VALDES ABASCAL Y BRITO ANDERSON, S.C.
CODE OF REGULATIONS
FEDERAL LAW ON ECONOMIC COMPETITION
(DOF 12.10.07)
Comments
Barra Mexicana-Colegio de Abogados
Alvaro R. Sánchez-González
November 7, 2007
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CODE OF REGULATIONS OF THE FEDERAL LAW ON ECONOMIC
COMPETITION
1.
“RESTRICTIONS TO MARKETS’ EFFICIENT
PERFORMANCE”.
2.
RELATED MARKETS.
3.
EFFECTIVE COMPETITION.
4.
CORPORATE RESTRUCTURES.
5.
CONSULTATIONS.
6.
FINAL COMMENTS.
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1. “RESTRICTIONS TO MARKETS’ EFFICIENT
PERFORMANCE”

FLEC: “Article 2. The object of this Law is to protect the
competition process and free access to markets, through the
prevention and elimination of monopolies, monopolistic practices
and other restrictions to the efficient performance of markets of
goods and services.”

FLEC. “Article 10…To determine if the practices referred to
herein[vertical restraints] should be sanctioned in terms of this Law,
the Commission will analyze efficiency gains from the conduct as
credited by the economic agents and if those conducts have a
favorable influence on the competition process …The efficiency
gains that could be included are: the introduction of new
products…; as well as others showing that net contributions to
consumer’s welfare derived from such practices outweigh their
anticompetitive effects.”
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 FLEC: “Article 18. To conclude if a concentration should be
challenged or sanctioned in terms of this Law, the Commission should
consider the following elements:…
 V. Elements provided by the economic agents that show greater
market efficiency achieved by the concentration and their
favorable influence on the competition process and free access to
markets…”
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 CODE OF REGULATIONS
 “Article 16. Pursuant to section 5 of article 18 of the Law, it will be
considered that a concentration will achieve greater market efficiency
and a favorable influence on the competition process and free access to
markets when economic agents credit that contributions to consumers’
welfare from that concentration will exceed permanently its
anticompetitive effects.
 To show the above mentioned, economic agents can prove, amongst
others, the following efficiency gains: [scale, scope, network]”
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
COMMENTS:
i.
THERE IS NO IDENTIFICATION OF “THE OTHER
RESTRICTIONS for markets’ efficient performance ”.
ii.
THE COMISSION DOES NOT PROVIDE WITH INDICATORS
AS TO WHEN A MARKET WORKS IN AN EFFICIENT
WAY.
iii.
THE LAW IDENTIFIES THE “EFFICIENCY GAINS” AIMED
TO CONSUMERS WELFARE [IN THE STUDY OF
VERTICAL RESTRAINTS]
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iv.
CODE OF REGULATIONS IDENTIFIES “EFFICIENCY
GAINS” AIMED TO CONSUMERS WELFARE
[IN THE STUDY OF CONCENTRATIONS]
v.
FLEC: ARTICLE 18, V: “Other criteria and analytical
instruments that the code of regulations of this Law instructs”.
THERE IS NO REGULATION FOR THIS SECTION.
vi.
POSSIBLE EFFECT: DISCRETIONALITY.
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2.

RELATED MARKETS
FLEC: “Article 18. To conclude if a concentration should be
challenged or sanctioned in terms of this Law, the Commission
should consider the following elements:…
III.
Concentration effects in the relevant market regarding
competitors and buyers of the good or service; as well as in
other related markets and agents;
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IV. The participation of the involved agents in the concentration in
other economic agents and the participation of other economic
agents in the agents involved in the concentration, as long as those
agents participate directly or indirectly in the relevant market or in
related markets. When this participation can not be identified, this
circumstance should be completely justified…
V. Other criteria and analytical instruments that the code of regulations
of this Law instructs.
THERE IS NO REGULATION FOR THIS SECTION
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 CODE OF REGULATIONS (Applicable to article 21 bis of the
Law).
 “Article 24.- The Commission could consider that is notorious that a
concentration does not have as a purpose or effect to decrease, harm or
hinder the competition and free access to markets when:…
 The transaction implies the acquirer’s participation in the relevant
market for the first time. For this effects, the relevant market structure
should not change and the transaction will only imply the substitution of
economic agents. The involved agents in the concentration must not
participate in related markets and they should not be potential
competitors in the relevant market or in related markets…”
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 Resolution on concentration indexes: Federation’s Official Gazette
24.07.98
 “FIFTH. The Commission will consider that a concentration could
decrease, harm or hinder the competition and free access to markets,
when the indexes estimations fall under some of the thresholds referred
to in the immediate previous point, when the economic agents involved
in the concentration fall in any of the following cases:…
 5.3. Has or could obtain substantial power in relevant related
markets...”
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 COMMENTS
 AND WHAT ARE RELATED MARKETS?
THE CODE OF REGULATIONS DOES NOT PROVIDE WITH
ELEMENTS.
POSSIBLE EFFECT: DISCRETIONALITY
SUGGESTION: FCC ISSUES A PLENUM CRITERION.
Recent reference: Televisa-TVI and Televisa-Cablemás
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3.
EFFECTIVE COMPETITION

