Competition or Competitiveness? - Banking and Financial - Mondaq Mexico - Mondaq Business Briefing - Books and Journals - VLEX 29357456

Competition or Competitiveness?

Author:Mr Mario Gutierrez-Caballero
Profession:Sanchez-DeVanny Eseverri, SC

The debate begins in Mexico's Congress on a new Law of Economic Competition

On July 7, 2004 Senators of the National Action Party (PAN) presented a bill named "Federal Law for Economic Competition and Competitiveness" (hereinafter the "Bill") which intends to repeal the Federal Law of Economic Competition ("LFCE") in effect since June 22, 1993.

The Bill represents much more than a simple name change to the LFCE. The Bill pretends to modify the approach and scope of application of the LFCE to turn it into a promotional instrument of "competitiveness", representing a diametrical change of the present approach of the LFCE and rejecting current international tendencies for the modernization of antitrust or competition law.

Among the most important aspects of the Bill vis-‡-vis the LFCE are the following:

  1. Eliminates the obligation to notify mergers and acquisitions and any type of concentrations regardless of the size of the transaction. Currently, under the LFCE, when the merger or concentration is above certain thresholds, the economic agents or relevant parties shall notify in advance the Mexico's Federal Competition Commission ("CFC"), a mechanism that the CFC uses today as a preventive instrument of control of concentrations and creation of monopolies;

  2. Eliminates the prohibition of the "relative monopolistic practices" set out in the LFCE, which are commercial practices mainly identified with vertical restrictions or agreements among firms at different levels in a distribution chain (such as vertical market agreements, resale price maintenance, tied sales, exclusive dealing, refusals to deal, etc.) practices which currently the CFC analyzes under the "rule of reason" approach. That is where, in its analysis, the CFC balances the pro-competitive aspects of an agreement or practice against its anti-competitive aspects to decide about the legality or illegality of the practice at issue;

  3. Limits the prohibition of the named by the LFCE as "absolute monopolistic practices", identified with horizontal agreements or arrangements between competitors or undertakings operating at the same level of the production or distribution chain (such as price fixing, output restriction, market division and bid rigging) only to those practices that fulfills certain criteria and to which currently the CFC treats like prohibited per se and legally void;

  4. Limits the fines that under the LFCE the CFC can impose to the different economic agents or parties in...

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