Merger Control 2013 by Latin Lawyer

Merger Control 2013 – Mexico LatinLawyer Reference

LATIN LAWYER THE BUSINESS L AW RESOURCE FOR LATIN AMERICA
Reference

Merger Control 2013 – Mexico
Ricardo Pons M, Juan Francisco Torres Landa R and Omar Guerrero R
Barrera, Siqueiros y Torres Landa, S.C.
Applicable legislation and the competent authorities (vii)
when the acquisition of shares or equity or participation in trusts is per-
1 What is the legislation applicable to merger control and how long has formed by one or more investment funds with speculative purposes only,
merger control legislation been in force? and have no other investments in companies or assets that participate or are
The basic statute is the Federal Law of Economic Competition (the FLEC), employed in the same relevant market of the concentrated agent.
and the regulations to the FLEC.
The provisions on merger control under the FLEC have been in force since The Regulations to the FLEC (which should be issued shortly), may include
June 1993, and suffered amendments through a reform effective as of June 2006, additional exceptions.
and more recently new amendments have entered into force on 11 May 2011. • ssumptions for the fast-track process. The parties in a filing may request
A
The basic changes affecting merger control under these recent amendments resolution through a fast-track process if it is proved that it is notorious
are the following: that the concentration will not have as its purpose or effect to reduce,
• xceptions to the filing obligations:
E damage or impede competition. The following assumptions are considered
(i) orporate reorganisations, where the economic agents belong to the
c as those notoriously not having as its purpose or effect to reduce, damage
same controlled economic group, and no third party participates in the or impede competition: (i) if the transaction implies the first participation
concentrations; of the purchaser in the relevant market. To this end, the structure of the
(ii) n the event the holder of shares, or equity units or equity parts increases its
i relevant market should not be modified and it should only involve the
relative participation in the capital stock of a company controlled by such substitution of the economic agent; (ii) if before the transaction, the pur-
holder since incorporation or since approved by the Federal Competition chaser holds no control of the acquired agent, and with the transaction, it
Commission (the FCC); increases its relative participation in such agent, without having additional
(iii) hen creating administration or guarantee trusts, or any other, where the
w power to influence the operation, management, strategy and main policies
contribution of assets or shares has no purpose or consequence of transfer- of the company, including the appointment of members of the board and
ring such assets or shares to a different company. The execution of a guar- managers; (iii) if the purchaser has the control of a company and increases in
antee trust, however, must be notified if the filing thresholds are met; relative participation in the capital stock of such company.The Regulations
(iv) cts on shares performed abroad, related with non-residents in Mexico for
a
to the FLEC may include additional assumption for the fast-track process.
tax purposes, as long as the companies involved do not acquire the control • he obligation for the FCC to issue guidelines concerning market defini-
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of Mexican companies, nor accumulate in Mexico shares, equity or assets in tion, market power, imposition of fines, among other factors. These guide-
general, in addition to those already possessed, directly or indirectly, before lines should be issued shortly.
the transaction; • ollective dominance in the analysis of monopolistic practices, which will
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(v) when the acquirer is a variable income investment firm (sociedad de inver- likely play a role in merger control.
sión de renta variable) and the transaction has as its purpose the acquisition • ubstantial increase in fines. In particular, (i) failing to notify a transaction
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of shares or other instruments with resources from the placement with the (up to 5 per cent of income of the economic agent involved); (ii) in the
public of shares representing the capital stock of the investment firm, except event of prohibited concentrations (up to 8 per cent of income of the eco-
when, as a result of the operations of the investment firm, it may have a nomic agent involved); (iii) not complying with undertakings imposed (up
significant influence in the decisions of the concentrated economic agent; to 10 per cent of income); and (iv) failing to comply with freeze or stop
(vi) n the acquisition of shares, equity or other documents representing (directly
i orders (up to 8 per cent of income of the economic agent involved). The
or indirectly) the capital stock of companies listed on a stock exchange foregoing, in addition to other penalties (such as total or partial divestments),
in Mexico or abroad, when the acts or successive acts do not allow the which were already in place, before these amendments.
purchaser to hold 10 per cent or more of such shares, equity or other • urprise verification visits in the event of an investigation of prohibited
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instruments, and, in addition, the purchaser has no authority to (a) appoint concentrations.
or revoke members of the board of directors, or managers of the issuer, (b) • ew judicial appeal process.The amendments call for a new appeal process
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impose, directly or indirectly, decisions in stockholders meetings or similar before federal courts. This process is known as the ordinary administrative
bodies, (c) maintain the holding of rights allowing it to, directly or indirectly, trial, which basis and procedural rules are still yet to be issued.This new pro-
exercise the vote of 10 per cent or more of the company in question, or ceeding will be followed before courts and judges specialised in economic
(d) instruct or influence, directly or indirectly, the management, operation, competition matters. The resolutions issued as a result of this new process
strategy or the main policies of a company, whether through ownership, will be reviewed through constitutional amparo action.
through contract or in any other manner; and

