- 1.What is the legislation applicable to merger control and how long has merger control legislation been in force?
The basic statute is the Federal Law of Economic Competition (the FLEC), and the regulations to the FLEC.
The provisions on merger control under the FLEC have been in force since June 1993, and suffered amendments through a reform effective as of June 2006, and more recently new amendments have entered into force on 11 May 2011.The basic changes affecting merger control under these recent amendments are the following:
- Exceptions to the filing obligations:
- Assumptions for the fast-track process. The parties in a filing may request resolution through a fast-track process if it is proved that it is notorious that the concentration will not have as its purpose or effect to reduce, damage or impede competition. The following assumptions are considered as those notoriously not having as its purpose or effect to reduce, damage or impede competition: (i) if the transaction implies the first participation of the purchaser in the relevant market. To this end, the structure of the relevant market should not be modified and it should only involve the substitution of the economic agent; (ii) if before the transaction, the purchaser holds no control of the acquired agent, and with the transaction, it increases its relative participation in such agent, without having additional power to influence the operation, management, strategy and main policies of the company, including the appointment of members of the board and managers; (iii) if the purchaser has the control of a company and increases in relative participation in the capital stock of such company. The Regulations to the FLEC may include additional assumption for the fast-track process.
- The obligation for the FCC to issue guidelines concerning market definition, market power, imposition of fines, among other factors. These guidelines should be issued shortly.
- Collective dominance in the analysis of monopolistic practices, which will likely play a role in merger control.
- Substantial increase in fines. In particular, (i) failing to notify a transaction (up to 5 per cent of income of the economic agent involved); (ii) in the event of prohibited concentrations (up to 8 per cent of income of the economic agent involved); (iii) not complying with undertakings imposed (up to 10 per cent of income); and (iv) failing to comply with freeze or stop orders (up to 8 per cent of income of the economic agent involved). The foregoing, in addition to other penalties (such as total or partial divestments), which were already in place, before these amendments.
- Surprise verification visits in the event of an investigation of prohibited concentrations.
- New judicial appeal process. The amendments call for a new appeal process before federal courts. This process is known as the ordinary administrative trial, which basis and procedural rules are still yet to be issued. This new proceeding will be followed before courts and judges specialised in economic competition matters. The resolutions issued as a result of this new process will be reviewed through constitutional amparo action.
(i) corporate reorganisations, where the economic agents belong to the same controlled economic group, and no third party participates in the concentrations;
(ii) in the event the holder of shares, or equity units or equity parts increases its relative participation in the capital stock of a company controlled by such holder since incorporation or since approved by the Federal Competition Commission (the FCC);
(iii) when creating administration or guarantee trusts, or any other, where the contribution of assets or shares has no purpose or consequence of transferring such assets or shares to a different company. The execution of a guarantee trust, however, must be notified if the filing thresholds are met;
(iv) acts on shares performed abroad, related with non-residents in Mexico for tax purposes, as long as the companies involved do not acquire the control of Mexican companies, nor accumulate in Mexico shares, equity or assets in general, in addition to those already possessed, directly or indirectly, before the transaction;
(v) when the acquirer is a variable income investment firm (sociedad de inversión de renta variable) and the transaction has as its purpose the acquisition of shares or other instruments with resources from the placement with the public of shares representing the capital stock of the investment firm, except when, as a result of the operations of the investment firm, it may have a significant influence in the decisions of the concentrated economic agent;
(vi) in the acquisition of shares, equity or other documents representing (directly or indirectly) the capital stock of companies listed on a stock exchange in Mexico or abroad, when the acts or successive acts do not allow the purchaser to hold 10 per cent or more of such shares, equity or other instruments, and, in addition, the purchaser has no authority to (a) appoint or revoke members of the board of directors, or managers of the issuer, (b) impose, directly or indirectly, decisions in stockholders meetings or similar bodies, (c) maintain the holding of rights allowing it to, directly or indirectly, exercise the vote of 10 per cent or more of the company in question, or (d) instruct or influence, directly or indirectly, the management, operation, strategy or the main policies of a company, whether through ownership, through contract or in any other manner; and
(vii) when the acquisition of shares or equity or participation in trusts is performed by one or more investment funds with speculative purposes only, and have no other investments in companies or assets that participate or are employed in the same relevant market of the concentrated agent.
