Dominance and Legal Challenges in Mexico: Expert Insights From Galicia Abogados

The lawyers explain that dominance in Mexican law refers to substantial market power, the ability of a firm to unilaterally control prices, output, or competition. A market share of 50% or more sustained over a considerable period is usually seen as evidence of dominance, but firms with lower market shares can also be deemed dominant if they have the ability to control prices or competition without significant constraint from competitors.

The lawyers clarify that in Mexico dominance is not inherently illegal. However, abusing this dominance can be unlawful. The Federal Competition Act outlines the types of conduct that can be considered illegal if committed by dominant firms, including exclusive dealings, tying, refusals to deal, discriminatory pricing, resale price maintenance, and cross-subsidies.

The existence of dominance does not automatically result in actions by regulators. An investigation can be initiated by a complaint from an affected party or ex officio by the competent agencies in Mexico. A peculiarity of Mexican competition law is that authorities can investigate dominance even without evidence of illegality, if they suspect barriers to competition exist in a market.

The podcast highlights the existence of two competition authorities in Mexico: the Mexican Federal Telecommunications Institute (Instituto Federal de Telecomunicaciones or IFT) and the Mexican Competition Commission (Comisión Federal de Competencia Económica, COFECE). There are some differences in their mandates and how they address dominance cases. The IFT focuses on telecommunications and broadcasting, while COFECE handles everything else.

The lawyers discuss a few recent cases involving dominance issues in Mexico. One case involved mezcal producers and their refusal to certify other producers. Another case dealt with barriers to competition in the e-commerce market segment.

The podcast concludes with a discussion on the future outlook for firms found dominant in their markets. While historically having substantial market power did not necessarily mean abuse, recent cases have shown that dominant firms are facing increased scrutiny. Companies with considerable market share should be aware that their conduct may be considered anti-competitive.