On July 5 2016 the Federal Economic Competition Commission (FECC) imposed fines totalling $3,882,379(1) on Denso and Mitsubishi for commissioning an absolute monopolistic practice involving the exchange of commercial information, with the aim and effect of manipulating the price of automobile air conditioning compressors.

Facts

In its ruling, the FECC revoked immunity granted to one of the undertakings involved on the grounds that it had failed to fulfil its obligation to cooperate fully with the FECC in all phases of the investigation.

Under the Federal Economic Competition Law, in order to obtain immunity under the leniency programme, an applicant must:

  • provide all possible evidence to prove the existence of the illegal practice;
  • cooperate fully with the FECC during the investigation and subsequent trial; and
  • take all necessary action to end its participation in the anti-competitive practice.

In light of the above, the FECC defined 'cooperating' under the leniency programme to mean acting "jointly with others to reach a common goal; act favorably in accordance with the interests or purposes of someone." This implies that, under the leniency programme, undertakings should not deny the practice or try to impede the FECC from imposing a penalty.

Consequently, the FECC stated that the undertaking that had been granted immunity had tried to negate its role in commissioning the investigated practice, arguing that the practice had not been committed in Mexico and, therefore, had not had an effect there. However, in light of the above, the FECC revoked the undertaking's immunity.

Comment

This is the first time that the FECC has revoked immunity granted to an undertaking since the leniency programme was implemented in 2006. Therefore, it is also the first time that the FECC has determined the level of cooperation it expects from undertakings that want to benefit from the programme.

Consequently, the FECC established an important precedent for undertakings that successfully receive immunity under the programme. However, the strength of this precedent will depend on the application of the same criterion in similar cases.

The rationale for the precedent is that the programme's application allows the FECC to:

  • invest less time and resources in investigations; and
  • have a greater influence in other cases that require its intervention.

However, the FECC should also clearly notify an undertaking during the respective phase of the investigation if it has acted in a way that will result in its immunity being revoked

For example, if during the evidence collection phase an undertaking acts in such a way that will result in its immunity being revoked, it should be notified of this at the end of that phase, so that it has the opportunity to exercise its defence right during the subsequent trial phase.

Consequently, evaluation of the immunity benefit should be carried out at the end of each investigation phase in order to avoid leaving the undertaking in a defenceless position.

For further information on this topic please contact Lucia Ojeda Cardenas or Felipe García Cuevas at SAI Consultores SC by telephone (+52 55 59 85 6618) or email (loc@sai.com.mx or fgc@sai.com.mx). The SAI Consultores website can be accessed at www.sai.com.mx.

Endnotes

(1) At an exchange rate of Ps18.5505 per US dollar.

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