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LatinLawyer Reference Merger Control 2013 – Mexico

New Regulations to the FLEC are expected for 2013.These Regulations should before the FCC. The FCC confirmed its original resolution not approving
clarify certain procedural aspects of the merger control process, as well as the the transaction. The parties made a new filing which was approved with
application of the exceptions to the filing obligations set forth above. conditions imposed.
• exicana de Aviación/Aeroméxico (file CNT-101-2007).The problematic
M
2 there any additional sector- or industry-specific merger regulation
Is markets where those of air travel routes. The parties walked away from the
legislation? (Is there, for example, in the energy, banking or telecom possible transaction.
sectors, legislation or regulation requiring notification or otherwise • oca-Cola FEMSA and The Coca-Cola Company/Jugos del Valle (file
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allowing a sector regulator to intervene? Is there an overlap in CNT-12-2007). Portfolio combination of sodas, juices and other beverages
jurisdiction with the general competition agency?) where deemed problematic. The parties negotiated conditions on appeal.
Specific sectors, such as financial institutions, and insurance, or for the transfer • elevisa/Iusacell (file RA-043-2012). Although this concentration mainly
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of concessions in the telecom industry, for instance, do require authorization referred to mobile telephony, the FCC raised concerns on related TV mar-
from other regulatory authorities. However, these authorizations do not over- kets, as the companies involved are both engaged in the open and restricted
lap with those of the competition authority. In addition, for certain sectors or TV markets. The parties negotiated conditions on appeal for approval.
specific circumstances, authorization from the foreign investment authorities
may also be required. 7 With respect to notifiable transactions that raise no obvious
competitive concerns, what is the expected time frame from
3 parties that are required to file notification of a transaction pre-
Are notification to approval?
closing obliged to not close their transaction pending regulatory Between five and eight weeks.
review?
Yes, if the FCC issues a “freeze order”. Under the FLEC, the FCC is authorised 8 With respect to notifiable transactions that raise obvious competition
to issue a resolution ordering the parties to refrain from closing the transaction concerns, what is the expected time frame from notification to a
until approval. This “freeze order” needs to be issued within 10 business days decision?
following the date of the filing. If this order is not issued, the parties may close This is very case-specific, but it ranges between two and eight months for very
the transaction “at their own risk”, which basically means that although the complex matters.
parties may close, the FCC retains its authority to challenge the transaction or
impose conditions. “Freeze orders” have been normally issued in transactions Notifiable transactions: thresholds
with horizontal overlaps, even if the combined market shares are relatively low. 9 Which types of transactions must be notified?
However, this does not occur in every case. Concentration reaching the statutory thresholds must be notified. The FLEC
The freeze order remains in force until the authority issues its final resolu- defines concentrations very broadly including any merger, acquisition of control
tion. In some cases, this may be over six months like in the Mexichem-Cydsa or any other act whereby corporations, associations, shares, equity parts, trusts or
transaction, where the process took over 10 months counting the approval of assets in general are joined by and among competitors, suppliers, clients or any
divestments and conditions and the process to complete them. other economic agents. Therefore, this definition includes joint ventures, and
