Antitrust Litigation 2022 Comparisons

In Mexico, there are two competition authorities:

• the Federal Telecommunications Institute (IFT, after its acronym in Spanish), for the telecommunications and broadcasting sectors; and
• the Federal Economic Competition Commission (COFECE, after its acronym in Spanish), which is the competition authority for the remaining sectors.

The Federal Economic Competition Law (FECL) governs both authorities.

It is also relevant to clarify that, in Mexico, the competition process is twofold. First, the investigating authority investigates either an absolute monopolistic practice (collusive conduct), a relative monopolistic practice (abuse of dominance), or an unlawful merger; and after the conclusion of said investigation, a second procedural stage, which is like a judicial proceeding (a trial-like proceeding), may begin.

The trial-like proceeding takes place when the competition authority believes that there are sufficient grounds to presume that the investigated economic agents executed or participated in anti-competitive conduct or an unlawful concentration. The trial-like proceeding may conclude with the imposition of penalties on the investigated economic agents. Those penalties may be challenged before federal courts through a constitutional trial (amparo indirecto).

Any reference to litigation in the antitrust field can be understood as a two-tier mechanism:

• first, litigation in the trial-like proceeding, which refers to the defence of the accused economic agents before the national competition authority (NCA); and
• second, a constitutional trial before the federal courts on behalf of the penalised economic agent to challenge the NCA’s final resolution.

Both levels of litigation are continually active in Mexico. On one hand, over the past number of years, COFECE has been increasingly active in penalising anti-competitive conduct; on the other hand, economic agents have also been continually active in challenging those sanctions before the courts.

According to the “2020 Fines Report” issued by COFECE, in 2020 COFECE imposed 191 penalties for a total amount of MXN1,148.78 million. A total of 115 of those 191 penalties were imposed for infringements of the FECL. According to the report, until January 2021, 54 out of 191 penalties were challenged and 82 were pending payment or were not final. These numbers mean that at least ¼ of the total penalties imposed in 2020 were challenged and this provides an overview of the level of litigation against COFECE’s decisions. This report is the most up-to-date fine report as of the date of this publication. There is no equivalent report by the IFT.

Two of the most relevant cases decided by COFECE in 2021 are the following decisions on cartel conduct.

• Investigation IO-002-2018 into collusive conduct in the soccer players' transfer market. In this case, COFECE penalised 17 Mexican soccer clubs and eight individuals for their responsibility in conducting absolute monopolistic practices, and for facilitating such conduct, in the Mexican Soccer Federation. The total fine amounted to MXN177.600 million. The clubs were sanctioned for inhibiting competition in the soccer player transfer market through two forms of conduct: (i) a price agreement to impose caps on the salaries of female soccer players, and (ii) a collusive agreement to divide the male soccer players' market for the purpose of limiting the competition of clubs in the hiring of players. One of the novel features of this case is that it is the only case related to no-poaching agreements processed by COFECE to date.
• Investigation number IO-001-2016 into collusive conduct in the drug distribution market. In this case, COFECE penalised four drug distributors and 21 individuals who participated on their behalf for their responsibility in conducting absolute monopolistic practices. COFECE imposed a total fine of MXN903.479 million, and ten executives of the sanctioned companies were disqualified. COFECE penalised such economic agents for conducting five activities that resulted in the manipulation of drug prices and the limitation of the sale of drugs in Mexico. One of the novel features of this case is that it is the first decision issued by a competent authority in Mexico imposing the sanction of disqualifying individuals.

On 11 March 2021, a constitutional amendment to the judicial power took place. This reform did not directly affect antitrust litigation but is more general in its scope. Among other issues:

• the Federal School of Judicial Training was created to institutionalise the training of federal judges; and
• relevant changes were made regarding the formation of jurisprudence and its mandatory nature.

Since these changes do not specifically deal with the judicial litigation of antitrust matters, this reform will not be further discussed.

