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Legislation and jurisdiction

Development of antitrust litigation

How would you summarise the development of private antitrust litigation in your jurisdiction?

Antitrust was regulated for the first time in Mexico in 1992 by the Federal Law of Economic Competition (FLEC). Since then, Mexico has a legal framework that allows to claim recovery of damages derived from any illegal conduct. This action is contemplated in the Federal Civil Code and the Federal Code of Civil Procedures (FCCP). Recovery of damages for antitrust violations (private action) was possible if the Federal Competition Commission (CFC) found a breach of the former FLEC.

Subsequently, in 2011, private actions were explicitly recognised in the former FLEC. Finally, the FCCP was amended and included collective actions.

It is worth noting that few private antitrust claims, derived from resolutions issued by the CFC, were brought to courts under the former FLEC.

Two of the three cases initiated up to now failed to be successful for different reasons. The first, Canel’s v Cadbury, was dismissed because the tribunal revoked the Federal Economic Competition Commission’s (COFECE’s) findings on breach of the law; and, the second, Ajemex v Coca Cola, was dismissed for filing the claim before an incompetent court (a commercial court instead of a civil court). In the third case, Mexican Institute of Social Security (IMSS) v a medicines cartel, although the first attempt has been unsuccessful for lacking clarity regarding before which court the claim should be filed, the case has not exhausted its statute of limitations. In fact, the Specialised Court that heard the case ordered, as an interim remedy, the confiscation of the assets of the laboratories involved in the collusion. Nevertheless, the defendants offered a bond to suspend the execution of the interim remedy. Consequently, the respective Specialised Court suspended the interim remedy. To date, the resolution of this case is still pending.

Finally, it is worth noting that in 2014 the former FLEC was abrogated and a New Federal Economic Competition Law (NFLEC) was enacted. This amendment entailed the creation of two antitrust authorities with the purpose of separating the sectorial jurisdiction previously granted to the CFC. The authorities are the following: COFECE and the Federal Institute of Telecommunications (IFT, which together with COFECE, form the ‘antitrust authorities’). Likewise, specialised courts in matters of economic competition, broadcasting and telecommunications (specialised competition courts and tribunals) were created. According to the NFLEC, the specialised competition courts and tribunals are empowered to award damages to the parties affected by anticompetitive practices but competent courts and tribunals for this purpose have not been created by the Judicial Council. In effect, judges and justices designated in specialised competition courts and tribunals only handle amparo proceedings. Nevertheless, as seen with the case of IMSS v a medicines cartel, antitrust claims of damages have been treated as ‘federal civil proceedings’ to be aired before specialised competition courts.

Applicable legislation

Are private antitrust actions mandated by statute? If not, on what basis are they possible? Is standing to bring a claim limited to those directly affected or may indirect purchasers bring claims?

Under both the NFLEC and the FCCP, economic agents have the prerogative to bring private antitrust actions to courts if they consider it necessary; however, private antitrust actions are not mandated by statute or law.

To bring private antitrust actions to courts, the claimant must be directly affected by the anticompetitive practice, pursuant to the FCCP. Indeed, article 2110 of the FCCP establishes that ‘the damage should be an immediate and direct consequence of the breach of an obligation’. Nevertheless, the FCCP establishes that antitrust authorities are also legitimised to file a private antitrust collective action. However, it is not clear how they can do so. Moreover, there are no precedents of an antitrust authority filing a private antitrust action.

If based on statute, what is the relevant legislation and which are the relevant courts and tribunals?

Article 134 of the NFLEC sets out the possibility for economic agents to file before the specialised competition courts a private antitrust action. Likewise, the FCCP establishes the procedure for both individual and collective private antitrust actions.

Private actions

Availability

In what types of antitrust matters are private actions available? Is a finding of infringement by a competition authority required to initiate a private antitrust action in your jurisdiction? What is the effect of a finding of infringement by a competition authority on national courts?

Private actions are available for both absolute and relative monopolistic practices (cartels and abuse of dominance), as well as for illicit mergers.

The finding of an infringement by either COFECE or IFT is necessary. In fact, these actions are only available once there is a final resolution.

Required nexus

What nexus with the jurisdiction is required to found a private action? To what extent can the parties influence in which jurisdiction a claim will be heard?

The finding of an infringement by either COFECE of IFT is necessary. Antitrust legislation and authorities have federal jurisdiction, so economic agents who had suffered damages or losses in Mexico as result of such breach have legal standing before the competent specialised competition courts and tribunals to file antitrust actions to recover damages.