acquisition of non-controlling interests, or similar commercial arrangements.
4 Where pre-closing notification and approval is required, can a Acquisition of non-controlling shareholder may be exempted from filing obliga-
transaction that has been approved be challenged after closing? Has tions, as described in response to question 1.
this ever happened? As to licensing of intellectual property rights, if a strict interpretation of the
Yes, a transaction may be investigated and challenged after it has been approved definition of concentration is made, the licensing of a patent, for instance, may
only (i) when the approval was obtained based on false information; or (ii) when also be considered as a concentration. Patent licensing involves the granting of
approval was subject to conditions to be complied after closing, and those condi- the right for licensee to use or exploit the patent for a specific period of time in a
tions are not complied with in terms of the corresponding resolution. particular territory. Personal rights under Mexican law (such as a patent licence)
To our knowledge, the FCC has not challenged to date any transactions for are considered moveable goods (assets, if defined from an economic standpoint).
which express approval has been granted. As mentioned before, the FCC considers as a concentration, among others, the
acquisition of control (without making reference as to whether this control is
5 Who are the authorities responsible for merger enforcement and temporary) of assets. Notwithstanding the foregoing, we have no knowledge of
how is responsibility for investigation and decision-making allocated any filing made to the FCC of a licensing agreement.
between authorities or within an authority? Similarly, if one makes a strict interpretation of the definition of a concen-
The FCC is the authority in charge of competition merger enforcement. Deci- tration, a long-term supply agreement may be considered as one if, as a result
sion is made by the Plenum of the FCC, which is composed of five commission- thereof, one of the parties acquires control of the other. However, it would not
ers. With respect to merger filings, the analysis is made by the Concentrations be easy to make such an argument, and as far as we know, no filing has been
General Direction, which is part of the FCC, although it is supervised by the made to the FCC of a supply agreement as a concentration. This needs to be
Executive Secretary, not the Plenum. The Concentrations General Direction reviewed on a case-by-case basis.
issues an internal report to be used by the commissioners upon adopting a final
decision. 10 Where change in control is part of the test, what is the standard
for defining control and changes thereof for pre-merger notification
Time frames purposes
6 Identify the last three times merger control legislation was used to Change of control is considered a concentration. However, knowing that the
prohibit a transaction, and for each, provide the ultimate outcome. definition of concentration is so broad, which includes any acquisition of assets
• exichem – Cydsa / acquisition of shares of Plásticos Rex (file CNT-093-
M or shares even when not granting control, the FCC has not reviewed a concen-
2008). The FCC raised concerns on the PVC tubes market. The decision tration solely as a result of a change of control.
was appealed before the FCC. The FCC confirmed its original resolution Notwithstanding the foregoing, the FCC, as well as the Supreme Court of
not approving the transaction. The parties made a new filing which was Justice of the Nation has discussed the notion of control upon analysing the
approved with conditions imposed; term “economic agent” and “economic group of companies” for purposes of
• exichem – Cydsa / acquisition of shares of Policyd (file CNT-091-2008).
M competition law, considering both legal and de facto control. In this regard, the
The FCC raised concerns on the PVC resins. The decision was appealed Supreme Court made reference to different circumstances to define whether or

