Navigating the Globe: Cartel Enforcement Around the World

Transcription

1 Navigating the Globe: Cartel Enforcement Around the World Chapter 14: Mexico Presented by the Cartel and Criminal Practice Committee and the International Committee October 24, 2013

2 Presenters Moderator Amilcar Peredo, Basham, Ringe y Correa, S.C., Mexico City. Panelists Alejandra Palacios Prieto, President of the Federal Economic Competition Commission, Mexico. Carlos Mena Labarthe, Head of the Planning, Institutional Relations and International Unit, Federal Economic Competition Commission, Mexico. Luis Gerardo Garcia Santos Coy, Partner, Creel, García- Cuéllar, Aiza y Enríquez, S.C., Mexico City.

3 Discussion Outline Mexican Legal Framework Enforcers Recent Developments Cartel Regulation Cartel Enforcement Key Cartel Cases Cooperation with other jurisdictions

4 Mexican Legal Framework Article 28 of the Constitution of the United Mexican States ( Mexican Constitution ); Federal Law of Economic Competition ( Competition Law ); and Regulations to the Competition Law ( Regulations ).

5 Enforcers Federal Economic Competition Commission (the CFCE for its acronym in Spanish). Federal Institute of Telecommunications (the IFT for its acronym in Spanish).

6 Recent Developments On June 11, 2013, amendments to article 28 of the Mexican Constitution were published in the official national register (Diario Oficial). The purpose of this constitutional reform is to enhance the development of dynamic, competitive and efficient markets in Mexico. On September 10, the reform became into effect when the Senate took oath of 6 (of 7) Commissioners that conform the Plenum of the new CFCE (a new autonomous constitutional body, with exclusive jurisdiction over competition issues in all sectors of the economy except telecommunications). Also derived from the reform, last September, the IFT was created as the new autonomous constitutional body with exclusive jurisdiction over telecommunications issues, including competition in this sector.

7 Cartel Regulation in Mexico Pursuant to the Competition Law, cartels are categorized as absolute monopolistic practices. Absolute Monopolistic Practices All kind of contracts or agreements, arrangements or combinations between competitors which purpose or effect is: (i) price fixing, (ii) restriction of production or distribution of products, (iii) market segmentation, or (iv) bid-rigging. Need not be a formal or written agreement (in fact, it may be a nonbinding arrangement or understanding). These acts and agreements shall not produce legal effects, as they are null and void. Economic agents participating thereat are subject to the sanctions and fines established in the Competition Law without prejudice of the criminal responsibility that may arise therefrom.

8 Cartel Regulation in Mexico Administrative procedure The Competition Law establishes an administrative procedure to investigate cartels that may be initiated by the CFCE (note: all references to CFCE in this presentation shall apply to the CFCE and the IFT, as the case may be) at the request of any party or ex officio. The CFCE s cartel investigation procedure is segmented in two stages: 1. The investigation stage, during which the CFCE shall gather all elements required to sustain and determine that the illegal activities were presumably carried out, and 2. The administrative procedure, followed in the form of a trial, by means of which the alleged offenders will be able to defend themselves from the CFCE s allegations and findings (derived from the investigation).

9 Cartel Regulation in Mexico Investigative stage During an investigation, the CFCE can rely on the following tools: Subpoenas. Formal requests of information and documents. On-site searches. Public information. Leniency applications.

10 Cartel Regulation in Mexico Leniency Programme Economic agents participating in cartels (either corporations or individuals), may voluntarily confess their participation in this kind of practices and request the benefit of a substantial reduction in the amount of the fines, as well as, immunity for criminal liability. Accordingly, the imposed fine could be as low as one times the daily minimum wage for the Federal District (currently $64.76 MXN). In order to request such benefit, the following requirements shall be fulfilled: (i) be the first one to provide sufficient evidence that allows the CFCE to demonstrate the existence of the practice; (ii) to fully and continuously cooperate with the CFCE; and (iii) to carry out all the necessary actions to stop its participation in the illegal conduct. The Competition Law also provides for the possibility of reducing the fine to those economic agents that are not the first to cooperate, if they provide additional evidence (different to the one already in possession of the CFCE). In case these requirements are fulfilled, the CFCE may reduce the fine in 50%, 30% or 20%, respectively, considering the chronological order in which the corresponding request is filed.

11 Cartel Regulation in Mexico Fines The CFCE may impose a fine for up to 10% of their annual revenues (in Mexico). Furthermore, the CFCE may impose other smaller fines such as: i. Fine of up to $12.95 million MXN for individuals participating in illegal practices on behalf of corporations. ii. Fine of up to $11.33 million MXN for providing false information or statements. iii. Fine of up to $11.65 million MXN for supporting in the execution/implementation of illegal practices.

12 Cartel Regulation in Mexico Criminal penalties The Federal Criminal Code provides penalties of (i) 3 to 10 years of imprisonment to the individuals that ordered, executed or carried out an absolute monopolistic practice, and (ii) 2 to 6 years of imprisonment for providing false information.

13 Cartel Enforcement The former competition authority (Federal Competition Commission) initiated several investigations against cartel activity involving, among others: Bid-rigging on: sale of medical supplies to governmental agencies. Price-fixing and market allocation related to: milk, beer, vitamins, tortillas, distribution of medicines, airline tickets, use of banking credit and debit cards, cathode ray tubes (CRT's), liquid crystal displays (LCD's), optical disc drives (ODD's), hermetic compressors, auto parts (diverse markets), distribution of egg, real estate services, and transportation (maritime and terrestrial).

