Antitrust Law Daily Wrap Up, ANTITRUST NEWS: ABA Sections Comment on Mexican Competition Commission’s Proposed Regulation Implementing the Mexican Federal Competition Law, (Apr 5, 2013)

By Tobias J. Gillett, J.D., LL.M.

The Antitrust Law and International Law Sections of the American Bar Association have submitted comments to the Mexican Competition Commission on the Commission’s proposed Regulation of the Federal Competition Law applauding the Commission’s promulgation of the proposed regulations, but making suggestions for their improvement.

"The Sections support the Commission’s promulgation of the proposed Regulation as a means of increasing efficiency, consistency, and transparency in the Commission’s administration of the Federal Competition Law," the comments stated. "In short, the Regulation is a substantial achievement in the further development of Mexican competition law and policy."

However, the comments did find areas for improvement. The comments noted that Article 14(1) of the Regulation treated "invitations to engage in per se illegal behavior" as an indication of per se illegal monopolistic practices. The comments observed that potentially ambiguities in communications could result in erroneous charges and could chill companies from making public statements that increase market efficiency. The comments also questioned the basis for holding both parties liable when one party makes an offer that the other party does not accept. Instead, the comments suggested that the Commission should consider invitations to engage in per se unlawful activity on a case-by-case basis, and hold only the offering party potentially liable.

The comments also noted that Article 14(2) considered "domestic offer prices that are significantly higher or lower the international offer prices" (taking various factors into account) to be an indication of per se illegal monopolistic practices. The comments pointed out that offer prices were not the same as final prices, and may be negotiated. International price differences could also reflect a wide range of market differences and regulatory requirements that could justify them.

In addition, the comments regarded Article 17(1)’s "treatment of all financing costs as a barrier to entry" as "overly broad." Market entry often requires investments that necessitate financing, and the provision therefore "appears to assume that any investment requirement should be treated as a market entry barrier." The comments observed that "the need to invest in order to enter is not in itself a barrier to entry," and suggested that Commission should specify if it intends to target "higher than normal" or "higher than the incumbent" financing costs.

Finally, the comments recommended against adoption of Article 27(9), which would require "merger filers to set forth details of their and their competitors’ market shares." The comments noted that filers would not necessarily know their relevant market, and that determination of the relevant market often requires "detailed and sophisticated economic analysis." Moreover, filers may not have accurate information regarding their competitors’ market shares.

News: Antitrust