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not a person has a decisive influence. This may be the case, if a person acquires only requires basic information such as general corporate and financial informa-
the majority of the shares of a company, if it has the authority to manage a tion of the parties and a description of the transaction.
company or the authority to appoint the majority of the members of the board, Cases involving horizontal overlaps would need to include economic analy-
among others. This may serve as a guideline for future merger cases. The fil- sis vis-à-vis market definition, market share data, and barriers to entry, among
ing exceptions included in the May 2011 amendments may also provide some others. Preparation for very complex filings may take several weeks, as it may
guidelines as to when the FCC would consider that control does not exist. require substantial market definition, barriers and market power analysis.
The webpage of the FCC includes a guide for concentration filings that
11 What thresholds apply for determining whether a transaction must be describes general information and suggestions with respect to the process and
notified data to be provided.
The FLEC provides that there are certain concentrations that are subject to
notification before the FCC, prior to their closing.These concentrations include 16 When must notification be made? Is there a triggering event that
those falling under any of the following thresholds: requires a filing to be made within a specified period?
• hose transactions involving an act or a series of acts, regardless of the place
t Filing must be made prior to closing or prior to acquiring control (including
of execution, amounting in Mexico the equivalent of 18 million times the de facto control). For transactions carried out abroad, the filing must be made
minimum general wage in force for the Federal District or more; before the concentration has legal or material effects in Mexico.
• ransactions involving an act or a series of acts with an accumulation of at
t With respect to mergers, according to the Regulations to the FLEC, the
least 35 per cent of the assets or capital stock of an economic agent, whose filing must be made prior to executing the merger agreement. In practice, the
assets in Mexico or annual sales originated in Mexico involve more than FCC has raised no concerns on filings made after the merger agreement is
the equivalent to 18 million times the minimum general wage in force for executed, provided closing is subject to the FCC’s clearance.
the Federal District; or When there is a succession of acts, the filing must be made prior to perfect-
• ransactions involving an act or series of acts with an accumulation in Mex-
t ing the last act triggering the threshold.
ico of assets or capital stock higher than 8.4 million times the minimum In any event, the parties cannot complete or close the transaction within
general wage in force for the Federal District, and the transaction involves the 10-day period following filing. This is to allow the FCC to issue a “freeze
the participation of two or more economic agents with assets or annual sales order” if considered appropriate for each specific case.
(worldwide), jointly or separately, of 48 million times the minimum general
wage in force for the Federal District. 17 When must notification be made with respect to acquisitions of
convertible non-voting securities or options?
The first two thresholds are referred to the target’s assets located in Mexico, tar- Considering the broad definition of a concentration, acquisition of non-voting
get’s companies with direct operation in Mexico (mainly Mexican subsidiaries securities would require notification, if any of the referred statutory thresholds
or branches) or target’s sales originated in Mexico. The third threshold, consid- is met, provided that the acquisition does not fall in any of the filing exceptions
ers a combination of sales or assets of the parties worldwide, and an additional explained on response to question 1. In the case of options, it may be seen in
accumulation of assets or sales in Mexico of the target company only. two different ways: (i) there would be no obligation to file until the option is
There is no filing obligation if the target or seller company has no presence exercised, as the option itself does not represent equity; or (ii) that the option, as
(assets and sales) in Mexico. However, there is no de minimis doctrine. If any a right to sell or buy equity, is itself an asset, and as such, when acquired, if the
of the thresholds is met, then the transaction must be filed, even if one of the asset value of the thresholds is met, it may be subject to filing. This would need
parties has insignificant presence or sales in the country. to be analysed on a case-by-case basis.
Economic groups are indeed considered for purposes of the threshold. As
mentioned for the response to question 10, the concept of economic group has 18 Where there is an obligation not to close the transaction pending
been analysed for competition law purposes, considering both legal and de facto review, is there any alternative available to allow closing before formal
control of companies, and the common goal and direction of each of them. clearance?
Formally speaking, the FLEC does not provide for an alternative. In practice,
12 what conditions must transactions between foreign companies be
In we have seen discussions in several cases to execute a hold separate agreement
notified? with respect to Mexico, where the parties would not give material effects to the
If a transaction between foreign companies involves the indirect acquisition international transaction in Mexico until the FCC issues its resolution.
of Mexican subsidiaries or assets located in Mexico, the transaction must be However, in discussing this issue with the staff of the FCC, they have con-
notified, provided any of the referred statutory thresholds is met. An indirect firmed (i) that this is not an alternative that the FCC wishes to pursue; and (ii)
acquisition is deemed to exist if, for instance, a company abroad is acquired, and if this is done, the FCC may consider this approach a violation of the “freeze
the acquired company has subsidiaries in Mexico. order”.

