June 2022
Frontpage
Market study
Anticompetitive practices
Opinion
Defense before the judicial power
Recommended Reading
FRONTAGE
Cofece imposes a total fine of 9.7 million Mexican pesos on Cemex, ABC Capital, ABC Holding and a natural person for the omission to notify two concentrations
Cofece imposes a total fine of 9.7 million Mexican pesos on Cemex, ABC Capital, ABC Holding and a natural person for the omission to notify two concentrations
The Federal Economic Competition Commission (Cofece or Commission) imposed sanctions for a total 9 million 748 thousand 587 Mexican pesos to Cemex, ABC Capital, ABC Holding and a natural person, for not notifying two transactions that exceed the thresholds foreseen in article 86 of the Federal Economic Competition Law (LFCE, per its initials in Spanish), and, for which they were obliged to receive authorization from this autonomous body before carrying them out.
In the first months of 2022, Cofece had knowledge that the first transaction was carried out in 2018, when ABC Holding increased its participation in ABC Capital’s social capital; and that the second took place in 2021, date on which Cemex sold stocks from ABC Capital to a natural person. The Commission identified that both operations exceeded the thresholds foreseen in section III of article 86 of the LFCE.
Based on due process, the Board of Commissioners of Cofece discussed and authorized both concentrations, as it considered that these do not represent risks to the process of competition and free market access. However, when proving the responsibility of the economic agents involved for not notifying the concentrations when they legally should have done so, Cofece imposed four fines: the fines for the companies involved in the first transaction amount to 7 million 956 thousand 187 Mexican pesos; while, for the company and the natural person related to the second transaction, the fines amount to 1 million 792 thousand 400 Mexican pesos.
Once the matter has been resolved and the parties have been notified, the Political Constitution of the United Mexican States grants the sanctioned economic agents the right to appear before the Judicial Power of the Federation to review the legality of the actions of Cofece, through an Indirect Amparo Trial.
MARKET STUDY
Cofece initiates market study on digital financial services
The Board of the Commission approved the conduction of a study on matters of free market access and economic competition in the markets of digital financial services and related markets. With this study, based on Article 12 Section XXIII of the Federal Economic Competition Law (LFCE, per its initials in Spanish), the structure, functioning and regulatory framework for these services will be analyzed, in addition —if appropriate— recommendations will be presented to the sectoral authorities to improve its functioning.
The study is pertinent because the services provided in these markets impact on productive activities, as well as on the options available to financial users.
This is aligned with the2022-2025 Strategic Plan of Cofece, which establishes that both financial services as well as digital markets are priority sectors for the attention of this autonomous body.
Persons, institutions and economic agents interested in making comments and submitting elements they deem relevant for the analysis of the market, from a competition perspective, may do so via email to the following address: estudiofintech@cofece.mx or directly at the Commission’s Filing Office, located at Avenida Revolución number 725, floor 1, Santa María Nonoalco, Benito Juárez, Mexico City, Postal Code 03700.
In accordance with the agreement of initiation of the study of the market for digital financial services and related markets, the final document does not constitute a prejudgment on possible violations to the LFCE
The Board of the Commission approved the conduction of a study on matters of free market access and economic competition in the markets of digital financial services and related markets. With this study, based on Article 12 Section XXIII of the Federal Economic Competition Law (LFCE, per its initials in Spanish), the structure, functioning and regulatory framework for these services will be analyzed, in addition —if appropriate— recommendations will be presented to the sectoral authorities to improve its functioning.
The study is pertinent because the services provided in these markets impact on productive activities, as well as on the options available to financial users.
This is aligned with the2022-2025 Strategic Plan of Cofece, which establishes that both financial services as well as digital markets are priority sectors for the attention of this autonomous body.
Persons, institutions and economic agents interested in making comments and submitting elements they deem relevant for the analysis of the market, from a competition perspective, may do so via email to the following address: estudiofintech@cofece.mx or directly at the Commission’s Filing Office, located at Avenida Revolución number 725, floor 1, Santa María Nonoalco, Benito Juárez, Mexico City, Postal Code 03700.
