Abuse of dominance in Mexico

Abuse of dominance

How is abuse of dominance defined and identified? What conduct is subject to a per se prohibition?

The term abuse is not defined by the LFCE. Notwithstanding, several types of conduct considered abusive under other jurisdictions may constitute relative monopolistic practices under Mexican law, as shown in questions 14 to 25. Article 56 of the LFCE defines 13 specific relative monopolistic practices. Mexican law follows an effects-based approach to identifying anticompetitive conduct as relative monopolistic practices may be deemed illegal only if the conduct is performed by an economic agent possessing substantial market power and the conduct’s purpose or effect is to unduly displace other economic agents from the market, to substantially preclude their access to the market or to create exclusive advantages in favour of one or several persons. Additionally, efficiency gains and their competitive effects may be alleged to sustain the legality of a relative monopolistic practice as explained in question 13.

Unilateral conduct is never prohibited per se under Mexican law. Only horizontal restraints or collusive agreements (absolute monopolistic practices) are prohibited per se and shall always be null and void regardless of their effect on the market.

Does the concept of abuse cover both exploitative and exclusionary practices?

Only predatory and exclusionary unilateral conduct falling into a specific relative monopolistic practice definition is covered under the LFCE. A dominant firm does not violate the LFCE simply by exploiting its power and charging monopolistic prices.

What link must be shown between dominance and abuse? May conduct by a dominant company also be abusive if it occurs on an adjacent market to the dominated market?

In order for a relative monopolistic practice to be illegal, the conduct in question must be performed in connection with goods or services pertaining to the relevant market where the defendant possesses substantial market power. Notwithstanding, the displacement of other economic agents (which is also a condition for the practice to be deemed illegal) may occur with respect to an adjacent but related market to the dominated market.

What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?

The main defences, usually raised to an allegation that a certain conduct constitutes a relative monopolistic practice are: an inaccurate definition of the relevant market due to the existence of close substitutes of the product or service in question; the absence of barriers to entry and, therefore, the lack of substantial market power; and that the conduct generates efficiency gains so that net contribution to consumers’ welfare overcomes its anticompetitive effects.