Notification procedure, timing and penalties for non-compliance 19 What is the timeline for review and clearance?
13 Who must file the notification? Normal process. The FCC must issue its resolution within 35 business days
The general rule is that a joint filing is required. However, the Regulations to counted from the date of receipt of the notification or the submission of the
the FLEC allow for the acquirer to make the filing independently when: (i) the additional information requested by the FCC. If the FCC has not issued a
other party is unable to do so (legally or de facto), and this is proved to the FCC; resolution at the end of this term, it shall be understood that the FCC has tac-
or (ii) when a simplified filing is made (please see question 19). itly approved the proposed transaction (afirmativa ficta).The period mentioned
above may be extended once in exceptional cases for another 40 business-days.
14 there filing fees?
Are In practice, the FCC normally issues requests of information, which inter-
Currently, no filing fees are required. rupts the 35-day term. Requests of information are made in two different
stages: (i) within five business days from filing, the FCC may issue a request of
15 there a standard form? How long does it take to prepare a filing?
Is basic information, granting the parties another five business days to respond;
What type of information is generally required? and (ii) within 15 business days following filing (if no basic information request
Currently there is no standard form. The length on the preparation of the fil- has been made), or following the date the parties submit the basic informa-
ing depends on the complexity of the case. For simple filings with no obvious tion requested by the FCC, the FCC may request additional information. This
competition concerns, a filing may be prepared in as short a time as a week, as it second request of information normally involves data required for substantive