Restrictions

Can private actions be brought against both corporations and individuals, including those from other jurisdictions?

Private actions may be brought against both corporations and individuals. However, if a practice had effects in Mexico, whereas committed in Mexico or abroad, but was executed by foreign economic agents, the affected parties may also file a private action.

Private action procedure

Third-party funding

May litigation be funded by third parties? Are contingency fees available?

Given the limited experience in Mexico related to these claims, there is no rule nor precedent related to this issue.

It should be noted that the legislation establishes that COFECE has legal standing to carry on a collective action claiming damages derived from the commission of anticompetitive practices.

Jury trials

Are jury trials available?

Under the NFLEC, the claims of damages should be resolved only by a specialised competition court. There are no juries in these courts.

Discovery procedures

What pretrial discovery procedures are available?

There are not pretrial discovery procedures available.

Admissible evidence

What evidence is admissible?

Under the FCCP, admissible evidence in a procedure where damages are claimed is mainly the following:

  • public documents;
  • expert opinions;
  • witness testimony;
  • confessions;
  • judicial inspections;
  • pictures;
  • writers;
  • notes; and
  • COFECE’s file.

Legal privilege protection

What evidence is protected by legal privilege?

There is only one precedent where specialised competition courts have accepted the existence of legal privilege. According to the relevant criterion, attorney-client privilege covers all written materials created by external lawyers regarding their clients’ defence within a legal procedure. In addition, according to this criterion, external lawyers are entitled to promote an amparo against the extraction of information protected by legal privilege, by officials of either COFECE or the IFT, in a dawn raid. For the amparo to proceed, external lawyers shall identify the information protected by legal privilege.

In principle, communications with in-house lawyers are not covered by legal privilege. Also, there is no precedent that includes trade secrets or other commercial information within the scope of legal privilege. However, under applicable law, all authorities must keep all sensitive commercial information as confidential.

Criminal conviction

Are private actions available where there has been a criminal conviction in respect of the same matter?

The process to claim damages is independent of the criminal process. Indeed, the claim for damages derives only from the antitrust authorities’ final resolutions. Hence, there are no indemnities that can be claimed, derived from a criminal conviction.

Utilising of criminal evidence

Can the evidence or findings in criminal proceedings be relied on by plaintiffs in parallel private actions? Are leniency applicants protected from follow-on litigation? Do the competition authorities routinely disclose documents obtained in their investigations to private claimants?

First, it is important to mention that, to this date, there has not been a criminal proceeding solved on the matter until now, and that there’s only one record of an ongoing proceeding. Therefore, how the criminal prosecutors handle the evidence and findings of the case is still unclear.

Furthermore, the procedural moments in which the criminal proceedings and the private action can take place, are not the same. The criminal proceeding starts with the publication of the statement of probable responsibility, while the private action can start as soon as the authorities’ resolution is issued.

Despite the above, plaintiffs should be able to have access to at least the public information of the criminal proceedings. On the other hand, the applicants protected by the leniency programme, are not protected from follow-on litigations.

About the last question, both competition authorities are obliged to disclose a public version of their resolution. However, according to article 124 of the FLEC, only the ones with legal interest can have access to all the information in the file that is not classified as confidential.

Stay of proceedings

In which circumstances can a defendant petition the court for a stay of proceedings in a private antitrust action?

Considering that a private action can only take place once competition authorities issue their final resolution, a revision of the resolution or an amparo trial are not circumstances by which a defendant can petition a stay of proceedings. However, there are a great number of procedural mechanisms through which the defendant may be able to petition the court for this, such as a suspension, in case one of the parts was not notified, or was not given the chance to access the evidence.

Nevertheless, given the fact that there is not a single record of a private action, we cannot ensure the exact ways through which a proceeding of this nature may be suspended.

Standard of proof

What is the applicable standard of proof for claimants? Is passing on a matter for the claimant or defendant to prove? What is the applicable standard of proof?

Because there are no clear criteria on the standard or the value each proof has on a private action, the analysis made by both the competition authorities and experts on the matter will be relevant.

Given the fact that the defendant must prove and quantify the damage, the claimant should be the one to prove that there was no passing on, when proving the existence of the damage.

Timeframe

What is the typical timetable for collective and single party proceedings? Is it possible to accelerate proceedings?

Because there has not been a single case of antitrust private action yet, we are not able to specify a timetable for collective or single party proceedings, nor is it possible to accelerate these proceedings.

Limitation periods

What are the relevant limitation periods?

