September 2022
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International Competition Community
Barriers to competition
Investigations
Recommended reading
FRONTPAGE
Cofece imposes fines of more than 51 million Mexican pesos on AT&T and Warner Bros. Discovery for not notifying a concentration
Cofece imposes fines of more than 51 million Mexican pesos on AT&T and Warner Bros. Discovery for not notifying a concentration
The Federal Economic Competition Commission (Cofece or Commission) fined AT&T, Inc. (AT&T) and Warner Bros. Discovery, Inc. (Warner Bros. Discovery) a total of 51 million 573 thousand 920 Mexican pesos, for omitting the notification of a concentration in terms of the Federal Economic Competition Law (LFCE).
The sanction is related to an international operation in which it was originally proposed the acquisition by Discovery, Inc. of the AT&T business known as Warnermedia, including the Mexican business, as well as the purchase by the shareholders of AT&T of 71 percent of the stock of the company resulting from the transaction, which would be rebranded as Warner Bros. Discovery, Inc.
However, before Cofece issued its authorization, the economic agents carried out a series of acts through which they separated only a part of Warnermedia’s business in Mexico, which created, at least for a time, market structures and legal relationships that were not considered in the originally notified operation and that for this reason could not be preventively analyzed by Cofece.
Once the matter has been resolved and the parties have been notified, the sanctioned economic agents have the right to appear before the Judicial Power of the Federation to review the legality of the actions of Cofece.
[Note: The public version of the resolution may be consulted in the opinions and resolutions portal of the Cofece's website within the legal term established in Article 47 of the Regulatory Provisions of the LFCE].
INTERNATINAL COMPETITION COMMUNITY
Competition authorities of North America reaffirm joint work to promote the enforcement of antitrust laws with greater rigor and effectiveness
The heads of the Federal Economic Competition Commission (Cofece or Commission), the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ), both from the United States; and the Competition Bureau of Canada, reaffirmed their willingness to work together to make their antitrust policies and the enforcement of their respective laws increasingly rigorous and effective.
The trilateral meeting, held in Washington D.C., was attended by the Acting Chair Commissioner of Cofece, Brenda Hernández; the Chair of the FTC, Lina Khan; the Attorney General of the Antitrust Division of the DOJ, Jonathan Kanter, and the Commissioner of the Competition Bureau of Canada, Matthew Boswell.
These meetings are based on competition law enforcement cooperation agreements between the governments of Mexico and the United States in 2000; and between the governments of Mexico and Canada in 2001.
In her participation, Acting Chair Commissioner, Brenda Hernández, highlighted the growing specialization of the Commission expressed in resolutions for monopolistic practices, concentrations, opinions and studies related to goods and services that impact numerous markets that are develop both in the traditional and in the digital economy, and where all types of economic agents are involved.
She also highlighted the strengths and substantive scope of the General Directorate of Concentrations and the General Directorate of Digital Markets and emphasized the technological scaling and work of the General Directorate of Market Intelligence, which reports to the Investigative Authority. These capabilities have been recognized abroad, as is the case of the honorable mention awarded to Cofece by the ICN-Competition Advocacy Contest 2022, for its work in digital markets.
The heads of the Federal Economic Competition Commission (Cofece or Commission), the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ), both from the United States; and the Competition Bureau of Canada, reaffirmed their willingness to work together to make their antitrust policies and the enforcement of their respective laws increasingly rigorous and effective.
The trilateral meeting, held in Washington D.C., was attended by the Acting Chair Commissioner of Cofece, Brenda Hernández; the Chair of the FTC, Lina Khan; the Attorney General of the Antitrust Division of the DOJ, Jonathan Kanter, and the Commissioner of the Competition Bureau of Canada, Matthew Boswell.
These meetings are based on competition law enforcement cooperation agreements between the governments of Mexico and the United States in 2000; and between the governments of Mexico and Canada in 2001.
In her participation, Acting Chair Commissioner, Brenda Hernández, highlighted the growing specialization of the Commission expressed in resolutions for monopolistic practices, concentrations, opinions and studies related to goods and services that impact numerous markets that are develop both in the traditional and in the digital economy, and where all types of economic agents are involved.
She also highlighted the strengths and substantive scope of the General Directorate of Concentrations and the General Directorate of Digital Markets and emphasized the technological scaling and work of the General Directorate of Market Intelligence, which reports to the Investigative Authority. These capabilities have been recognized abroad, as is the case of the honorable mention awarded to Cofece by the ICN-Competition Advocacy Contest 2022, for its work in digital markets.