The Regulations to the FLEC (which should be issued shortly), may include additional exceptions.
- 2.Is there any additional sector- or industry-specific merger regulation legislation?
The FCC is the only authority that reviews mergers from a competition standpoint. However, mergers and acquisitions may also require authorisation from other authorities in regulated sectors, including but not limited to banking, telecommunications, air transport, railroad transport and airports. In these cases, the specific authority does not focus on competition issues, but rather compliance with sector regulation.
Foreign investment authorities in specific cases may also need to authorise foreign investment equity participation in specific industries.
- 3.Are parties that are required to file notification of a transaction pre-closing obliged to not close their transaction pending regulatory review?
Yes, if the FCC issues a “freeze order”. Under the FLEC, the FCC is authorised to issue a resolution ordering the parties to refrain from closing the transaction until approval. This “freeze order” needs to be issued within 10 business days following the date of the filing. If this order is not issued, the parties may close the transaction “at their own risk”, which basically means that although the parties may close, the FCC retains its authority to challenge the transaction or impose conditions. “Freeze orders” have been normally issued in transactions with horizontal overlaps, even if the combined market shares are relatively low. However, this does not occur in every case.
The freeze order remains in force until the authority issues its final resolution. In some cases, this may be over six months like in the Mexichem-Cydsa transaction, where the process took over 10 months counting the approval of divestments and conditions and the process to complete them.
- 4.Where pre-closing notification and approval is required, can a transaction that has been approved be challenged after closing? Has this ever happened?
Yes, a transaction may be investigated and challenged after it has been approved only (i) when the approval was obtained based on false information; or (ii) when approval was subject to conditions to be complied after closing, and those conditions are not complied with in terms of the corresponding resolution.
To our knowledge, the FCC has not challenged to date any transactions for which approval has been granted.
- 5.Who are the authorities responsible for merger enforcement and how is responsibility for investigation and decision-making allocated between authorities or within an authority?
The FCC is the authority in charge of competition merger enforcement. Decision is made by the Plenum of the FCC, which is composed of five commissioners. With respect to merger filings, the analysis is made by the Concentrations General Direction, which is part of the FCC, although it is supervised by the Executive Secretary, not the Plenum. The Concentrations General Direction issues an internal report to be used by the commissioners upon adopting a final decision.
- 6.Identify the last three times merger control legislation was used to prohibit a transaction, and for each, provide the ultimate outcome.
- Mexichem – Cydsa / acquisition of shares of Plásticos Rex (file CNT-093-2008). The FCC raised concerns on the PVC tubes market. The decision was appealed before the FCC. The FCC confirmed its original resolution not approving the transaction. The parties made a new filing which was approved with conditions imposed;
- Mexichem – Cydsa / acquisition of shares of Policyd (file CNT-091-2008). The FCC raised concerns on the PVC resins. The decision was appealed before the FCC. The FCC confirmed its original resolution not approving the transaction. The parties made a new filing which was approved with conditions imposed.
- Mexicana de Aviación/Aeroméxico (file CNT-101-2007). The problematic markets where those of air travel routes. The parties walked away from the possible transaction.
- Coca-Cola FEMSA and The Coca-Cola Company/Jugos del Valle (file CNT-12-2007). Portfolio combination of sodas, juices and other beverages where deemed problematic. The parties negotiated conditions on appeal.
- 7.With respect to notifiable transactions that raise no obvious competitive concerns, what is the expected time frame from notification to approval?
- 8.With respect to notifiable transactions that raise obvious competition concerns, what is the expected time frame from notification to a decision?
This is very case-specific, but it ranges between two and eight months for very complex matters.
- 9.Which types of transactions must be notified?
