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Mexico: COFECE investigates possible vertical restraints between competitors in the insecticides market

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In brief

On 23 March 2022, the Investigating Authority of the Federal Economic Competition Commission (COFECE) published notice of the initiation of an investigation, for the alleged vertical restrictive practices in the market of production, distribution and commercialization of domestic insecticides in Mexico

This market is related to relevant household insecticides used to controlling disease carrying insects, and these products may be produced as powders, aerosols, gases, liquids, among others. Insect-borne diseases is considered an important public health problem in Mexico.

If the conduct of a relative monopolistic practice is proven, the responsible economic agent or agents could be sanctioned with fines of up to 8% of their income and an order to cease the conduct.

Recommended actions

  • In this type of proceedings, it is normal for the antitrust authority to request information and documents from the companies offering products and services related to the market under investigation. In the event the antitrust authority sends a request for information, it is essential to respond to such request; otherwise, the defaulting company will be subject to a fine.
  • The Mexican antitrust authority is empowered to conduct dawn raids (on-site unannounced visits at the company’s offices, through which they may request information and/or photocopy documents related to the market under investigation). In these cases, it is recommended to contact the company’s legal counsel and seek immediate advice from an antitrust & competition lawyer. Obstruction or failure to comply with a dawn raid may result in fines and/or criminal penalties.
  • In some cases, the antitrust authority considers it pertinent to summon individuals who are presumed to have knowledge of the market under investigation, e.g., technical personnel or managers of companies that offer products and services related to the market under investigation. In case an employee is summoned by the COFECE, it is recommended to consult with an attorney who specializes in competition matters.

In more detail

  • The investigation should not be understood as a judgement of liability, but as an action by the authority to verify compliance with the Federal Mexican Antitrust Law.
  • Vertical restrictive practices are acts, contracts, agreements or procedures carried out by one or several economic agents with substantial power and that have, or may have, the purpose or effect of unduly displacing other market participants, substantially impeding their access, or establishing exclusive advantages in favor of one or several economic agents. Examples of these practices are tied purchases or sales, exclusivities, price or treatment discrimination, boycotts, raising costs to other economic agents and refusal of treatment, among others.
  • This antitrust investigation was initiated on 9 September 2021, and it could take up to 120 business days, with the possibility of being extended four times for an additional period of 120 business days each.
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Author

Raymundo Enriquez is currently the managing partner of the Mexico offices and the lead partner of Baker McKenzie's Antitrust Practice Group in Mexico City. He was a member of the Firm’s Executive Committee and a previous chairman of the Latin America Regional Council where he also served as the Latin America chair of the Global Diversity and Regional Pro Bono Committees. Mr. Enriquez is recognized as a leading lawyer for competition / antitrust and for business by Chambers Latin America. He served as a board member for several Mexico companies. In addition, he was a visiting lecturer at the Mexican Bar Association and a part-time tax and foreign trade law professor at Universidad Iberoamericana, where he obtained his JD from the university’s School of Law.

Author

Luis Amado is a partner in the Antitrust & Competition Practice Group of the Firm's Mexico City office. He has more than 10 years of experience in his field and has conducted several antitrust and competition seminars for the telecommunications, automotive, electronics, medical, mining, metal, home appliance and white goods industries. Luis was part of the Firm’s EU Competition & Trade Practice Group in London, where he advised on antitrust matters. He was appointed Latin America's representative in the Firm committee responsible for abuse of dominance matters. He has also been a guest professor at Universidad Iberoamericana and IPADE, giving lectures on antitrust and competition.

Author

Alina de la Luz is an associate in the Firm's Antitrust Practice Group in Mexico. Prior to joining the Antitrust Practice Group at the Firm, she was part of the Mexican competition authority (Federal Economic Competition Commission), as part of the investigating authority. With more than 8 years of experience in economic competition, mainly in abuse of dominance and analysis of competition conditions, she has conducted investigations in several markets: financial, energy, ports, digital, telecommunications, and transportation, among others. Likewise, she was head of the economic competition subject at UNAM and has taught about competition in several forums.

Author

Natalie Flores is currently the regional knowledge attorney for North America and Latin America in the Global Antitrust & Competition Group in the Firm's Mexico City Office. She has over ten years of experience as an attorney, and manages and executes regional and global legal content projects, training and client initiatives for the Competition Group within the context of the Firm's knowledge strategy across the region. Natalie oversees all regional knowledge for the antitrust and competition group for the Americas, including develop thought leadership, client training, and publications, amongst other antitrust initiatives for the region, and advises a diverse range of industry clients in multijurisdictional competition matters. She has experience in competition litigation, specifically class action. She is an active member of the Firm's various industry groups, with a focus in the Energy, Mining & Infrastructure group of Baker McKenzie. Natalie is on the Board for Mujeres en Energías Renovables (Women in Renewable Energy) en México (MERM), an association dedicated to promoting the development of women in renewable energy, and concentrates on advocating for renewables and the empowerment of women in the sector.

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