According to article 1934 of the Federal Civil Code, the time to exert an action to demand the repair of damages caused by illicit actions runs out two years after the damage was caused. However, article 584 of the FCCP establishes a limitation period for collective actions of three-and-a-half years.

Moreover, the article 134 of the FLEC states that the limitation period for private actions that claim the repair of damages will be suspended from the initiation of the authorities’ investigation, and until the resolution stands firm.

Finally, the limitation period can start to run and run out without the claimant being aware of the infringement.

Appeals

What appeals are available? Is appeal available on the facts or on the law?

Appeals are available on the law only, not on the facts.

Collective actions

Availability

Are collective proceedings available in respect of antitrust claims?

In accordance to the FCCP, collective proceedings can be carried on for antitrust claims.

Collective actions are classified in terms of the FCCP as follows:

  • Diffuse action: indivisible action exercised to protect diffuse rights and interests, whose holder is an undetermined collective, with the purpose of judicially claiming from the defendant the repair of the damage caused to the collective, consistent in the restitution of the state of things before the affectation, or if appropriate in a specific case, the substitute compliance according to the affectation of the collective’s rights or interests, with no necessary legal link between such collective and the defendant.
  • Strictly collective action: indivisible action exercised to protect collective rights and interests, whose holder is a determined or determinable collective, based on common circumstances, with the purpose of judicially claiming from the defendant the repair of the damage caused, consistent in the realisation of one or more actions or abstention of carrying them on, as well as covering damages in an individual way to the group members. This action derives from a common legal link, existent by law, between the collective and the defendant.
  • Homogenous individual action: divisible action, exercised to protect individual rights and interests of collective incidence, whose holders are the grouped individuals based on common circumstances, with the purpose of judicially claiming from a third party the compulsory compliance of a contract or its termination with its consequences and effects, according to the applicable law.

Applicable legislation

Are collective proceedings mandated by legislation?

Collective proceedings for the purposes of claiming antitrust damages are not mandated by legislation. Indeed, a private action for damages may be exercised both individually or collectively.

Certification process

If collective proceedings are allowed, is there a certification process? What is the test?

There is a certification process for the collective action to proceed.

In this regard, in order to the test to certify the admissibility of the collective action, the following requirements should be met.

The claim must contain the following:

  • the tribunal that will hear the case;
  • the name of the legal representative and the documents that credit its representation;
  • for the case of both strict collective actions and homogeneous individual actions, the names of the members of the collective that bring the claim;
  • the documents with which the plaintiff credits its representation;
  • the name and address of the defendant;
  • the specification of the affected right: diffuse, collective or homogeneous individual right;
  • the type of action that will be brought;
  • the claims that correspond to the action;
  • the facts on which the plaintiff bases its claims and the common circumstances that it shares with the collective regarding the specific action that will be carried out;
  • the reasons and facts that justify why the action is collective and not individual; and
  • the people or institutions that intend to exercise a collective action must have legal standing in the process. In this regard, these are:
  • COFECE;
  • the joint representative of the collective conformed of at least 30 members;
  • non-profit civil associations that are legally constituted at least a year before bringing the action and whose social object is the promotion or defence of consumer rights and interests; and
  • the attorney-general.

For there to be a legal standing in the cause that allows the action to proceed, the following requirements should be met:

  • that the action is based on acts that affect consumers and, or goods or public or private services users, given the existence of illicit mergers or monopolistic practices, determined by a firm resolution of COFECE or the IFT:
  • that the action is based on common issues of fact or of law among the members of the collective;
  • that the collective is composed of at least 30 members, in the case of collective actions and homogeneous individual actions;
  • that the object of the exercised action and the damage coincide;
  • that the object of dispute has not been object of final ruling in previous trials derived from the exercise of collective actions; and
  • that the action has not expired.

Have courts certified collective proceedings in antitrust matters?

There has not been a collective action case regarding antitrust matters in Mexico. Therefore, courts have not certified collective proceedings in antitrust matters.

Opting in/ out

Can plaintiffs opt out or opt in?

According to the FCCP, plaintiffs must opt in to a collective action of damages.

Judicial authorisation

Do collective settlements require judicial authorisation?

In accordance to the FCCP, settlements of collective actions should be judicial. Therefore, collective settlements require judicial authorisation through an agreement that can be reached at any time during the trial, before there is a firm resolution. This judicial agreement between the collective and the defendant will be considered as a final and firm resolution that concludes the dispute; therefore, no further claim for the same matter and parties shall proceed.