In accordance with the agreement of initiation of the study of the market for digital financial services and related markets, the final document does not constitute a prejudgment on possible violations to the LFCE
ANTICOMPETITIVE CONDUCTS
Initiation of investigation of probable barriers to competition and free market access in the national market of federal passenger transport that uses terminals for the boarding and disembarking of passengers, and related services
The Investigative Authority of Cofece published in the Federal Official Gazette the initiation of an investigation to identify and, in its case, determine the probable existence of barriers to competition and free market access, as well as possible essential facilities in the national market for federal land passenger transport that uses terminals for passenger boarding and disembarking, and related markets.
In the extract of the initiation agreement of the investigation IEBC-003-2022 2022, it is indicated the finding of initial elements that suggest the absence of effective competition conditions in this market. The initiation of the ex officio investigation does not imply any prejudgment by the Investigative Authority.
The federal passenger transport service is essential for the mobility of the population and has a crosscutting impact on other areas of the economy. According to the 2020 Basic Statistics of the Ministry of Infrastructure, Communications and Transport, 95.2% of passengers mobilized by means of interstate transport in 2020, did so through federal land transport.
For the Commission, the transport sector is highly relevant, thus it has conducted diverse actions to strengthen competition in the related markets for the benefit of Mexican families. In addition, this new investigative work is aligned with its 2022-2025 Strategic Plan.
For the development of this inquiry, the Investigative Authority has a period of between 30 and 120 business days, counted from the publication of the extract, which may be extended up to two times.
Anyone may contribute in this investigation by providing information through the email address aicomunicacion@cofece.mx or directly at the Commission’s Filling Office, located at Avenida Revolución número 725, piso 1, colonia Santa María Nonoalco, alcaldía Benito Juárez, Mexico City, Postal Code 03700.
The Investigative Authority of Cofece published in the Federal Official Gazette the initiation of an investigation to identify and, in its case, determine the probable existence of barriers to competition and free market access, as well as possible essential facilities in the national market for federal land passenger transport that uses terminals for passenger boarding and disembarking, and related markets.
In the extract of the initiation agreement of the investigation IEBC-003-2022 2022, it is indicated the finding of initial elements that suggest the absence of effective competition conditions in this market. The initiation of the ex officio investigation does not imply any prejudgment by the Investigative Authority.
The federal passenger transport service is essential for the mobility of the population and has a crosscutting impact on other areas of the economy. According to the 2020 Basic Statistics of the Ministry of Infrastructure, Communications and Transport, 95.2% of passengers mobilized by means of interstate transport in 2020, did so through federal land transport.
For the Commission, the transport sector is highly relevant, thus it has conducted diverse actions to strengthen competition in the related markets for the benefit of Mexican families. In addition, this new investigative work is aligned with its 2022-2025 Strategic Plan.
For the development of this inquiry, the Investigative Authority has a period of between 30 and 120 business days, counted from the publication of the extract, which may be extended up to two times.
Anyone may contribute in this investigation by providing information through the email address aicomunicacion@cofece.mx or directly at the Commission’s Filling Office, located at Avenida Revolución número 725, piso 1, colonia Santa María Nonoalco, alcaldía Benito Juárez, Mexico City, Postal Code 03700.
OPINIONS
Opinion on the Initiative with a Draft Decree that Reforms Article 380 and Adds Article 380 bis to the Commercial Code.
The Commission recommended not to approve the initiative as it could affect the process of competition and free market access by limiting the capacity to compete of micro, small and medium enterprises (MSMEs) and hinder their entry into markets.
It was considered that, in order not to limit dynamic efficiency in the markets and competition in production chains in the long term, alternatives could be explored to guarantee that providers receive payments under the conditions and timeframes agreed with their buyers. This will allow MSMEs to have the necessary resources in time to remain and grow in the markets.
The opinion does not prejudge aspects of any other nature that fall within the competence of this authority.
The Commission recommended not to approve the initiative as it could affect the process of competition and free market access by limiting the capacity to compete of micro, small and medium enterprises (MSMEs) and hinder their entry into markets.
It was considered that, in order not to limit dynamic efficiency in the markets and competition in production chains in the long term, alternatives could be explored to guarantee that providers receive payments under the conditions and timeframes agreed with their buyers. This will allow MSMEs to have the necessary resources in time to remain and grow in the markets.
