Mexico: New Advertising Law impacts competition

In brief

3 June 2021, the Law for Transparency, Prevention and Combating Improper Practices in Advertising Contracting ("Advertising Law") was published in the Official Gazette1. The new Advertising Law went into effect on 1 September 2021. The Mexican Competition Authority (COFECE) issued Emergency Regulations2, establishing the procedures for filing a complaint, the investigatory process, and ruling for complaints of violations under the new Advertising Law. 


Contents

Key takeaways 

The Advertising Law establishes that the COFECE shall oversee and process any, and all, complaints related to alleged violations under this new Law. Prior to this, COFECE had filed a constitutional controversy challenging the Advertising Law before the Supreme Court of Mexico. The arguments asserted by the COFECE, included the alleged harm the Advertising Law would cause, in particularly to the autonomy of the Competition authority, and matters they asserted were unrelated to antitrust issues. The Mexican Supreme Court ruled that the Advertising Law would not be suspended, and once implemented, this Law and its provisions must be complied with accordingly. The Advertising Law grants powers to the Commission holding them responsible, and places the competition authority in charge of investigating and sanctioning violations. The Emergency Regulations provides legal certainty for the process and procedure for handling complaints, investigations, and resolutions with respect to the new Advertising Law. 


Background

31 August 2021, the COFECE issued Emergency Regulations to provide information with respect to the complaint process, which a party may file for violations3 of the Advertising Law. These Provisions will institute the rules and procedures for handling complaints and investigations, and establishes the following:

  1. All investigations for violations4 of the Advertising Law shall be initiated by a formal complaint, and the Investigative Authority COFECE will be in charge of the investigations as the competent authority of such complaint. 
  2. Before filing, a party should take into consideration if the violation involves a contract or agreement between two or more economic agents5 regulated by this Advertising Law6. In addition, whether there is sufficient cause to file a complaint, including evidence to prove a harm. If a party does not have a sufficient legal right to file7, and has not suffered an injury caused by the violation, the complaint may not be admissible. 
  3. The investigations may take up to five periods of 120 business days each. During this time, the Investigative Authority may request further information, collect documentation and evidence to support the investigation, including order dawn raids. 
  4. Once the investigation is concluded, if it is determined that there is plausible liability, a trial-like procedure will initiate, and the defense stage will begin. 
  5. All evidence and arguments of those identified parties, who may be held liable, will be heard and analyzed at this stage in the trial like procedure. 
  6. The Board of Commissioners has the authority to determine if there was a violation of the Advertising Law. If the Board concludes the conduct is in fact a violation under Article 10 of the Advertising Law, it has the authority to impose the corresponding sanction. 

1 Advertising Law, in Spanish

2 Emergency Regulation, Spanish

3 Article 10 of the Advertising Law

4 Under Article 10 of the Advertising Law

5 Economic Agents include, but not limited to: Media Agency or Agencies; Advertiser(s); Press, and other Media sources.

6 See Article two, and Section I, II and VII of Article three of the Advertising Law

7 See Article two of the Advertising Law

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