National collective proceedings

If the country is divided into multiple jurisdictions, is a national collective proceeding possible? Can private actions be brought simultaneously in respect of the same matter in more than one jurisdiction?

While Mexico is a country divided into state and federal jurisdictions, the federal jurisdiction has exclusive competence to hear and resolve collective actions. Therefore, even though it is possible for there to be both individual claims and collective actions simultaneously in the same matter (whereas the plaintiff of the individual claim is not part of the collective action), both claims will always be heard and resolved by the federal specialised competition courts.

Collective-proceeding bar

Has a plaintiffs’ collective-proceeding bar developed?

The Mexican regulation does not establish a plaintiffs’ bar for the purposes of carrying on a collective proceeding. Consequently, a plaintiffs’ collective-proceeding bar has not been developed.

Remedies

Compensation

What forms of compensation are available and on what basis are they allowed?

The FCCP establishes, in general, several forms of compensation for either diffuse, strictly collective or individual homogeneous actions.

In this regard, article 604 of the FCCP establishes that, for diffuse actions, the form of compensation will consist in the repair of the damages caused to the collective. This compensation will consist, if possible, in the restitution of the state of things before the collectivity was affected. This restitution may imply carrying on one or more actions or abstaining to do so. If compensation in the form of restitution is not possible, a substitute compensation shall be applied, considering the rights and interests of the collective.

For both strictly collective and individual homogeneous actions, article 605 of the FCCP establishes that the defendant shall repair the damage caused to the collective or individuals, by carrying on one or more actions or abstaining to do so, as well as covering the individual damages caused to each member of the group. Each member of the collective can promote a liquidation trial in which it will have to prove its loss.

Even though these forms of compensation are focused on civil cases, they may also be applicable for other type of private actions, such as those that claim environmental rights. It is not clear whether these methodologies and forms of compensation result are applicable to the special needs in private antitrust actions. Indeed, there has not been a successful case before the specialised competition courts; thus, there is no experience on how compensation can be made.

Other remedies

What other forms of remedy are available? What must a claimant prove to obtain an interim remedy?

Under article 389 of the FCCP, the following interim remedies are available for individual actions:

  • confiscation of sufficient assets to guarantee the result of the trial; and
  • deposit or assurance of assets, books, documents or papers, object of trial.

Regarding collective actions, under article 610 of the FCCP, the following interim remedies are available:

  • the order to cease the acts or activities that are causing or necessarily will cause an imminent and irreparable damage to the collective;
  • the order to carry on certain acts, whose omission has caused or necessarily will cause an imminent and irreparable damage to the collective;
  • the removal of the market or assurance of instruments, goods, copies and products directly related to the irreparable damage that has caused or are causing or that will be caused to the collective; and
  • any other measure deemed necessary by the judge to protect the interests and rights of the collective.

To obtain an interim remedy for an individual action, in terms of articles 390, 391 and 392 of the FCCP, a claimant must do the following:

  • establish the amount of money to be claimed;
  • provide a sufficient guarantee to cover the damages derived from the interim measure. In this regard, the defendant may cause the inapplicability of the measure in case it grants a sufficient guarantee to cover the trial´s result; and
  • have a well-founded fear that it is possible that things, books, documents or papers can be hidden, lost or altered.

Nevertheless, as far as we are aware, none of these remedies have been applied in antitrust private actions so far.

Punitive damages

Are punitive or exemplary damages available?

As mentioned, in Mexico there have not been any successful antitrust private action case where punitive or exemplary damages have been imposed; hence, it is not clear if these types of damages can be claimed in the context of an antitrust private action. However, for other civil liability matters, punitive damages have been recently imposed in a landmark case involving the Mayan Palace hotel. In the Mayan Palace case, a young man was electrocuted when he fell into the reservoir of the Mayan Palace hotel in Acapulco, Guerrero. There was a submerged pump in the reservoir that had not had any maintenance. Consequently, the young man died and his parents claimed an indemnity. The Supreme Court ordered the Mayan Palace hotel to pay punitive damages of 30 million Mexican pesos.

Considering the above and the fact that private actions are subject to the FCCP, if a successful private antitrust action arises, it could be argued that punitive damages may be imposed to economic agents, to discourage them from incurring in anticompetitive practices.

Interest

Is there provision for interest on damages awards and from when does it accrue?

Given that there has not been a successful private action claim in Mexico, it is not clear if interests on damages awards can be claimed. However, it seems reasonable to consider that damages must be claimed considering their value at the time the fine is paid. This is particularly relevant considering how long these proceedings may take.