14 Cooperation with other jurisdictions Mexico is a party of multiple international treaties in which cooperation between the competition agencies is addressed. These treaties have been signed with Canada and the United States, members of the North America Free Trade Agreement, Colombia and Venezuela (members of the G-3 Free Trade Agreement), Costa Rica, El Salvador, and Guatemala, the European Union, the European Free Trade Association (Iceland, Norway, Liechtenstein and Switzerland), and with Bolivia, Chile, Israel, Nicaragua, Uruguay and Japan in bilateral free trade agreements. Furthermore, Mexico has executed bilateral cooperation agreements on competition matters with the United States, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Russia, Japan, Nicaragua, Russia and the Republic of Korea, the main purpose of which is, in most of the cases, to promote the effective application of the competition laws and the coordination between agencies, in order to avoid jurisdictional conflicts. Also, the Commission actively participates in the International Competition Network, the Organisation for Economic Cooperation and Development, the Asia-Pacific Economic Cooperation, the United Nations Conference on Trade and Development and other international competition fora. These international activities will continue to be a priority of the CFCE.

15 Short biographies

16 Alejandra Palacios Prieto Was appointed President of the Federal Economic Competition Commission (CFCE), in September 2013, for a four year term. Ms. Palacios holds a Master s Degree in Public Administration and Public Policy from Centro de Investigación y Docencia Económicas (CIDE). She also holds a Master of Business Administration and a Bachelor s Degree in Economics from Instituto Tecnológico Autónomo de México (ITAM). Prior to her appointment to the CFCE, she was the Director of Good Governance Projects at the Mexican Institute for Competitiveness (IMCO), a Mexican public policy think-tank. Ms. Palacios was also a consultant of the former Federal Telecommunications Commission (Cofetel) and advisor of the Mexican Institute for Social Security (IMSS). She has been a lecturer and Academic Coordinator of the Economics Department at ITAM. She was also TV co-anchor on a weekly TV program Opinion Pública on Proyecto 40 TV.

17 Carlos Mena Labarthe He is currently the Chief of Staff at the CFCE. He is licensed to practice law in Mexico. He obtained his law degree from ITAM University with the highest honors, obtained a Master s degree in Business Law from the Attorney s Bar Association in Madrid, Spain with honors and a Master s Degree in Regulation from the London School of Economics and Political Science with the distinction for the best overall performance. He has various publications including those published by Competition Policy International, World Competition Law and Economics Review and the Texas Transnational Law Quarterly and is the Editor and co-author of five books on economic competition, regulation and other areas of the law. He has worked for major national and international law firms. He teaches Competition Law, Regulation and Public Policy at the graduate and postgraduate level at ITAM. He was the Director General of the Cartel Investigations Division at the Federal Competition Commission of Mexico until September this year where he handled all leniency applications since the enactment of the program and has participated in each major reform to the competition laws of Mexico.

18 Luis Gerardo García Santos Coy Mr. García Is a partner and heads the competition and antitrust practice at Creel, García-Cuéllar, Aiza y Enríquez, SC. He obtained his law degree (LLB) from Universidad Iberoamericana in A survey published in the Global Competition Review 40 under 40: the world s brightest young antitrust lawyers and economists (2004), cited him as one of the world s top young antitrust lawyers. Mr García has also been included in The International Who s Who of Competition Lawyers since 2005, and has been recognised by Chambers & Partners as an expert in the fields of M&A, corporate and competition/antitrust. Mr García has published (as author or co-author) several articles, including: the Mexico chapters in The Handbook of Competition Enforcement Agencies in 2004 and 2005, Cartel Regulation: Getting the fine down in 2006 and 2011, PLC Cross-border Competition Handbook 2011, The Merger Control Review, published by Law Business Research, in 2010, 2011, and 2012; A tough sheriff, published in the International Financial Law Review (December 2006) and Overcoming the Constitutional Difficulties: Recent Trends in Mexican Competition Law published in Latin Lawyer (July 2006); Competition and antitrust developments in Mexico published by Euromoney (2012), and The Cartels and Leniency Review, published by Law Business Research, in 2013.

19 Amilcar Peredo Rivera Obtained his law degree at Universidad Nacional Autonoma de Mexico in He also obtained a master degree at the Georgetown University Law Center, specializing in antitrust law and is therefore familiar with the United States antitrust law. He was promoted to partner in 2007 and is currently head of the Antitrust Department of the firm. He has been a lecturer in antitrust law at two of Mexico s best known universities and in 2004 published one of the few books on Mexican antitrust law called (in English) Economic Competition: Theory and Practice. which is used as a text in many Mexican universities. Mr. Peredo has been invited to speak at many conferences in Mexico and other countries on antitrust matters. Among other associations, he is a member of the Antitrust Committee of the International Bar Association and of the American Bar Association. Since 2011 he is the Vice- Chair of the Section of Antitrust Law of the Mexican Corporate Counsel Association. Since 2009 up to 2013 Mr. Peredo has been recognized by publications such as Legal 500, Who s Who Legal Chambers & Partners and Global Competition Review as one of the best antitrust lawyers in Mexico.