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analysis. The FCC grants 15 business days to respond, although extensions to Please refer to question 19 for details on these requests and the effects on tim-
this term are common. ing to resolve. Requests of information are normally made to the parties, but
In complex cases, the FCC would normally extend the term to resolve for in complex cases third parties such as competitors, suppliers or clients may be
an additional 40-business-day period. requested to produce information that the FCC deems required to complete
Fast track: the FLEC provides for a fast-track process if the parties prove to its analysis.
the FCC that it is notorious that a concentration does not have as its purpose In addition to the filing process, the FCC may investigate concentrations
or its consequences to have the effect of diminishing, damaging or impeding which purpose or effect may be to reduce, damage or impede competition.
competition. In these cases, the FCC must resolve the filing within a term of These investigations may be initiated:
15 business days from the date the FCC formally acknowledges receipt of the • ithin one year from closing, if the transaction was not subject to filing;
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filing through a resolution (which must be made within five business days fol- • ithin five years, if the transaction was subject to filing, but the parties failed
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lowing the date of the filing). to make the filing; or
The response to question 1 describes those cases eligible for the fast-track • ithin five years if clearance was obtained through false information, or if
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process. the parties fail to comply with conditions imposed by the FCC.
Contacts with the authority are common prior to actually making a notifi-
cation and during the process. Contacts will depend on the confidentiality and During this investigation process, the FCC may request information to the
complexity of the transaction, but the authority is open to these discussions. parties or third parties, and request interviews with key officers. In addition, the
FCC may preform surprise (unannounced) verification visits.
20 there post-clearance obligations imposed on the parties for a
Are
clearance decision to remain valid? 26 there confidentiality rules to protect sensitive proprietary
Are
Resolutions clearing a transaction include a term of three months. Therefore, information provided to the authority and what procedure must be
closing must be made within that three-month term. In practice, this term can followed for confidentiality to apply?
be extended, and it normally is extended when justified to the authority. The FLEC allows the parties to classify information as confidential. The infor-
In addition, once the transaction closes, the parties must file the documents mation is considered as confidential if; disclosed it may harm the competitive
evidencing closing within a term of 30 business days. If clearance is subject to position of the party providing it; or if the information involves personal data
conditions, the parties must evidence completion of the conditions within the which disclosure requires consent or risks the safety of the person involved, or
specific terms provided under the resolution. if disclosure is legally prohibited.
To this end, the information is classified as confidential when the party
21 there a simplified notification procedure with accelerated review
Is providing it expressly requests this classification, proves that the information is
periods? What type of transactions qualify? of a confidential nature and provides a summary of the information. If the con-
Please refer to the fast-track process explained in question 19. fidential information cannot be summarised, the party in question is required
to explain why a summary cannot be provided.
22 there special rules applicable for public takeover bids, private
Are
equity transactions or for corporate restructuring under bankruptcy 27 notification and its content publicised?
Is
procedures? The notification itself is not publicised. However, whenever there is an interim
The only exemptions of the filing obligations are described in response to resolution (eg, a request of information or a freeze order) during the process,
question 1. the file number and the name of the parties are listed in the website of the FCC.
Once the filing process has concluded, third parties may have access to the
23 Can the authority be consulted on a no-names basis for guidance on file, except for confidential information.
notification requirements? Is this practice useful? In addition, a public version of the final resolution is published at the FCC’s
Yes. This is very common and useful, as it provides the interpretation that the website. In some cases, the FCC has issued press releases on the general aspects
FCC normally follows.The General Concentrations Direction is open to discuss of a resolution.
notification requirements informally. However, it is important to note that the
FCC is not bound by the informal consultations. 28 there agreements in place to exchange information with foreign
Are
competition authorities? Must the authority seek a waiver from the
24 What are the risks if the parties do not file, if the transaction is closed transaction parties to disclose confidential information submitted in
before clearance or if notification is untimely? What penalties can be their filing?
imposed and on whom? What is the highest fine imposed to date for The FCC has executed cooperation agreements with authorities in other juris-
failure to file? dictions, including the US, Europe, South Korea, Canada and others. The FCC
Failing to file a transaction reaching the thresholds or violating a freeze order, must seek waiver from the parties to disclose confidential information to foreign
may result in significant fines for the parties, as described in response to ques- authorities.
tion 1. In addition, if during the investigation process it is determined that the
transaction is a prohibited concentration, additional fines may be imposed, as 29 a matter of practice, how do the authorities investigate a
As
well as conditions (eg, undoing of specific legal acts) or the order to divest or transaction? Whom do they consult? What weight, based on your
unwind the corresponding concentration. experience, does the authority give to the information provided?
Penalties may be imposed to both parties under the transaction, as well as The FCC commences the analysis with the information included in the filing.
to those individuals ordering or executing the transaction. With this initial analysis, the FCC determines whether additional information
from the parties is required. At the same time, the FCC may request information
The review process, confidentiality and the role or influence of third from third parties, including competitors, clients, trade associations, suppliers and
parties authorities within the country that may have any knowledge of the market or
25 What are the investigative powers of the authority? the parties. Informal requests are also common, for the FCC to confirm infor-
There are two processes under which the FCC may investigate concentrations. mation provided by the parties or to have a better grasp of the market dynamics.
The filing process, and the investigation of concentrations which purpose or There is extensive informal exchange of information with merger control
effect may be to reduce, damage or impede competition. authorities abroad, mainly with authorities in the US and the European Union.
During the filing process, the FCC may request additional information.