Global Competition Review ratifies the three and a half star rating for Cofece in its 2022 ranking, it recognizes the improving performance of the Commission
For the fifth consecutive year, we obtained the rating of three and a half stars (out of five) in the Rating Enforcement 2022 of the British specialized publication Global Competition Review (GCR). With the rating obtained, Cofece ranks at the same level as competition authorities of Austria, Canada, Chile and Greece; and above to the agencies of Belgium, Israel, among others.
This publication is an international benchmark in the measurement of the performance and effectiveness of the most important antitrust agencies in the world, and on this occasion recognizes the improving performance of our actions in comparison to the previous year.
Some of the achievements highlighted by GCR to grant this rating were: the fine imposed on five medicine distributors and one natural person for a total 903 million Mexican pesos, emphasizing that, for the first time, the Commission disqualified 10 directors from occupying managerial positions in pharmaceutical companies.
Another relevant case was the sanction imposed for a total 177.6 million Mexican pesos to Mexican clubs from the Liga Mx, the Mexican Football Federation and eight natural persons in the market for the draft of female and male soccer players. These collusive agreements restrict labor mobility for female and male soccer players, preventing them from negotiating and being hired by the team that best suited them.
For the fifth consecutive year, we obtained the rating of three and a half stars (out of five) in the Rating Enforcement 2022 of the British specialized publication Global Competition Review (GCR). With the rating obtained, Cofece ranks at the same level as competition authorities of Austria, Canada, Chile and Greece; and above to the agencies of Belgium, Israel, among others.
This publication is an international benchmark in the measurement of the performance and effectiveness of the most important antitrust agencies in the world, and on this occasion recognizes the improving performance of our actions in comparison to the previous year.
Some of the achievements highlighted by GCR to grant this rating were: the fine imposed on five medicine distributors and one natural person for a total 903 million Mexican pesos, emphasizing that, for the first time, the Commission disqualified 10 directors from occupying managerial positions in pharmaceutical companies.
Another relevant case was the sanction imposed for a total 177.6 million Mexican pesos to Mexican clubs from the Liga Mx, the Mexican Football Federation and eight natural persons in the market for the draft of female and male soccer players. These collusive agreements restrict labor mobility for female and male soccer players, preventing them from negotiating and being hired by the team that best suited them.
BARRIERS TO COMPETITION
Due to a lack of appointment of Commissioners, Cofece suspended the period to resolve the procedure on barriers to competition in the national market for jet fuel
The Board of Commissioners of Cofece was forced to suspend the period to resolve the procedure on barriers to competition in the national market of jet fuels, which includes production, import, storage, transport, distribution, commercialization, retail and related services (file number IEBC-002-2019).
In March of this year, the Investigative Authority of Cofece issued the Preliminary Opinion (DP, per its initials in Spanish), through which it concluded that there were elements to preliminarily determine the lack of effective competition conditions in said market, so it proposed corrective measures to eliminate the identified barriers to competition. This DP was notified to various economic agents and public authorities.
Afterwards, once the second stage of the procedure was substantiated and the offered evidence was processed, the file was considered completed in September, so the Board of Commissioners had to issue a resolution within a maximum period of 60 days, in accordance with section VII of Article 94 of the Federal Economic Competition Law.
To resolve this type of procedure, the LFCE establishes that the vote in favor of at least five commissioners is required. However, due to the omission of Federal Executive to propose the missing commissioners to the Senate, currently the governing body of Cofece has only four of the seven commissioners who, by constitutional mandate, must comprise it.
Being legally unable to resolve this file, the Board of Commissioners suspended the period to issue the resolution until the minimum number of required commissioners is available, so that the resolution of this file can be submitted for a vote. It is important to remember that when a market operates without effective competition conditions, it harms both consumers and the economic agents that participate therein. The suspension prevents the Board of Commissioners from assessing said conditions and, if needed, from imposing corrective measures that protect the public interest.
The Board of Commissioners of Cofece was forced to suspend the period to resolve the procedure on barriers to competition in the national market of jet fuels, which includes production, import, storage, transport, distribution, commercialization, retail and related services (file number IEBC-002-2019).
In March of this year, the Investigative Authority of Cofece issued the Preliminary Opinion (DP, per its initials in Spanish), through which it concluded that there were elements to preliminarily determine the lack of effective competition conditions in said market, so it proposed corrective measures to eliminate the identified barriers to competition. This DP was notified to various economic agents and public authorities.
Afterwards, once the second stage of the procedure was substantiated and the offered evidence was processed, the file was considered completed in September, so the Board of Commissioners had to issue a resolution within a maximum period of 60 days, in accordance with section VII of Article 94 of the Federal Economic Competition Law.
