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10 December 2020
On 4 November 2020 the Federal Economic Competition Commission (COFECE) released a market study on the food and beverage sector (specifically, focusing on the 'modern channel' – that is, self-service stores). COFECE considered the study relevant since:
Through the study, COFECE:
COFECE identified the following main concerns:
Considering the concerns described above, COFECE issued the following recommendations:
COFECE's study identifies several relevant competition concerns in the food and beverages retail market. As stated before, this market has a lot of impact in the Mexican economy, given the portion of income that families spend on food and beverages and the number of jobs that the sector produces. Therefore, it is positive that COFECE has highlighted the main competition problems that this market experiences.
With regard to the market power that certain players might have, given that COFECE has already identified high market concentrations in certain regions of the country, it would be expected that the study would serve as a warning to the big players and that they would be particularly cautious in their conduct and with the type of contractual terms and conditions that they enter into in order to avoid potential complaints from suppliers or competitors and investigations by COFECE that could lead to penalties due to market dominance abuse.
With regard to the asymmetric power relationship between retailers and suppliers, it would be expected that efforts would be made to promote and improve the code, so that it would be an effective tool to prevent abuse by players with greater negotiating power.
Finally, in connection with the regulatory barriers noted by COFECE, it would be convenient if state and local authorities review their regulatory frameworks so that they generate better competitive conditions for the benefit of consumers and the public as a whole.
For further information on this topic please contact Lucía Ojeda Cárdenas, Felipe García Cuevas or Diego Hernández Aello at SAI Consultores SC by telephone (+52 55 59 85 6618) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The SAI Consultores website can be accessed at www.sai.com.mx.
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