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30 What rights do third parties such as competitors, suppliers or 37 what extent are economic efficiencies and non-competition issues
To
customers have to intervene and participate in the investigation taken into account in the review process?
process, including rights to access the investigation file? Economic efficiencies are an integral part of the analysis. However, the parties
During the filing process, third parties are not allowed to participate. According have the burden to prove efficiencies. If the parties do not argue efficiencies
to the Regulations to the FLEC, a claim by a third party challenging a con- during the process, the FCC will not include them as part of the analysis. The
centration which has been filed, but not resolved, must be dismissed. However, analysis is based only on competition issues.
the economic agents may assist the FCC by submitting data and documents
that they consider relevant to the case. In addition, the claimant does not have 38 Can remedies be negotiated, and, if so, at what stage in the process?
access to the file. How are they enforced?
Notwithstanding the foregoing, at least in a couple of cases (Televisa/Radio Remedies can be negotiated during the process, prior to the FCC issuing a
Acir and Ferromex/Ferrosur), third parties have been able to intervene in the resolution. In fact, the Regulations to the FLEC specifically allow the parties
process as a result of constitutional control proceedings (amparo) before federal to propose remedies until the day after the matter is listed for discussion by the
courts, claiming that the articles that based the dismissals were unconstitutional Commissioners. The appeal process before the FCC also allows for the parties
as they violated fundamental due process rights. to negotiate remedies.
On the other hand, third parties may file claims requesting the FCC to The FCC prefers to impose structural remedies, rather than behavioural.
investigate alleged prohibited concentrations, only if these have not (or are not) Structural remedies are easy to enforce, as the FCC requires the parties to file a
the subject matter of a filing. divestment programme, and report on compliance. Considering this, behavioural
remedies are less common, but in some instances have been imposed. Enforce-
31
Can third parties appeal clearance decisions, and has this ever ment of behavioural remedies has included the appointment and report of inde-
happened successfully? pendent auditors, strict policies as to exchange of information between officers
Under the filing process, third parties cannot appeal clearance decisions. or directors, or the filing by the parties of documents evidencing compliance.

32 a transaction that appears to raise competitive concerns, is it
In 39 How common are negotiated remedies? Can negotiated remedies be
recommended to consult the authority prior to filing and, if so, why? challenged by third parties?
This needs to be assessed on a case-by-case basis. Sometimes it may be a good Remedies are commonly negotiated with the FCC. The FCC would normally
idea to consult with the authority as to how they prefer for the parties to submit advise the parties on concerns related with the transaction, and the parties would
information to facilitate the review. address those concerns by either clarifying information, or proposing remedies.
Third parties, on the other hand, are not allowed to challenge remedies, as they
33 Does the authority and its staff share its concerns about a transaction are not part of the filing process. Please refer to questions 30 and 31 for a discus-
with transaction parties at each stage of review? How can parties sion on third-party rights.
productively participate in the evaluation and decision processes?
Both the comissioners and the staff of the FCC would normally share their 40 there a vehicle for reconsideration by the authority of its
Is
concerns during the review process.This method allows for the parties to submit decision? If so, please describe and provide recent examples where
additional information or clarifications to address the concerns of the staff or reconsideration led to a revised outcome.
even propose conditions for the transaction to be cleared. FCC’s decisions may be appealed through a reconsideration recourse followed
before the FCC. Remedies are often negotiated during this appeal/reconsidera-
Substantive analysis and remedies tion process. For instance, the Coca-Cola Company- FEMSA/Jugos del Valle
34 there published guidelines for merger analysis?
Are transaction was rejected during the filing process, but remedies were accepted
A set of guidelines is published in the website of the FCC (www.cfc.gob.mx). in the appeal resolution. A similar outcome was recently witnessed for the Tel-
However, the FCC is likely to change these guidelines as a result of the recent evisa/Iusacell transaction, where the FCC accepted certain remedies during
amendments to the FLEC. the appeal stage.

