The Mexican Competition Authority clarifies enforcement of the Federal Economic Competition Law during the COVID-19 health emergency

COFECE’s position for enforcing the Federal Economic Competition Law in light of the current health emergency*

  • Collaboration agreements between economic agents will not be prosecuted as long as they don’t have the objective of displacing competitors and are necessary, given the present context, for maintaining orraising supply,satisfying the demand, protecting the supply chain and avoiding the shortage or hoarding of goods.
  • Increasing or setting prices must be each company’s individual and independent decision; these cannot be induced, promoted or recommended by business associations, confederations or chambers.
  • Those markets in which indiscriminate price hikes are observed will be reviewed to evaluate, and rule out, that these are being caused by possible agreements between competitors, in which case an investigation would have to be initiated.
  • The Commission will expedite the review of filed concentrations to create synergies and contribute to the increase of production capacities for satisfying the demands derived from this crisis.

In the context of the COVID-19 epidemic, caused by the SARS-CoV2 virus, recognized as a serious disease for immediate attention, [1] and considering that the Federal Ministry of Health has announced that Mexico entered into phase 2, the Federal Economic Competition Commission (COFECE or Commission) is aware of the inconveniences this situation may cause to companies, consumers and the general functioning of the markets. To contribute to uninterrupted operation of supply chains or to an artificial restriction of the supply that raises prices of goods and services, the Commission states the following:

  • Agreements between competitors breach the Federal Economic Competition Law and are investigated and sanctioned when their purpose or effect is manipulating prices, allocating the market, and/or restricting the supply of goods and services in detriment of the consumer. Therefore, any collaboration agreement between economic agentsthat, in the present context of a health emergency, is necessary for maintaining or raising the supply, satisfying the demand, protecting supply chains, avoiding the shortage or hoarding of goods, will not be prosecuted as long as they comply with the law and do not displace competitors in the market.
  • In addition to the COVID-19 crisis, we have recently experienced price variations in some inputs such as gasoline, a devaluation of the Mexican currency, as well as drastic changes (increase or decrease) in the demand for some goods and services. These situations could result, although not necessarily, into increases in the prices of goods and services for final consumption; this due to a hike in import costs and a possible temporary shortage. In thisregard, the Commission warns economic agents that any increase in prices should obey individual and independent decisions and not be induced, promoted or recommended by business associations, confederations or chambers.
  • Pursuant to its constitutional mandate, COFECE has always prosecuted and severely sanctioned violations to competition law. Given the current circumstances, it is particularly seriousthat competitors engage in any agreement to manipulate prices, restrict the supply of goods and/or services, allocate markets or rig bids for public procurement. COFECE will prosecute and sanction these conducts in accordance with the law.
  • The Federal Economic Competition Law does not bestow COFECE with powers to prosecute and sanction per se high margins or price hikes set unilaterally by companies in the market. However, COFECE will keep close attention to the behavior of sensible markets in which indiscriminate price hikes are observed, to evaluate and rule out that these are not a result of undue barriers or agreements between competitors which would derive in a formal investigation proceeding.
  • COFECE is committed to an expedite review of notified concentrations derived from the need for creating synergies and increase production capacities to timely and sufficiently satisfy the needs of products of popular consumption, as well as those goods for addressing this crisis.

COFECE is available to both public and private sectors to solve immediately any doubt or concern derived from activities, programs, policies or collaborations between competitors and their compliance with competition law. These can be sent to consultacofece@cofece.mx or to the following phone number +52.55.27.89.66.69.

COFECE joins, from its area of expertise, to the efforts to successfully face the COVID-19 pandemic. The welfare of consumers will always be the guidance for our interventions and decisions.

*This is the original title of the press release. The title above has been amended in order to match the e-Competitions format. Individual authors are welcome to provide original independent commentaries on the case law. Articles are subject to approval by the Board of e-Competitions Bulletin before publication based on the Editorial Policy (click here).

Footnotes

[1Agreement by which the General Health Council recognizes the epidemic of the disease caused by the SARS- CoV2 virus (COVID-19) in Mexico, as a serious disease for priority attention, as well as the activities of preparation and response to said epidemic, published in the Federal Official Gazette on March 23rd, 2020.

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Mexican Competition Authority, The Mexican Competition Authority clarifies enforcement of the Federal Economic Competition Law during the COVID-19 health emergency, 27 March 2020, e-Competitions March 2020, Art. N° 93953

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