FLEC: “Article 7. To impose, pursuant to article 28 of the
Constitution, prices to products and services essential to the national
economy or popular consumption, it should be considered the
following:
I.
It is an exclusive right of the Federal Executive power to determine
through an executive order goods and services that could be abide to
prices [MAXIMUM], when there are not conditions for effective
competition in the relevant market. The Commission will
determine through a declaration if there are not conditions for
effective competition”.
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 FLEC: “Article 33 bis. When the laws and rulings expressively prevent
that should be resolved about effective competitions issues, market
power existence and other similar terms in the relevant market, the
Commission will issue ex-officio, by authority’s request or by request
of an affected party the corresponding resolution. Pursuant to article 7
of this Law, the Commission will only issue a resolution by the request
of the Federal Executive power. In all cases the following procedure
applies:
I.
In the case of request by affected party or by corresponding
authority, the petitioner must provide with information that enables
to define the relevant market and substantial power according
to articles 12 and 13 of this Law, as well as reasonable motives
about the need of issuing a resolution. The code of regulations of
this Law will establish the requirements for filing a request.”
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 CODE OF REGULATIONS
 “Article 55.- Pursuant to article 33 bis of the Law, the following
applies:
 I. A request by the correspondence authority or by an affected party,
according to section I, should include, amongst others, the following
information:…
 e) Elements allowing to define, pursuant to articles 12 and 13 of the
Law the relevant market and substantial market power or
competition conditions. These elements should be provided according
to the questionnaire that the Commission will issue and publish in its
Web site and in the Federation’s Official Gazette”.
 CHECK OUT THE QUESTIONNAIRE.
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Reference. Law, “Article 12. For the definition of the relevant market, the
following criteria should be considered :…[NO Regulated]
Reference. Law, “Article 13. To determine IF any economic agent has
substantial market power, should be considered:…
I. Its participation in that market…[Code of Regulations, Art. 11:
sales…]…
II. The existence of entry barriers…[Code of Regulations, Art. 12: financial
costs…]…
III. The existence and power of it competitors [NO Regulated]
IV. The possibilities to access… to input sources [NO Regulated]
V. Its recent performance [NO Regulation]
VI. Other criteria established in the Code of regulations of this Law
[Code of regulations, Art. 13: I Market Share in the relevant market; II.
Lack of access to imported goods; III. Costs differentials to turn to other
suppliers].
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
COMMENTS

AND, WHAT IS EFFECTIVE COMPETITION?

THE CODE OF REGULATIONS DOES NOT PROVIDE WITH
ELEMENTS REGARDING WHAT IS MEANT FOR EFFECTIVE
COMPETITION

POSSIBLE EFFECTS: DISCRETIONALITY / REGULATION
WITHOUT SUPPORT

SUGGESTION: FCC ISSUES A PLENUM CRITERION

Recent Reference: Declaration about LP Gas Markets
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4.
COPORATE RESCTRUCTURES
 CODE OF REGULATIONS
 “Article 26.- It is not necessary to file, pursuant to articles 20 and 21,
when the transaction falls under any one of the following
assumptions:…
 If the proposed transaction does not fall within the assumptions of this
article, or the corporate restructure is not filed on time and if the
involved agents did not file a previous concentration or a corporate
restructure notice, the benefit provided by this article will be lost and
the Commission should close the file; then the economic agents must
notify the concentration according to articles 20 and 21 of the Law,
without prejudice of sanctions pursuant to the Law”.
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 COMMENT
 IS ALSO LOST THE POSSIBILITY OF NOTIFYING ACCORDING
TO ARTICLE 21 BIS OF THE FLEC. (?)
 IT REMAINS SIMPLER THE TREATMENT OF CORPORATE
RESTRUCTURE ABROAD THAN OF THOSE ROOTED IN
MEXICO.
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5.
CONSULTATIONS
 FLEC: “Article 33 Bis 4. Any individual or moral person, as well as the
agencies and entities of the public administration, at the federal, state or
municipal level, could lodge to the Commission any consultation on
competition issues or free access to markets, the following applies:




I. A written submission
II. Information requirement (10 days); response (15 days).
III. FCC more data requirement (15 days), response (10 days).
IV. FCC will resolve (30 days after the reception of the information). If this period ends
and there is no resolution, it will be implied that the Commission does not have any
objection to the consultation.
 V. FCC CAN EXTEND “THE PERIOD REFERRED TO EACH OF
THE PREVIOUS SECTIONS UP TO SIXTY ADDITIONAL DAYS
[WORKING]”.
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 COMMENTS
 CIP 7 Consultations resolutions (20.08.98): “For the Commission
to be able to resolve consultations, these should be raised on real and
specific cases, providing with the relevant information for the analysis”.
STILL IN FORCE?
 EFFECTIVE PERIODS CAN BE TOO LONG, THEN THE
RESPONSE TO SUCH CONSULTATION MAY CEASE TO BE
PRACTICAL.
 THE CODE OF REGULATIONS DOES NOT TACKLE THE
POINTED ISSUES.
 SUGGESTION: FILE A CONSULTATION WRITTEN IN SUCH A
WAY THAT A TACIT APPROVAL MAY BE APPLIED.
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6. FINAL COMMENTS
 THERE IS NO CLARIFICATION OF THE FUNDAMENTAL
CONCEPTS FOR ECONOMIC ANALYSIS
 POSSIBLE EFFECT : DISCRETIONALITY
 SUGGESTIONS: PUBLICATION OF PLENUM CRITERIA ON:

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TYPES OF RESTRICTIONS TO THE MARKETS’ EFFICIENT
PERFORMANCE
PARAMETERS FOR MEASUREMENT OF THE EFFICIENCY OF
MARKETS
ELEMENTS TO DEFINE RELATED MARKETS
DETERMINANTS OF EFFECTIVE COMPETITION
FAST-TRACK RESOLUTION TO THE CORPORATE RESTRUCTURE
FILINGS
SHORTEN TIME FOR ANSWERING CONSULTATIONS
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