Concentration reaching the statutory thresholds must be notified. The FLEC defines concentrations very broadly including any merger, acquisition of control or any other act whereby corporations, associations, shares, equity parts, trusts or assets in general are joined by and among competitors, suppliers, clients or any other economic agents. Therefore, this definition includes joint ventures, and acquisition of non-controlling interests, or similar commercial arrangements. Acquisition of non-controlling shareholder may be exempted from filing obligations, as described in response to question 1.
As to licensing of intellectual property rights, if a strict interpretation of the definition of concentration is made, the licensing of a patent, for instance, may also be considered as a concentration. Patent licensing involves the granting of the right for licensee to use or exploit the patent for a specific period of time in a particular territory. Personal rights under Mexican law (such as a patent licence) are considered moveable goods (assets, if defined from an economic standpoint). As mentioned before, the FCC considers as a concentration, among others, the acquisition of control (without making reference as to whether this control is temporary) of assets. Notwithstanding the foregoing, we have no knowledge of any filing made to the FCC of a licensing agreement.
Similarly, if one makes a strict interpretation of the definition of a concentration, a long-term supply agreement may be considered as one if, as a result thereof, one of the parties acquires control of the other. However, it would not be easy to make such an argument, and as far as we know, no filing has been made to the FCC of a supply agreement as a concentration. This needs to be reviewed on a case-by-case basis.
- 10.Where change in control is part of the test, what is the standard for defining control and changes thereof for pre-merger notification purposes?
Change of control is considered a concentration. However, knowing that the definition of concentration is so broad, which includes any acquisition of assets or shares even when not granting control, the FCC has not reviewed a concentration solely as a result of a change of control.
Notwithstanding the foregoing, the FCC, as well as the Supreme Court of Justice of the Nation has discussed the notion of control upon analysing the term “economic agent” and “economic group of companies” for purposes of competition law, considering both legal and de facto control. In this regard, the Supreme Court made reference to different circumstances to define whether or not a person has a decisive influence. This may be the case, if a person acquires the majority of the shares of a company, if it has the authority to manage a company or the authority to appoint the majority of the members of the board, among others. This may serve as a guideline for future merger cases. The filing exceptions included in the May 2011 amendments may also provide some guidelines as to when the FCC would consider that control does not exist.
- 11.What thresholds apply for determining whether a transaction must be notified?
The FLEC provides that there are certain concentrations that are subject to notification before the FCC, prior to their closing. These concentrations include those falling under any of the following thresholds:
- those transactions involving an act or a series of acts, regardless of the place of execution, amounting in Mexico the equivalent of 18 million times the minimum general wage in force for the Federal District or more;
- transactions involving an act or a series of acts with an accumulation of at least 35 per cent of the assets or capital stock of an economic agent, whose assets in Mexico or annual sales originated in Mexico involve more than the equivalent to 18 million times the minimum general wage in force for the Federal District; or
- transactions involving an act or series of acts with an accumulation in Mexico of assets or capital stock higher than 8.4 million times the minimum general wage in force for the Federal District, and the transaction involves the participation of two or more economic agents with assets or annual sales (worldwide), jointly or separately, of 48 million times the minimum general wage in force for the Federal District.
The first two thresholds are referred to the target’s assets located in Mexico, target’s companies with direct operation in Mexico (mainly Mexican subsidiaries or branches) or target’s sales originated in Mexico. The third threshold, considers a combination of sales or assets of the parties worldwide, and an additional accumulation of assets or sales in Mexico of the target company only.
There is no filing obligation if the target or seller company has no presence in Mexico.
- 12.In what conditions must transactions between foreign companies be notified?
If a transaction between foreign companies involves the indirect acquisition of Mexican subsidiaries or assets located in Mexico, the transaction must be notified, provided any of the referred statutory thresholds is met. An indirect acquisition is deemed to exist if, for instance, a company abroad is acquired, and the acquired company has subsidiaries in Mexico.
- 13.Who must file the notification?
The general rule is that a joint filing is required. However, the Regulations to the FLEC allow for the acquirer to make the filing independently when: (i) the other party is unable to do so (legally or de facto), and this is proved to the FCC; or (ii) when a simplified filing is made (please see question 19).
