Mexico: COFECE investigates possible vertical restraints between competitors in the insecticides market

In brief

On 23 March 2022, the Investigating Authority of the Federal Economic Competition Commission (COFECE) published notice of the initiation of an investigation, for the alleged vertical restrictive practices in the market of production, distribution and commercialization of domestic insecticides in Mexico

This market is related to relevant household insecticides used to controlling disease carrying insects, and these products may be produced as powders, aerosols, gases, liquids, among others. Insect-borne diseases is considered an important public health problem in Mexico.

If the conduct of a relative monopolistic practice is proven, the responsible economic agent or agents could be sanctioned with fines of up to 8% of their income and an order to cease the conduct.


Contents

Recommended actions

  • In this type of proceedings, it is normal for the antitrust authority to request information and documents from the companies offering products and services related to the market under investigation. In the event the antitrust authority sends a request for information, it is essential to respond to such request; otherwise, the defaulting company will be subject to a fine.
  • The Mexican antitrust authority is empowered to conduct dawn raids (on-site unannounced visits at the company's offices, through which they may request information and/or photocopy documents related to the market under investigation). In these cases, it is recommended to contact the company's legal counsel and seek immediate advice from an antitrust & competition lawyer. Obstruction or failure to comply with a dawn raid may result in fines and/or criminal penalties.
  • In some cases, the antitrust authority considers it pertinent to summon individuals who are presumed to have knowledge of the market under investigation, e.g., technical personnel or managers of companies that offer products and services related to the market under investigation. In case an employee is summoned by the COFECE, it is recommended to consult with an attorney who specializes in competition matters.

In more detail

  • The investigation should not be understood as a judgement of liability, but as an action by the authority to verify compliance with the Federal Mexican Antitrust Law.
  • Vertical restrictive practices are acts, contracts, agreements or procedures carried out by one or several economic agents with substantial power and that have, or may have, the purpose or effect of unduly displacing other market participants, substantially impeding their access, or establishing exclusive advantages in favor of one or several economic agents. Examples of these practices are tied purchases or sales, exclusivities, price or treatment discrimination, boycotts, raising costs to other economic agents and refusal of treatment, among others.
  • This antitrust investigation was initiated on 9 September 2021, and it could take up to 120 business days, with the possibility of being extended four times for an additional period of 120 business days each.

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