To resolve this type of procedure, the LFCE establishes that the vote in favor of at least five commissioners is required. However, due to the omission of Federal Executive to propose the missing commissioners to the Senate, currently the governing body of Cofece has only four of the seven commissioners who, by constitutional mandate, must comprise it.
Being legally unable to resolve this file, the Board of Commissioners suspended the period to issue the resolution until the minimum number of required commissioners is available, so that the resolution of this file can be submitted for a vote. It is important to remember that when a market operates without effective competition conditions, it harms both consumers and the economic agents that participate therein. The suspension prevents the Board of Commissioners from assessing said conditions and, if needed, from imposing corrective measures that protect the public interest.
Cofece fines Infra and Cryoinfra for not complying with commitments undertaken to restore competition in the markets for the distribution and commercialization of the oxygen, nitrogen and industrial argon
The Board of Commissioners of Cofece fined for a total 296 million 323 thousand 915 pesos to Cryoinfra, S.A. de C.V. (Cryoinfra) and Infra, S.A. de C.V. (Infra), for not complying with commitments they assumed before this authority to restore competition in the markets of oxygen, nitrogen and liquid industrial argon, and that were established due to the request for an early termination of file number DE-006-2014 and accumulated, for the possible realization of relative monopolistic practices.
In April 2014, the Investigative Authority initiated an investigation derived from a complaint for the possible participation of various economic agents in acts, contracts or agreements with the object or effect of unduly displacing their competitors or preventing their access to the market. Specifically, the markets in which the possible anticompetitive conducts were investigated were those of the bulk distribution and commercialization of oxygen, nitrogen and liquid industrial argon through cryogenic tanker trucks unloaded unto a cryogenic container at the client’s premises, with a regional geographic dimension.
Through the use of the tool provided for in the LFCE of 1992, in 2018 Infra and Cryoinfra requested the early closure of the trial-like procedure, for which they presented to the Board of the Commission various commitments to suppress the investigated conduct and restore the process of competition and free market access, which were accepted.
The Board of Commissioners resolved the non-compliance by Infra and Cryoinfra and imposed fines of 296 million 323 thousand 915 Mexican pesos. Additionally, it granted them a period of 45 working days from the notification of the resolution to prove compliance with all commitments. Otherwise, fines may be imposed on them as an enforcement measure up to the equivalent to one thousand 500 times the daily value of the Unit of Measurement and Update for each day that elapses without them complying with what was ordered.
Once the matter has been resolved and the parties have been notified, the sanctioned economic agents have the right to appear before the Judicial Power of the Federation to review the legality of the actions of Cofece.
The Board of Commissioners of Cofece fined for a total 296 million 323 thousand 915 pesos to Cryoinfra, S.A. de C.V. (Cryoinfra) and Infra, S.A. de C.V. (Infra), for not complying with commitments they assumed before this authority to restore competition in the markets of oxygen, nitrogen and liquid industrial argon, and that were established due to the request for an early termination of file number DE-006-2014 and accumulated, for the possible realization of relative monopolistic practices.
In April 2014, the Investigative Authority initiated an investigation derived from a complaint for the possible participation of various economic agents in acts, contracts or agreements with the object or effect of unduly displacing their competitors or preventing their access to the market. Specifically, the markets in which the possible anticompetitive conducts were investigated were those of the bulk distribution and commercialization of oxygen, nitrogen and liquid industrial argon through cryogenic tanker trucks unloaded unto a cryogenic container at the client’s premises, with a regional geographic dimension.
Through the use of the tool provided for in the LFCE of 1992, in 2018 Infra and Cryoinfra requested the early closure of the trial-like procedure, for which they presented to the Board of the Commission various commitments to suppress the investigated conduct and restore the process of competition and free market access, which were accepted.
The Board of Commissioners resolved the non-compliance by Infra and Cryoinfra and imposed fines of 296 million 323 thousand 915 Mexican pesos. Additionally, it granted them a period of 45 working days from the notification of the resolution to prove compliance with all commitments. Otherwise, fines may be imposed on them as an enforcement measure up to the equivalent to one thousand 500 times the daily value of the Unit of Measurement and Update for each day that elapses without them complying with what was ordered.
Once the matter has been resolved and the parties have been notified, the sanctioned economic agents have the right to appear before the Judicial Power of the Federation to review the legality of the actions of Cofece.