- 14.Are there filing fees?
- 15.Is there a standard form? How long does it take to prepare a filing? What type of information is generally required?
Currently there is no standard form. The length on the preparation of the filing depends on the complexity of the case. For simple filings with no obvious competition concerns, a filing may be prepared in as short a time as a week, as it only requires basic information such as general corporate and financial information of the parties and a description of the transaction.
Cases involving horizontal overlaps would need to include economic analysis vis-à-vis market definition, market share data, and barriers to entry, among others. Preparation for very complex filings may take several weeks, as it may require substantial market definition, barriers and market power analysis.
The webpage of the FCC includes a guide for concentration filings that describes general information and suggestions with respect to the process and data to be provided.
- 16.When must notification be made? Is there a triggering event that requires a filing to be made within a specified period?
Filing must be made prior to closing or prior to acquiring control (including de facto control). For transactions carried out abroad, the filing must be made before the concentration has legal or material effects in Mexico.
With respect to mergers, according to the Regulations to the FLEC, the filing must be made prior to executing the merger agreement. In practice, the FCC has raised no concerns on filings made after the merger agreement is executed, provided closing is subject to the FCC’s clearance.
When there is a succession of acts, the filing must be made prior to perfecting the last act triggering the threshold.
In any event, the parties cannot complete or close the transaction within the 10-day period following filing. This is to allow the FCC to issue a “freeze order” if considered appropriate for each specific case.
- 17.When must notification be made with respect to acquisitions of convertible non-voting securities or options?
Considering the broad definition of a concentration, acquisition of non-voting securities would require notification, if any of the referred statutory thresholds is met, provided that the acquisition does not fall in any of the filing exceptions explained on response to question 1. In the case of options, it may be seen in two different ways: (i) there would be no obligation to file until the option is exercised, as the option itself does not represent equity; or (ii) that the option, as a right to sell or buy equity, is itself an asset, and as such, when acquired, if the asset value of the thresholds is met, it may be subject to filing. This would need to be analysed on a case-by-case basis.
- 18.Where there is an obligation not to close the transaction pending review, is there any alternative available to allow closing before formal clearance?
Formally speaking, the FLEC does not provide for an alternative. In practice, we have seen discussions in several cases to execute a hold separate agreement with respect to Mexico, where the parties would not give material effects to the international transaction in Mexico until the FCC issues its resolution.
However, in discussing this issue with the staff of the FCC, they have confirmed (i) that this is not an alternative that the FCC wishes to pursue; and (ii) if this is done, the FCC may consider this approach a violation of the “freeze order”.
- 19.What is the timeline for review and clearance?
Normal process. The FCC must issue its resolution within 35 business days counted from the date of receipt of the notification or the submission of the additional information requested by the FCC. If the FCC has not issued a resolution at the end of this term, it shall be understood that the FCC has tacitly approved the proposed transaction (afirmativa ficta). The period mentioned above may be extended once in exceptional cases for another 40 business-days.
In practice, the FCC normally issues requests of information, which interrupts the 35-day term. Requests of information are made in two different stages: (i) within five business days from filing, the FCC may issue a request of basic information, granting the parties another five business days to respond; and (ii) within 15 business days following filing (if no basic information request has been made), or following the date the parties submit the basic information requested by the FCC, the FCC may request additional information. This second request of information normally involves data required for substantive analysis. The FCC grants 15 business days to respond, although extensions to this term are common.
In complex cases, the FCC would normally extend the term to resolve for an additional 40-business-day period.
Fast track: the FLEC provides for a fast-track process if the parties prove to the FCC that it is notorious that a concentration does not have as its purpose or its consequences to have the effect of diminishing, damaging or impeding competition. In these cases, the FCC must resolve the filing within a term of 15 business days from the date the FCC formally acknowledges receipt of the filing through a resolution (which must be made within five business days following the date of the filing).
The response to question 1 describes those cases eligible for the fast-track process.
