03 Jul Amendment to the Federal Economic Competition Law: Key Changes
On June 30, the Mexican Congress approved a bill to amend the Federal Economic Competition Law (“LFCE”), which formalizes the legal restructuring of the competition authority in Mexico.
While the publication of the Decree in the Federal Official Gazette (Diario Oficial de la Federación) remains pending, once the reform enters into force, the Federal Economic Competition Commission (“COFECE”) will continue operating until the Plenary of the newly created National Antitrust Commission (“CNA”) is formally appointed.
The key changes introduced by the reform to the LFCE include:
- Legal Nature of the Competition Authority. Unlike COFECE, which operated as an autonomous constitutional body, the CNA will be a decentralized public entity under the Ministry of Economy, with its own legal personality, assets, and technical and administrative autonomy.
- Expanded Powers. The CNA is granted jurisdiction over telecommunications and broadcasting; is authorized to use “any tool” to collect data and information; and sees an extension of the review period for non-notifiable concentrations from one to three years. Notably, a new power referred to as the “Executive Branch Notice” could, among other effects, limit the ability to extend timelines in merger review processes.
- New Key Concepts. The reform introduces new legal concepts such as “potential competitor,” “joint substantial market power”, and “exploitative effects,” which expand the scope of conducts that may be deemed anticompetitive and, as a result, may trigger enforcement actions and sanctions by the CNA.
- Merger Control Thresholds. The monetary thresholds for notifiable concentrations are reduced. The CNA is also given the authority to assess potential negative effects not only in the relevant market but also in related markets. Importantly, the CNA may now roll back the effects of successive transactions to the status quo prior to the execution of the first act.
- Increased Sanctions. The reform provides for significantly higher fines and sanctions. For instance, maximum fines for absolute monopolistic practices (cartels) increase from 10% to 15% of the economic agent’s revenues, and from 8% to 10% in the case of relative monopolistic practices or unlawful concentrations. If taxable revenues cannot be determined, the cap on fines increases from 1.5 million UMA to 3 million UMA.
The reform also introduces new sanctions, including the disqualification of economic agents from participating in public procurement procedures. - Attorney-Client Privilege. The reform expressly limits attorney-client privilege to communications between economic agents and external counsel. Communications with in-house counsel will not be protected under this privilege, which is particularly relevant for the internal management and treatment of sensitive information.
- Compliance Program Certification. Companies may now seek certification from the CNA for their internal compliance programs aimed at preventing and detecting violations of competition law.
- Leniency and Fine Reductions. The reform imposes significant new restrictions on the eligibility of economic agents to benefit from the immunity and leniency program for antitrust violations.
Given these substantial changes, companies are strongly encouraged to conduct a thorough operational risk assessment and update their internal antitrust compliance programs to enhance current policies, mitigate legal, financial, and reputational risks, and maintain a strong competitive position in light of the new regulatory challenges.
At Cuesta Campos, we have extensive experience advising companies on antitrust compliance and developing tailored competition compliance programs. Corporate policies and guidelines must be adapted to reflect the specific context of each company—its industry, market power, operating environment, and stakeholder structure, among other key factors.
Contact
Azucena Marín
amarin@cuestacampos.com
Héctor Mercado
hmercado@cuestacampos.com
THE ABOVE IS PROVIDED AS GENERAL INFORMATION PREPARED BY PROFESSIONALS WITH REGARD TO THE SUBJECT MATTER. THIS DOCUMENT ONLY REFERS TO THE APPLICABLE LAW IN MEXICO. WHILE EVERY EFFORT HAS BEEN MADE TO ENSURE ACCURACY, NO RESPONSIBILITY CAN BE ACCEPTED FOR ERRORS OR OMISSIONS. THE INFORMATION CONTAINED HEREIN SHOULD NOT BE RELIED ON AS LEGAL, ACCOUNTING OR PROFESSIONAL ADVICE BEING RENDERED.