Enforcement proceedings

Enforcement authorities

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 Federal Economic Competition Commission (CFCE) and the Federal Telecommunications Institute (IFT).

In terms of articles 28, section II and 119 of the Federal Law of Economic Competition (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 and the Federal Courts have determined that the principles of the presumption of innocence, the right against compelled self-incrimination and the attorney-client privilege are applicable (with some exceptions) to the investigation phase and the administrative sanctioning procedure.

Sanctions and remedies

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 17.9 million Mexican pesos on the individuals engaging in the illegal conduct, acting on behalf of legal entities;
  • imposing a fine of up to 16.1 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.

The highest fine ever imposed for abuse of dominance was on the mobile telephony provider Telcel and was around US$936 million at the time.

Enforcement process

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 Specialised Courts in Competition, Telecommunications and Broadcasting.

Enforcement record

What is the recent enforcement record in your jurisdiction?

Since September 2013, the CFCE has concluded 20 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.

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 in October 2013 and the decision was issued in September 2016. The CFCE imposed a fine of 63 million Mexican pesos on Mexico City Airport.

Contractual consequences

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. Nevertheless, the First Federal Specialised Court in Competition, Telecommunications and Broadcasting determined that the CFCE does not have the authority to order the elimination or modification of clauses containing alleged anticompetitive previsions.

Private enforcement

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.

Damages

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, as of January 2021, there are only two damages claims filed before Mexican courts, which are in course. However, these damages claims derives from a cartel conduct cases. 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 specialised courts in competition, telecommunications and broadcasting have jurisdiction over individual and collective damages claims.

Appeals

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 Specialised Courts in Competition, Telecommunications and Broadcasting. This trial is aimed to revoke unconstitutional or illegal decisions of any kind of authorities.

Law stated date

Correct as of

Give the date on which the information above is accurate.

January 2021.