- 20.Are there post-clearance obligations imposed on the parties for a clearance decision to remain valid?
Resolutions clearing a transaction include a term of three months. Therefore, closing must be made within that three-month term. In practice, this term can be extended.
In addition, once the transaction closes, the parties must file the documents evidencing closing within a term of 30 business days. If clearance is subject to conditions, the parties must evidence completion of the conditions within the specific terms provided under the resolution.
- 21.Is there a simplified notification procedure with accelerated review periods? What type of transactions qualify?
Please refer to the fast-track process explained in question 19.
- 22.Are there special rules applicable for public takeover bids or for corporate restructuring under bankruptcy procedures?
There are no special rules applicable to these procedures. The only exemptions of the filing obligations are described in response to question 1.
- 23.Can the authority be consulted on a no-names basis for guidance on notification requirements? Is this practice useful?
Yes. This is very common and useful, as it provides the interpretation that the FCC normally follows. The General Concentrations Direction is open to discuss notification requirements informally. However, it is important to note that the FCC is not bound by the informal consultations.
- 24.What are the risks if the parties do not file, if the transaction is closed before clearance or if notification is untimely? What penalties can be imposed and on whom? What is the highest fine imposed to date for failure to file?
Failing to file a transaction reaching the thresholds or violating a freeze order, may result in significant fines for the parties, as described in response to question 1. In addition, if during the investigation process it is determined that the transaction is a prohibited concentration, additional fines may be imposed, as well as conditions (eg, undoing of specific legal acts) or the order to divest or unwind the corresponding concentration.
Penalties may be imposed to both parties under the transaction, as well as to those individuals ordering or executing the transaction.
- 25.What are the investigative powers of the authority?
There are two processes under which the FCC may investigate concentrations. The filing process, and the investigation of concentrations which purpose or effect may be to reduce, damage or impede competition.
During the filing process, the FCC may request additional information. Please refer to question 19 for details on these requests and the effects on timing to resolve. Requests of information are normally made to the parties, but in complex cases third parties such as competitors, suppliers or clients may be requested to produce information that the FCC deems required to complete its analysis.
In addition to the filing process, the FCC may investigate concentrations which purpose or effect may be to reduce, damage or impede competition.
These investigations may be initiated:
- within one year from closing, if the transaction was not subject to filing;
- within five years, if the transaction was subject to filing, but the parties failed to make the filing; or
- within five years if clearance was obtained through false information, or if the parties fail to comply with conditions imposed by the FCC.
During this investigation process, the FCC may request information to the parties or third parties, and request interviews with key officers. In addition, the FCC may preform surprise (unannounced) verification visits.
- 26.Are there confidentiality rules to protect sensitive proprietary information provided to the authority and what procedure must be followed for confidentiality to apply?
The FLEC allows the parties to classify information as confidential. The information is considered as confidential if; disclosed it may harm the competitive position of the party providing it; or if the information involves personal data which disclosure requires consent or risks the safety of the person involved, or if disclosure is legally prohibited.
To this end, the information is classified as confidential when the party providing it expressly requests this classification, proves that the information is of a confidential nature and provides a summary of the information. If the confidential information cannot be summarised, the party in question is required to explain why a summary cannot be provided.
- 27.Is notification and its content publicised?
The notification itself is not publicised. However, whenever there is an interim resolution (eg, a request of information) during the process, the file number and the name of the parties are listed in the website of the FCC.
Once the filing process has concluded, third parties may have access to the file, except for confidential information.
In addition, a public version of the final resolution is published at the FCC’s website. In some cases, the FCC has issued press releases on the general aspects of a resolution.
- 28.Are there agreements in place to exchange information with foreign competition authorities? Must the authority seek a waiver from the transaction parties to disclose confidential information submitted in their filing?
The FCC has executed cooperation agreements with authorities in other jurisdictions, including the US, Europe, South Korea, Canada and others. The FCC must seek waiver from the parties to disclose confidential information to foreign authorities.
- 29.As a matter of practice, how do the authorities investigate a transaction? Whom do they consult? What weight, based on your experience, does the authority give to the information provided?