35 What are the prevailing theories of competitive harm and analysis, and Judicial review
how are they typically applied? 41 Can a decision from the regulator be appealed and if so what is the
The FCC focuses on different aspects. First, on the combined market shares timetable for judicial review to take place?
of the parties and whether the acquirer, as a result of the transaction, will have Resolutions of the FCC may be appealed through (i) reconsideration recourse,
the ability to raise prices, or substantially restrict output, without competitors, before the FCC; or (ii) through the ordinary administrative trial (which proce-
actually or potentially counteracting such ability. dural rules are yet to be issued) before the federal courts. The term for a final
Second, the FCC would analyse whether the transaction may have an and definitive decision varies from case to case, but it may range from two to
exclusionary purpose or effect. To this end, the FCC analyses both the relevant seven years, or more.
and related markets.
Third, the FCC would look into whether the transaction may have as its 42 What has been the most important challenged decision in the past
purpose or effect to substantially facilitate the commission of a monopolistic five years that has been overruled and how often generally do appeals
practice (whether horizontal cartels, or vertical restraints). result in reversal?
There have been very few merger cases judicially reviewed. Probably the most
36 there safe harbours and what are they
Are relevant recent case was the proposed acquisition by Gruma of Agroinsa involv-
A transaction with no horizontal or vertical overlaps should be cleared without ing different flour markets for tortilla production.The FCC objected the trans-
any questioning by the authority (except, maybe, with respect to limitations action, but notified the resolution one day after the term to resolve had elapsed.
to non-compete provisions). In addition, transactions where combined market The Supreme Court determined that the FCC failed to notify the resolution
shares are lower than 30 per cent should not raise any concerns, but must be in time, and thus the transaction was deemed as tacitly approved without any
analysed on a case-by-case basis. conditions.
Another example is the Ferromex/Ferrosur merger, involving railroad
transportation.

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In addition, the resolution involving the Televisa/Iusacell transaction is also Case law
currently subject to judicial review, and is still outstanding. 44 Briefly highlight any notable merger control decisions rendered over
the past twelve months.
43 When reviewing decisions from the competition authority, do courts Without a doubt, the most relevant case resolved during the past year is the
restrict themselves to procedural aspects, or can they review the acquisition of control by Televisa of shares representing the capital stock of Iusa-
substance of the authority’s analysis? cell (telecommunications company owned by rival TV company TV Azteca).
The federal courts only have jurisdiction to hear cases based on constitutional The FCC approved the transaction, on appeal, imposing several conditions
challenges filed against the rulings issued by the FCC after the administrative mostly related with the open and restricted TV markets.
appeal process has been exhausted, if the parties have elected to follow the
administrative appeal. While these jurisdictional rules may change based on 45 Update and trends
the new ordinary administrative trial, the current process allows the federal The FCC’s resolutions are increasingly using economic analysis. As transac-
courts to only examine the specific claims by petitioners concerning violations tions increase their complexity, analysis is becoming much more thorough and
to the Constitutional Bill of Rights, mainly related to due process and proper sophisticated. For this reason, competition practitioners usually involve teams of
interpretation of the law. It is not uncommon for federal courts to try and find legal and economic advisers working in tandem. In addition, analysis of verti-
for petitioners on procedural grounds to remand for the FCC to replace parts cal effects of concentrations is increasingly becoming more important in the
of the original investigation or proceedings. However, federal courts have also merger review process.
had to analyse the full merits of a complaint and thus analysed and ruled upon Finally, the FCC is focusing its attention to justification of non-compete
the fundamental status and constitutional consistency of the FLEC, in some provisions, and restricting possibilities of interlocking directors.
cases deciding that either the FCC violated due process principles or that the
FLEC had provisions that are incompatible with the Constitution and were thus
removed from possible legal application.

Barrera, Siqueiros y
Torres Landa, S.C.
Ricardo Pons M
rpm@bstl.com.mx
Juan Francisco Torres Landa R
jftl@bstl.com.mx
Omar Guerrero R
ogr@bstl.com.mx

Paseo de los Tamarindos #150-PB
Bosques de las Lomas
05120 México, D.F.

Tel: +52 55 5091 0166
Fax: +52 55 5091 0123

www.bstl.com.mx

–6–

Merger Control 2013 by Latin Lawyer

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