Enforcement proceedings in dominance in Mexico

Enforcement proceedings

Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

The authorities in charge of preventing, prosecuting and sanctioning relative monopolistic practices in the administrative sphere are the CFCE and the IFT (see question 1).

In terms of articles 28, section II and 119 of the LFCE, the CFCE may request information and documents. Requests can be issued to any person presumed to have knowledge or relation to any fact under investigation.

In practice, the CFCE issues its requests on the basis that all documents are relevant and pertinent, just because it has initiated an investigation.

Moreover, it is important to mention that the authority frequently issues requirements to the agent under investigation. In addition, if the CFCE presumes that there is evidence considered necessary for the investigation in the premises of the agent under investigation, it is entitled to perform dawn raids. If the addressee is not at the corresponding place, these proceedings can be carried out with any person found at the premises, without needing to leave any kind of subpoena.

Finally, the authority can subpoena individuals in order to testify regarding the facts under investigation. There is no certainty about the implications of declaring as a witness, possible offender or as a ‘person related to the investigated market’. Thus, there is no certainty about the rights that summonsed people have. There is no precedent yet about the impossibility of using the information given by deponents to incriminate themselves.

However, the Supreme Court has determined that the principle of the presumption of innocence is applicable (with some exceptions) to the administrative sanctioning procedure.

What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?

The CFCE may impose fines (based mainly on percentages of income) and remedies as a result of an investigation of abuse of dominance conduct by:

• ordering a firm to cease the illegal practice;
• imposing a fine of up to the equivalent of 8 per cent of the annual income of the infringing party, during the preceding fiscal year, for the performance of a relative monopolistic practice;
• imposing a fine of up to 16.8 million Mexican pesos on the individuals engaging in the illegal conduct, acting on behalf of legal entities;
• imposing a fine of up to 15.2 million Mexican pesos on the firms or individuals that have cooperated with the infringing party; and
• disqualification from acting as an adviser, administrator, officer, manager, directive, executive, agent, representative or proxy of any company for up to five years.

In cases of recidivism, the CFCE may impose a fine up to twice the applicable amount or may order the divestiture or sale of assets, rights, ownership interests or stock in the portion as may be required for the elimination of the anticompetitive effects.

As mentioned in question 18, the highest fine ever imposed for abuse of dominance was to mobile telephony provider Telcel, and the amount of the fine was around US$936 million at the time.

Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

The competition enforcers are empowered to impose sanctions directly. Notwithstanding, such decisions may be challenged through an amparo trial before the federal courts specialising in competition, telecommunications and broadcasting.

What is the recent enforcement record in your jurisdiction?

Between September 2013 and the time of writing, the CFCE concluded fifteen proceedings aimed at investigating and sanctioning relative monopolistic practices. In nine of these proceedings the CFCE imposed fines on the investigated agents. Four proceedings were closed on condition that the investigated agents complied with specific obligations and competition measures. The rest of the proceedings were closed, absolving the investigated agents from responsibility. According to public information, the IFT (created in September 2013) concluded one proceeding in which a company was fined and three proceedings were closed, absolving the investigated agents from responsibility.

The average length of the procedure, from the start of the investigation to the final decision, is three years. The most recent high-profile case is the Pemex Refinación case (see question 15).

A recent relative monopolistic case is one that involved the Mexico City Airport and several taxi companies that had permits to operate in the premises. The conduct consisted of the imposition of dissimilar price conditions to economic agents situated in equal conditions (price discrimination). Specifically, Mexico City Airport applied differentiated rates for parking and access to the airport to all the taxi companies, except to one. The conduct had the effect of unduly displacing the excluded taxi company and the creation of exclusive advantages in favour of the other companies. The investigation was initiated on October 2013 and the decision was issued on September 2016. The CFCE imposed a fine of 63 million Mexican pesos on Mexico City Airport.

Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

There are no direct consequences for the validity of contracts entered into by dominant companies. However, as the CFCE may order the correction or cessation of a relative monopolistic practice as a sanction, a resolution stating that this kind of illegal conduct has taken place could result in the order to modify some terms of contracts.

To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?

Article 67 of the LFCE entitles any third party to file a complaint before the CFCE against any economic agent performing relative monopolistic practices. The CFCE may order the cessation of the practice, which could imply an obligation on the dominant firm to grant access, supply goods or services, conclude a contract, invalidate a provision or to perform whatever action is required to cease the illegal conduct.

Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?

Damages claims for relative monopolistic practices have not been frequent in Mexico, as a decision from the competition authority judging a party is responsible (as a legally settled matter) is necessary for initiating a process on the matter. In fact, the end of 2016 saw the first ever damages claim filed before Mexican courts, which was dismissed for procedural aspects. However, this damages claim derives from a cartel conduct case. Thus, private antitrust tort practice is still under development.

Damages claims can be lodged by both individuals or through a class action. The latter can be lodged by the CFCE, by a group of no less than 30 members, by not-for-profit civil organisations whose purpose is the defence of rights and interest in antitrust matters and by the Attorney General of Mexico. The balance of the advantages and disadvantages of class actions is still pending.

Federal courts specialising in competition, telecommunications and broadcasting have jurisdiction over individual and collective damages claims.

To what court may authority decisions finding an abuse be appealed?

The decisions of the CFCE and IFT may be challenged through an amparo trial before the federal courts specialising in competition, telecommunications and broadcasting. This trial is aimed to revoke unconstitutional or illegal decisions of any kind of authorities.