December 03 2009
Several precedential decisions by the federal courts offer guidance on when an economic group can be considered a single economic agent for competition law purposes. The test is whether an individual or a corporation (i) coordinates, directly or indirectly, a group's activities in its operations in the market, and (ii) has decisive influence or control over the other entities in the group. Thus, it is essential to show that one entity within the group exercises influence over the rest and enables them to implement and coordinate their conduct in the market. The existence of such a relationship can be demonstrated by commercial, organizational, economic and legal links that indicate systems of control and coordinated behaviour between the relevant entities, thereby evidencing the coordinating entity's strategic influence and justifying the group's assessment as a sole economic unit.
If the Federal Competition Commission considers that illegal activities attributable to one entity were carried out by an economic group, it must show the link with the entity under investigation and demonstrate integration of the group. The entity under investigation is liable for a penalty unless it can show that its commercial strategy is determined independently, thereby proving that it does not belong to the group in question for the purposes of a competition law assessment.
If the commission has evidence of illegal practices by an economic group, it may assign liability jointly to the economic agents that decided to carry out such practices and to the agents that implemented the decision - typically, the decision makers' subsidiaries.
The Competition Law is silent on economic groups, but provides that economic agents which decide on an illegal practice and those which are directly involved are jointly liable. Therefore, the only legal consequence of a finding that an economic group exists is that its members may be held jointly liable. Nevertheless, the commission has used the economic group principle as a basis for requesting information from an entity in Mexico about all of the entities in its international group, thereby avoiding the need to issue information requests in other jurisdictions. If the Mexican entity refuses to divulge information about its parent company or affiliates, it may be difficult to enforce the request in court. However, if a company receives such a request, a case-specific evaluation will determine the advantages and disadvantages of initiating litigation to contest it.
For further information on this topic please contact Luis Gerardo García Santos Coy or José Ruíz López at Creel, García-Cuéllar, Aiza y Enríquez by telephone (+52 55 1105 0600), fax (+52 55 1105 0690) or email (firstname.lastname@example.org or email@example.com).
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Luis Gerardo Garcia Santos Coy
José Ruiz López