Member Article

In order to speed up the application in Mexico of the concept of “immunity” proposed in a recent bill containing amendments to the Federal Economic Competition Law (the “Law”), a full session of the Commission, on January 26, 2006, approved the “Internal Policies to Grant Immunity to Those Cooperating in Investigations of Monopolistic Practices.” The policy will work as follows: 1. Purpose of Immunity The immunity policy will only apply to monopolistic practices considered as “absolute” under the Law. These refer to certain agreements between competitors that, for the damage that may be caused in the Mexican market, are deemed to be illegal per se, that is to say upon proof that they exist and without further consideration of their effects, purpose or justification. By nature, the type of agreement referred to above is usually hidden and therefore difficult to prove. This has provoked the competition authorities in various countries to set up “immunity” programs to reduce or eliminate penalties otherwise applicable to those who participate in the conduct in question, provided they provide the authorities with evidence to prove the existence of the practice in the appropriate proceedings. 2. Immunity Program in Mexico In Mexico, the current Law does not contemplate the concept of “immunity” and therefore this was included in the amendments submitted to Congress on July 27, 2005. Until the amendments are passed, the Commission proposes to implement an “immunity” program as part of its internal policies. This will offer, in exchange for information and evidence of the absolute monopolistic practice being carried out: A. A reduction in the fine imposed for taking part in the conduct which, up to the time when the information is revealed, had not been the subject of a formal investigation by the Commission, to one daily minimum wage for the Federal District ($48.67 for the year 2006). Taking into consideration that the fine for such conduct can be greater than Pesos $18,000,000 (approximately US$1,710,000) for the company involved and Pesos $365,000 (US$35,000.00) for officials implementing the monopolistic practice, the reduction of the fine to one daily minimum wage effectively eliminates the fine. The measure is designed to provide an incentive to those taking part in monopolistic practices to reveal them to the Commission at a time when third parties still have no information about them and prior to the Commission beginning any formal investigation. Receiving the benefit is subject to meeting certain requirements such as admitting and stopping the conduct, as well as providing, before any other company, information and sufficient proof to be able to begin an investigation of the practice in question. B. In those cases where a formal investigation by the Commission has already begun, the amount of the fine may be reduced from 50% to 75%, depending upon the case, for the first participant to reveal the absolute monopolistic practice, 30% for the second, and 20% for subsequent informants. Again, the reduction is subject to both admitting and stopping the practice, as well as complying with certain other requirements such as providing material and relevant information and evidence about the practice. The application of this policy will no doubt result in questions with respect to its constitutionality, the appropriateness of the regulatory framework chosen for its implementation, and the level of certainty that can be offered to informants. For more information about this matter, please contact Amilcar Peredo, Ignacio Orendain or Sara Gutierrez Ruiz de Chavez, at our Mexico City offices, and at the following: [email protected], [email protected] and [email protected]