By: Sophia Lozano Chernitsky and Paola Salomón del Arenal
In Mergers and Acquisitions transactions, the Federal Antitrust Commission (Comisión Federal de Competencia Económica) (by its acronym in Spanish, “COFECE”) assumes an important role as the authority in charge of overseeing competition in Mexico and ensuring that transactions of this nature do not result in (i) the creation of market power, as occurs when few companies control the majority of the market, allowing them to influence prices and sale conditions; (ii) conditions that may jeopardize competition, such as creating barriers for new participants to enter the market or the elimination of important competitors; and (iii) harmful effects for consumers, such as increasing prices or offering lower quality products.
Article 61 of the Federal Antitrust Law (the “Law”) defines concentrations as the merger, acquisition of control or any act by virtue of which companies, associations, shares, membership interests, trusts or assets in general are united between competitors, suppliers, clients or any other economic agents.
In this regard and in accordance with the provisions of article 86 of the Law, concentrations that exceed the established thresholds must be notified and approved by COFECE, for which the authority has established an electronic concentration notification system for such purposes.
Pursuant to article 86 of the Law, all concentrations that meet the following thresholds and criteria must be authorized by COFECE before they are carried out and become effective between the parties and before third parties 1:
I. When the act or succession of acts that originate them, regardless of the place of their execution, directly or indirectly import in the national territory, an amount greater than MXN$2,036,520,000.00 (Two Billion Thirty-Six Million Five Hundred Twenty Thousand Pesos 00/100 National Currency);
II. When the act or succession of acts that originate them imply the accumulation of 35% (thirty five percent) or more of the assets or shares of an economic agent, whose annual sales originated in the national territory or assets in the national territory amount to more than MXN$2,036,520,000.00 (Two Billion Thirty-Six Million Five Hundred Twenty Thousand Pesos 00/100 National Currency); or
III. When the act or succession of acts that originate them imply an accumulation in the national territory of assets or capital stock in an amount greater than MXN$950,376,000.00 (Nine Hundred and Fifty Million Three Hundred Seventy-Six Thousand Pesos 00/100 National Currency); and the concentration involves two or more economic agents whose annual sales originating in the national territory or assets in the national territory, jointly or separately, amount to more than MXN$5,430,720,000.00 (Five Billion Four Hundred Thirty Million Seven Hundred Twenty Thousand Pesos 00/100 National Currency).
Therefore, the importance of COFECE and the role it assumes in promoting and guaranteeing economic competition in mergers and acquisitions is evident, since its function is to prevent, investigate, combat and eliminate monopolies and monopolistic practices that could affect both the market and the consumer.
1 Amounts calculated according to the Measurement and Update Unit (Unidad de Medida y Actualización) published by the National Institute of Statistics and Geography (Instituto Nacional de Estadística y Geografía) on January 10, 2025, whose daily value was established in the amount of MXN$113.14 (One Hundred Thirteen Pesos 14/100 National Currency).
References:
https://www.cofece.mx/que-hacemos-en-la-cofece
https://www.cofece.mx/wp-content/uploads/2018/06/cnt-concentracionesa_web.pdf
https://www.diputados.gob.mx/LeyesBiblio/pdf/LFCE_200521.pdf
https://dof.gob.mx/nota_detalle.php?codigo=5746930&fecha=10/01/2025#gsc.tab=0
