Introduction
The Federal Law on Economic Competition entered into force on July 7 2014. According to Article 53 of the law, information exchanges between competitors may constitute an absolute monopolistic practice where they have any of the following anti-competitive purposes or effects:
- fixing prices;
- reducing output;
- allocating markets; or
- coordinating biddings.(1)
Absolute monopolistic practices are illegal per se and can trigger criminal liability. In this regard, the law is unclear as to what or how information may be exchanged between competitors without incurring risks.
Following a public consultation, in December 2015 the Federal Economic Competition Commission (FECC) issued guidelines on the exchange of information between economic agents. The guidelines aim to clarify the elements that the FECC will consider when evaluating information exchanges and allow economic agents to determine with greater certainty whether their exchanges of information are permissible. The recommendations contained in the guidelines are particularly relevant when exchanging strategic information, such as information relating to:
- prices and discounts;
- costs;
- inputs;
- production and commercialisation strategies;
- sales;
- stocks;
- lists of clients or suppliers;
- market share; and
- investments for expansion.
The FECC recognises that access to this type of information may facilitate coordination between competitors, as it eliminates uncertainty, exposes the actions of the economic agents involved and allows them to monitor their behaviour and detect deviations from collusive agreements.
The guidelines identify the following scenarios in which information exchanges are common and often necessary,(2) but nevertheless potentially risky:
- activities of trade associations and chambers of commerce;
- evaluation of mergers;
- conclusion of joint ventures and cooperation agreements; and
- sharing of directories.
The guidelines recommend that the exchanged information be aggregated so that it is impossible to identify the specific information of each competitor. Moreover, the guidelines note that an exchange will pose less risk where it involves more historical information and is undertaken sporadically, so that it does not increase market transparency or facilitate the prediction of competing economic agents' future commercial conduct. Finally, the guidelines suggest that economic agents establish mechanisms to restrict access to the information being exchanged and preferably encourage the involvement of independent third parties.
The following chart summarises the recommendations contained in the guidelines.
Click here to view table.
Despite the above recommendations, the guidelines highlight that the risks arising from an exchange of information between competitors vary depending on the relevant market structure. Such an exchange is particularly risky where it involves concentrated or static markets, homogeneous goods or services, or asymmetric competitors. Thus, it is impossible for the FECC to be more precise in its recommendations; a proper analysis of the purpose and effects of information exchanges must be undertaken on a case-by-case basis. For this reason, the guidelines urge economic agents to seek advice before entering into potentially risky exchanges of information.
For further information on this topic please contact Lucia Ojeda Cardenas at SAI Consultores SC by telephone (+52 55 59 85 6618) or email ([email protected]). The SAI Consultores website can be accessed at www.sai.com.mx.
Endnotes
(1) Absolute monopolistic practices are penalised by the FECC with a fine of up to 10% of the involved undertakings' annual income.
(2) The exchange of strategic information between competitors is justifiable to the extent that it is strictly necessary to pursue a legitimate goal and to facilitate efficiency gains and consumer benefits.
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