The FCC commences the analysis with the information included in the filing. With this initial analysis, the FCC determines whether additional information from the parties is required. At the same time, the FCC may request information from third parties, including competitors, clients, trade associations, suppliers and authorities within the country that may have any knowledge of the market or the parties. Informal requests are also common, for the FCC to confirm information provided by the parties or to have a better grasp of the market dynamics.
There is extensive informal exchange of information with merger control authorities abroad, mainly with authorities in the US and the European Union.
- 30.What rights do third parties such as competitors, suppliers or customers have to intervene and participate in the investigation process, including rights to access the investigation file?
During the filing process, third parties are not allowed to participate. According to the Regulations to the FLEC, a claim by a third party challenging a concentration which has been filed, but not resolved, must be dismissed. However, the economic agents may assist the FCC by submitting data and documents that they consider relevant to the case. In addition, the claimant does not have access to the file.
Notwithstanding the foregoing, at least in a couple of cases (Televisa/Radio Acir and Ferromex/Ferrosur), third parties have been able to intervene in the process as a result of constitutional control proceedings (amparo) before federal courts, claiming that the articles that based the dismissals were unconstitutional as they violated fundamental due process rights.
On the other hand, third parties may file claims requesting the FCC to investigate alleged prohibited concentrations, only if these have not (or are not) the subject matter of a filing.
- 31.Can third parties appeal clearance decisions, and has this ever happened successfully?
Under the filing process, third parties cannot appeal clearance decisions.
- 32.In a transaction that appears to raise competitive concerns, is it recommended to consult the authority prior to filing and, if so, why?
This needs to be assessed on a case-by-case basis. Sometimes it may be a good idea to consult with the authority as to how they prefer for the parties to submit information to facilitate the review.
- 33.Does the authority and its staff share its concerns about a transaction with transaction parties at each stage of review? How can parties productively participate in the evaluation and decision processes?
Both the commissioners and the staff of the FCC would normally share their concerns during the review process. This method allows for the parties to submit additional information or clarifications to address the concerns of the staff or even propose conditions for the transaction to be cleared.
- 34.Are there published guidelines for merger analysis?
A set of guidelines is published in the website of the FCC (www.cfc.gob.mx). However, the FCC is likely to change these guidelines as a result of the recent amendments to the FLEC.
- 35.What are the prevailing theories of competitive harm and analysis, and how are they typically applied?
The FCC focuses on different aspects. First, on the combined market shares of the parties and whether the acquirer, as a result of the transaction, will have the ability to raise prices, or substantially restrict output, without competitors, actually or potentially counteracting such ability.
Second, the FCC would analyse whether the transaction may have an exclusionary purpose or effect. To this end, the FCC analyses both the relevant and related markets.
Third, the FCC would look into whether the transaction may have as its purpose or effect to substantially facilitate the commission of a monopolistic practice (whether horizontal cartels, or vertical restraints).
- 36.Are there safe harbours and what are they?
A transaction with no horizontal or vertical overlaps should be cleared without any questioning by the authority (except, maybe, with respect to limitations to non-compete provisions). In addition, transactions where combined market shares are lower than 30 per cent should not raise any concerns, but must be analysed on a case-by-case basis.
- 37.To what extent are economic efficiencies and non-competition issues taken into account in the review process?
Economic efficiencies are an integral part of the analysis. However, the parties have the burden to prove efficiencies. If the parties do not argue efficiencies during the process, the FCC will not include them as part of the analysis. The analysis is based only on competition issues.
- 38.Can remedies be negotiated, and, if so, at what stage in the process? How are they enforced?
Remedies can be negotiated during the process, prior to the FCC issuing a resolution. In fact, the Regulations to the FLEC specifically allow the parties to propose remedies until the day after the matter is listed for discussion by the Commissioners. The appeal process before the FCC also allows for the parties to negotiate remedies.