INVESTIGATIONS
Cofece investigates possible relative monopolistic practices
The Investigative Authority (AI, per its initials in Spanish) of Cofece published on the Commission’s internet portal, the extract of the initiation agreement of an ex officio investigation, file number IO-005-2022, for the possible realization of relative monopolistic practices in the market for the development, distribution and payment processing of mobile applications and digital content, as well as related services.
This inquiry is carried out based on Articles 12, section I, 28, section II, 52, 66 and 71 of the LFCE, as well as 16 and 17, section II, of the Organic Statute of the Federal Economic Competition Commission, to analyze if any of the conducts provided for in article 56 of the LFCE and/or 10 of the LFCE of 1992 are met, since there is an objective cause that could indicate the realization of possible relative monopolistic practices provided for in the above mentioned regulations.
To carry out this investigation, the AI has a period of up to 120 business days, counted from the date of initiation of the investigation, which may be extended for the same period up to four times.
This investigation, which began on September 30, 2022, should not be understood as a prejudgment on the responsibility of any economic agent. The foregoing, since so far, no violations of the regulations on economic competition have been identified
If by the end of the investigation no elements that presume the realization of said anticompetitive practice are found, the Board of the Commission may resolve its closure. In the case that elements that presume an infringement of the Law are found, those who are responsible will be called to a trial-like procedure to present their defense. If a relative monopolistic practice is proven, the responsible economic agents could be sanctioned with fines of up to 8% of their income and the order to suppress the conduct.
The Investigative Authority (AI, per its initials in Spanish) of Cofece published on the Commission’s internet portal, the extract of the initiation agreement of an ex officio investigation, file number IO-005-2022, for the possible realization of relative monopolistic practices in the market for the development, distribution and payment processing of mobile applications and digital content, as well as related services.
This inquiry is carried out based on Articles 12, section I, 28, section II, 52, 66 and 71 of the LFCE, as well as 16 and 17, section II, of the Organic Statute of the Federal Economic Competition Commission, to analyze if any of the conducts provided for in article 56 of the LFCE and/or 10 of the LFCE of 1992 are met, since there is an objective cause that could indicate the realization of possible relative monopolistic practices provided for in the above mentioned regulations.
To carry out this investigation, the AI has a period of up to 120 business days, counted from the date of initiation of the investigation, which may be extended for the same period up to four times.
This investigation, which began on September 30, 2022, should not be understood as a prejudgment on the responsibility of any economic agent. The foregoing, since so far, no violations of the regulations on economic competition have been identified
If by the end of the investigation no elements that presume the realization of said anticompetitive practice are found, the Board of the Commission may resolve its closure. In the case that elements that presume an infringement of the Law are found, those who are responsible will be called to a trial-like procedure to present their defense. If a relative monopolistic practice is proven, the responsible economic agents could be sanctioned with fines of up to 8% of their income and the order to suppress the conduct.
RECOMMENDED READING
Memoria del Programa Cofece Estudiantil de Verano 2022 [Memoir of the Cofece Student Summer Program 2022]
For the fourth consecutive year, Cofece invited the country's students to participate in the Cofece Student Summer Program, which aims to foster the formation of professionals interested in and committed to economic competition, by encouraging that more students consider specializing in the subject through involvement in the daily activities we carry out at the Commission.
This project is an opportunity to identify talented persons who can help us to promote competition culture in their universities and academic circles. It is worth mentioning that due to the success of this initiative, for the third consecutive year it is part of our strategic actions in our Annual Work Program.
BY THE NUMBERS
In September, the Commission handled 115 matters, of which 57 correspond to concentrations, 31 to procedures for monopolistic practices and concentrations, 5 special procedures and 22 opinions on tenders, concessions or permits.
Complaints, investigations, and trial-like procedures
- Follow-up was made to 6 complaints for anticompetitive conducts, 5 remain under analysis.
- 1 investigation for monopolistic practices was initiated ex officio, therefore at the end of the period, there are 20 investigations ongoing.
- Follow-up was made to 5 trial-like procedures.
- Four procedures for barriers to competition were followed-up.
- One procedure to resolve on competition conditions was followed-up.
Concentrations
- 57 concentrations were reviewed, of which 6 were authorized1.
- The amount of the authorized operations is of $16,384.8 million Mexican pesos.
Opinions
- 2 regulatory assessments were carried out during the period.
Amparo trials
- During September the Judicial Power resolved 8 amparo trials: 4 were granted, 2 were denied and 2 were dismissed. Additionally, 1 trial was transferred to another file and 1 was discharged. At the end of the period, 419 trials are still in trial, of which 330 correspond to economic competition matters.