Consideration of fines

Are the fines imposed by competition authorities taken into account when setting damages?

As previously stated, there are no precedents for the imposition of fines in private antitrust litigation. However, the antitrust authorities must take into account the damages caused by the economic agent when calculating the amount of the fine to be imposed. Therefore, it seems reasonable that specialised competition courts and tribunals consider the damage calculated by the antitrust authorities in their resolutions for the purposes of setting damages in a private action.

Legal costs

Who bears the legal costs? Can legal costs be recovered, and if so, on what basis?

Pursuant to article 7 of the FCCP, the party that loses the trial bears the legal costs. The basis of the legal costs consists in the sum that the winning party disbursed to win the trial. This sum excludes all superfluous acts or forms of defence, which will be paid by the party who made the relevant expenses, no matter if it wins or loses the trial.

It must be noted that the amount of the legal costs to be paid to the winning party is determined by the specialised competition courts and tribunals according to the Organic Law of the Superior Court of Justice of the Federal District. It is worth mentioning that although the jurisdiction is federal, because there is no legislation available and pursuant to the jurisprudence, this local law must be applied.

Joint and several liability

Is liability imposed on a joint and several basis?

Since there have been no successful private antitrust cases, it is not clear if joint and several liabilities can be imposed, say for instance, to a cartel.

Contribution and indemnity

Is there a possibility for contribution and indemnity among defendants? How must such claims be asserted?

So far in Mexico, there is no specific regulation that allows the contribution and indemnity among defendants. Likewise, given that there has not been a successful private action case that establishes how damage will be measured, neither is there a criterion regarding a possibility for contribution and indemnity among defendants.

Passing on

Is the ‘passing on’ defence allowed?

The ‘passing on’ defence, as it is known in the antitrust community, is a frequent defence stated by the defendant in a private action case arguing that its direct purchaser, the claimant, has not in fact sustained any damages because the claimant has in turn passed on the overcharge to its own purchasers. Therefore, the direct purchaser has not been affected by the practice committed by the defendant.

However, given that in Mexico there has not been a successful case regarding private actions (both individual and collective), this defence has yet to be argued in a private action case.

Nevertheless, the ‘passing-on’ defence seems reasonable under competition and civil law, given that if article 2110 of the FCCP establishes that for there to be indemnity there shall be a direct damage, if the claimant ‘passed-on’ that damage to its own purchasers, the claimant did not suffer any damage. Therefore, there is not causation between the anticompetitive practice and the damage claimed; hence, the claimant should not be entitled to an indemnity from the defendant.

However, it remains unclear if, in case this defence is used in a private action trial, the direct purchaser’s own purchasers could be entitled to an indemnity given that the overcharge (damage) caused by the defendant was passed on to them.

Other defences

Do any other defences exist that permit companies or individuals to defend themselves against competition law liability?

Until now, no other defences have been explored, simply because there have been no successful private action cases. Likewise, the existence of other defences will depend on the alleged anticompetitive practice. For instance, in the case of relative monopolistic practices, the common defence is the one of efficiency gains. This defence implies that even though a relative monopolistic practice was committed, efficiencies were generated, improving the economy and, or economic competition process. Examples of such efficiency gains, established in article 55 of the FLEC, are the following:

  • the introduction of new goods or services;
  • the use of leftovers, defective or perishable products;
  • the reduction of costs derived from the creation of new production techniques and methods, of asset integration, of production scale increments, and of the production or different goods or services with the same production factors;
  • the introduction of new technologies that produce new or improved goods or services;
  • the combination of productive assets or investments and their revenue to the extent they improve the quality or broaden the supply attributed of relevant goods or services; and
  • the improvements in quality, investments and their revenue, opportunity and service, that favourably impact in the supply chain.

Alternative dispute resolution

Is alternative dispute resolution available?

For both individual and collective proceedings, the legislation establishes that before the private action trial commences, a settlement hearing must be held for both the plaintiff and the defendant to discuss and negotiate a possible agreement that resolves the dispute. This agreement may be judicial or extrajudicial in the case of individual claims.

However, as established by the FCCP, for collective actions it is only possible to settle through a judicial agreement. Therefore, the collective can settle with the defendant through a judicial agreement at any time during the trial, before there is a firm resolution. This judicial agreement between the collective and the defendant will be considered as a firm resolution that terminated the dispute, so no further claim for the same matter and parties shall proceed.