The FCC prefers to impose structural remedies, rather than behavioural. Structural remedies are easy to enforce, as the FCC requires the parties to file a divestment programme, and report on compliance. Considering this, behavioural remedies are uncommon, but in some instances have been imposed. Enforcement of behavioural remedies has included the appointment and report of independent auditors, or the filing by the parties of documents evidencing compliance.
- 39.How common are negotiated remedies? Can negotiated remedies be challenged by third parties?
Remedies are commonly negotiated with the FCC. The FCC would normally advise the parties on concerns related with the transaction, and the parties would address those concerns by either clarifying information, or proposing remedies. Third parties, on the other hand, are not allowed to challenge remedies, as they are not part of the filing process. Please refer to questions 30 and 31 for a discussion on third-party rights.
- 40.Is there a vehicle for reconsideration by the authority of its decision? If so, please describe and provide recent examples where reconsideration led to a revised outcome.
FCC’s decisions may be appealed through a reconsideration recourse followed before the FCC. Remedies are often negotiated during this appeal/reconsideration process. For instance, the Coca-Cola FEMA and The Coca-Cola Company/Jugos del Valle transaction was rejected during the filing process, but remedies were accepted in the appeal resolution.
- 41.Can a decision from the regulator be appealed and if so what is the timetable for judicial review to take place?
Resolutions of the FCC may be appealed through (i) reconsideration recourse, before the FCC; or (ii) through the ordinary administrative trial (which procedural rules are yet to be issued) before the federal courts. The term for a final and definitive decision varies from case to case, but it may range from two to seven years, or more.
- 42.What has been the most important challenged decision in the past five years that has been overruled and how often generally do appeals result in reversal?
There have been very few merger cases judicially reviewed. Probably the most relevant recent case was the proposed acquisition by Gruma of Agroinsa involving different flour markets for tortilla production. The FCC objected the transaction, but notified the resolution one day after the term to resolve had elapsed. The Supreme Court determined that the FCC failed to notify the resolution in time, and thus the transaction was deemed as tacitly approved without any conditions.
Another case which is still under judicial review is the Ferromex/Ferrosur merger, involving railroad transportation.
- 43.When reviewing decisions from the competition authority, do courts restrict themselves to procedural aspects, or can they review the substance of the authority’s analysis?
The federal courts only have jurisdiction to hear cases based on constitutional challenges filed against the rulings issued by the FCC after the administrative appeal process has been exhausted, if the parties have elected to follow the administrative appeal. While these jurisdictional rules may change based on the new ordinary administrative trial, the current process allows the federal courts to only examine the specific claims by petitioners concerning violations to the Constitutional Bill of Rights, mainly related to due process and proper interpretation of the law. It is not uncommon for federal courts to try and find for petitioners on procedural grounds to remand for the FCC to replace parts of the original investigation or proceedings. However, federal courts have also had to analyse the full merits of a complaint and thus analysed and ruled upon the fundamental status and constitutional consistency of the FLEC, in some cases deciding that either the FCC violated due process principles or that the FLEC had provisions that are incompatible with the Constitution and were thus removed from possible legal application.
- 44.Briefly highlight any notable merger control decisions rendered over the past twelve months.
The recent decision on the Mexichem-Pemex Petroquimica joint venture is probably one of the most important one in the past year. This transaction relates to a joint venture between Mexichem and government-owned oil-chemical company for the production, among other products, of vinyl chloride. Attention is being placed on the acquisition of control by Televisa of shares representing the capital stock of Iusacell (telecommunications company owned by rival TV company TV Azteca). Resolution is still pending, but the analysis under this concentration will likely be considered as a landmark.
- 45.Update and trends
The FCC’s resolutions are increasingly using economic analysis. As transactions increase their complexity, analysis is becoming much more thorough and sophisticated. For this reason, competition practitioners usually involve teams of legal and economic advisers working in tandem. In addition, analysis of vertical effects of concentrations is increasingly becoming more important in the merger review process.
© Law Business Research Ltd 1998-2012. All rights reserved.
Company No.: 03281866
IMPORTANT: Please read our Terms & conditions.
W11 1QQ, UK
