In brief

On June 3 2021, the Law on Transparency, Prevention and Combating of Unfair Practices in Advertising Contracting (Law) was published in the Official Gazette of the Federation.

The purpose of the Law is to promote transparency in the advertising market, as well as to prevent and combat commercial practices that constitute an undue advantage in favor of certain individuals to the detriment of advertisers and, ultimately, consumers. This law will enter into force on 1 September 2021.

The Law implies a substantial change in the way companies in the advertising sector, including advertising agencies, advertisers and media, operate. As a result of the Law, agencies and media will have to make changes to their contracts, systems and operations in order to comply with the Law and avoid penalties.

The Law could violate agency and media rights, including the rights to competition and free concurrence, violations of freedom of trade and legal equality, among others. We consider that these violations can be fought via amparo (summary proceeding) .

Key Takeaways

Main Conclusions 

  • The Law is applicable to all acts, contracts, agreements or procedures performed with or by a media agency, and advertiser, and the media, including some that are part of common practices in industry and commerce.
  • The agreement between an agency and the advertiser must establish the terms and conditions of the agency's remuneration. The agency may only receive, as remuneration the consideration established in the agreement; therefore, it may be recommendable to review cases where there may be rebate agreements separate from the main agreement.
  • Any discount granted by the media to the agency must be transferred in full to the advertiser. In addition, other means of remuneration must be reviewed as neither the agency nor any third party used by the agency may receive any remuneration, commission or benefit in kind from a media outlet.
  • Agencies will need to make purchases transparent and the advertiser may receive and request more information on the services, including locations and pricing from the media.
  • New definitions are included. On the one hand, Digital Advertising is described as "the place that digital platforms connected to the Internet, including websites and mobile applications, allocate to insert online advertisements". Programmatic Digital Advertising, on the other hand, is defined as "digital advertising sold through automated mechanisms, in particular through real-time auctions, which set forth access to audiences with segmented profiles as the main selling criteria".
  • It contemplates fines, up to the equivalent of 4% of its revenues, for agencies that acquire advertising space, on their own account, for subsequent resale to an advertiser.