additional initiatives amending the Mexican competition law framework were presented by the Senate. As in the other cases, these initiatives will be decided jointly in compliance with the legislative process established by the Federal Constitution.

SAI Consultores SC