The opinion does not prejudge aspects of any other nature that fall within the competence of this authority.
DEFENSE BEFORE THE JUDICIAL POWER
PJF denies amparo to ubén Ernesto Monroy León and Combustibles Otay, S.A. de C.V., Operadora El Peñasco, S.A. de C.V. and Combustibles Rancho Viejo, S.A. de C.V. (Grupo APPRO).
The Second District Court on Administrative Matters Specialized in Economic Competition, Broadcasting and Telecommunications denied the amparo to Rubén Ernesto Monroy León y Combustibles Otay, S.A. de C.V., Operadora El Peñasco, S.A. de C.V. and Combustibles Rancho Viejo, S.A. de C.V. (Grupo APPRO), who appealed before the Judicial Power the fine imposed by the Board of the Federal Economic Competition Commission, after establishing that they carried out absolute monopolistic practices in the market for the commercialization of gasolines in the municipality of Tijuana, in the state of Baja California.
On March 11, 2022, the economic agents were notified of the ruling issued on March 10, 2022, that denied them the amparo, and after the timeframe for appealing the ruling expired, by agreement of June 6, 2022, the District Tribunal determined that the ruling became enforceable.
The anticompetitive practices sanctioned by the Board of Commissioners of Cofece consisted in agreements between competitors to maintain prices of gasolines at the maximum determined by the Federal Executive, through the Ministry of Treasury and Public Credit.
The Second District Court on Administrative Matters Specialized in Economic Competition, Broadcasting and Telecommunications denied the amparo to Rubén Ernesto Monroy León y Combustibles Otay, S.A. de C.V., Operadora El Peñasco, S.A. de C.V. and Combustibles Rancho Viejo, S.A. de C.V. (Grupo APPRO), who appealed before the Judicial Power the fine imposed by the Board of the Federal Economic Competition Commission, after establishing that they carried out absolute monopolistic practices in the market for the commercialization of gasolines in the municipality of Tijuana, in the state of Baja California.
On March 11, 2022, the economic agents were notified of the ruling issued on March 10, 2022, that denied them the amparo, and after the timeframe for appealing the ruling expired, by agreement of June 6, 2022, the District Tribunal determined that the ruling became enforceable.
The anticompetitive practices sanctioned by the Board of Commissioners of Cofece consisted in agreements between competitors to maintain prices of gasolines at the maximum determined by the Federal Executive, through the Ministry of Treasury and Public Credit.
RECOMMENDED READING
Beneficio económico de las intervenciones de la Cofece 2021 [Economic benefit of the 2021 interventions of Cofece]
Each year Cofece quantifies the impact of its interventions on the markets, by preventing and sanctioning anticompetitive conducts. This generates savings for consumers, as they stop paying overprices and have more resources to meet other needs. These evaluation exercises are intended to measure the effectiveness of the Commission’s actions, provide evidence on the benefits generated by each Mexican peso invested in competition policy and compare the expected effects with those observed.
BY THE NUMBERS
BY THE NUMBERS
In June, the Commission handled 113 matters, of which 65 correspond to concentrations, 31 to procedures for monopolistic practices and prohibited concentrations, 5 special procedures and 12 are opinions on tenders, concessions or permits.
Complaints, investigations and trial-like procedures
- Follow-up was made to 8 complaints for anticompetitive conducts, 5 remain under analysis.
- 19 investigations of monopolistic practices were followed-up: all are ongoing.
- Progress is being made in 4 trial-like procedures, that are still being processed.
- 4 procedures for barriers to competition are being analyzed; they are still being processed.
- 1 case to declare competition conditions is still in process.
Concentraciones
- 65 concentrations were reviewed, of which 13 were authorized1.
- The amount of the authorized operations is of 90,578.92 million Mexican pesos.
Opinions
- During the period, 1 opinion was issued ex officio to a reform initiative.
Juicios de amparo
- During June, the Judicial Power resolved 17 amparo trials: 4 were granted, 6 were denied and 7 were dismissed. At the end of the period, 423 trials are still being processed, of which 12 correspond to economic competition matters.
