in a nutshell
On October 27, 2022, the Federal Economic Commission Investigative Office (COFECE) issued a notice initiating an investigation into the marketing of services related to credit card transactions. Allegations of absolute monopoly practices (or cartel practices), especially price fixing and the exchange of commercially sensitive information.
It is important to mention that the study did not include cardholders, only economic entities participating in the market under study. This means that in order to carry out such transactions, you need a payment system that allows it, a physical store with POS terminals, or a virtual store that offers the option of purchasing with this modality. Includes financial institutions that provide credit lines and related cards that enable interest-free purchases, payment clearing and payment services.
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- In these types of proceedings, it is common for antitrust authorities to request information from companies whose products and services are relevant to the market under investigation. If you receive a request for information from an antitrust authority, it is imperative that you comply with the request or the violating company will be fined.
- In some cases, antitrust authorities may require individuals presumed to have knowledge of fraudulent activity in the market under investigation, such as technical personnel of companies whose products or services are relevant to the market under investigation. or consider it appropriate to summon a manager.
- Mexican Antitrust Authorities Conduct Dawn Raids are authorized to do so. Interrupting or disobeying a Dawn Raid may result in fines and/or criminal penalties.
- If you receive a subpoena or request for information, or if your company has experienced a Dawn Raid, we recommend that you consult an attorney who specializes in antitrust and competition matters.
- The market under study includes products offered by financial institutions to their users (cardholders). Through this product, you can use your credit line to pay for goods and services. Payment for such purchases can be made on the next credit card due date or deferred until interest-free months (usually he is 6, 12, 18 or 24 months).
- Absolute monopoly practices are anti-competitive agreements, contracts, or arrangements between competing economic entities whose purpose or effect is to manipulate prices, market fragmentation, collusion, and/or Establishing a mechanism to limit supply in the market. Please note that any exchange of confidential business information between competing economic entities that could give rise to any of the above acts also qualifies as an absolute proprietary practice.
- Responsible economic entities can be fined up to 10% of their annual income in Mexico if absolute monopoly practices are proven to exist. In addition, individuals directly participating in and/or contributing to such illegal conduct may be subject to imprisonment of up to ten years.
- This investigation is not prejudicial and should be understood as an action by the authorities to ensure compliance with Mexican federal antitrust laws.
- This antitrust investigation was launched on April 29, 2022. The 120 business day investigation period shall be counted from the date the investigation period begins. Each period is 120 working days and the same period can be extended by him up to 4 times.
- On 26 October 2022, COFECE reaffirmed its commitment to keep financial markets as a key priority sector for competition authorities during Competition Day and in its strategic plan for 2022-2025.
- The financial sector is a priority given the services provided, such as interest-free monthly credit card purchases, are essential to running multiple economic activities. Moreover, while the sector produces a significant share of the country’s gross domestic product, digital financial services will impact the financial inclusion of Mexicans and facilitate access to credit for small businesses. According to the National Institute of Statistical Geography (INEGI), in 2021 the financial sector will generate he 3.8% of the country’s gross domestic product and 67.8% of the population were users of some kind of financial services.