The legal basis for a claim for damages for breach of competition law is Article 134 of the FECL, which establishes that the payment of damages caused by a monopolistic practice or an illicit concentration may be claimed through a legal action conducted before the Specialised Judicial Courts on Economic Competition, Telecommunications and Broadcasting Matters.

To be able to file a lawsuit before the specialised courts, it is necessary to have a final resolution issued by COFECE or the IFT.

Claims for damages are regulated by the FECL and the Federal Code of Civil Procedures (FCCP).

There are Specialised Courts on Competition, Telecommunications, and Broadcasting Matters (“Specialised Courts”) that hear constitutional challenges brought by economic agents against the NCA’s final decisions. The Specialised Courts were contemplated in the constitutional competition reform of June 2013 and were created in August 2014. The main activity of these Specialised Courts is to rule on amparo actions filed against the decisions issued by the competition authorities (the IFT or COFECE). According to the constitutional amendment, the authorities’ final decisions may only be challenged through an indirect amparo action filed with the Specialised Courts.

An amparo action is a trial in which a specific provision of a law or an administrative decision (or both) can be challenged in a federal court, on the basis that it violates constitutional and/or conventional human rights.

There are no special procedures to transfer or remand cases among different courts.

However, in cases where the competition authorities claim to have jurisdiction over the same case or in which they consider that none of them has jurisdiction and they do not agree on which is the competent authority, during an administrative trial conducted by the NCAs, the FECL has granted additional powers to the Specialised Courts to resolve those jurisdictional conflicts that may arise between COFECE and the IFT.

The decision of an NCA is not binding on the court. The Specialised Courts are competent to review the NCA’s decisions and decide on whether its rulings were duly grounded and whether they conform to constitutional and conventional rights. The Specialised Courts may confirm or overrule the NCA’s decisions. In the last scenario, the competition authority will be compelled to issue a new resolution in which the sections that were infringing constitutional rights are repealed and replaced.

COFECE and the IFT have federal authority and the applicable legal regime does not grant Mexican states’ authority over competition matters. Therefore, those federal NCAs are the only Mexican competition authorities.

NCAs have no faculties to intervene in damages actions. After the constitutional reform, the FECL clarifies that civil actions filed to recover compensatory damages arising from anti-competitive behaviour will be decided by the Specialised Courts.

In January 2014, the Supreme Court of Justice of the Nation (SCJN) resolved that, by virtue of the principle of presumption of innocence, the authority has the burden of challenging the innocence of individuals or companies by proving that they conducted an illegal conduct. The authority must be completely certain of their guilt to impose sanctions. This principle:

• indicates that the burden of proof regarding the execution of illegal conduct and the participation of those accused falls on the authority, which requires sufficient evidence gathered in the administrative proceeding to be able to sanction;
• it is up to the prosecuting body to supply, collect and provide the evidentiary elements; if that such evidentiary activity is not conducted, the authority's statement of facts will not have a presumption of validity; and
• once the authority proves the participation of the accused economic agents in the illegal conduct, the burden of proving innocence is reversed to the defendant.

The above-mentioned criterion has been confirmed by recent precedents, which explain that a relevant aspect of the presumption of innocence is the “standard of proof” rule, which in criminal matters compels judges to exonerate accused individuals when insufficient evidence is provided to prove the existence of the crime and the responsibility of the person. This precedent makes clear that it applies to the trial-like proceeding conducted by the competition authorities and sets the standard of proof applicable to these cases.

The pass-on defence principle does not apply as such, during the trial-like proceeding or the constitutional trial. However, while calculating the penalties to be imposed on those responsible for conducting an anti-competitive practice, the investigation authority must assess, among other elements, the damage caused by each economic agent to the market and the benefits obtained in the overprice charged to the consumer.

The FECL establishes that any person may bring complaints before the investigation authority in connection with absolute monopolistic practices, relative monopolistic practices, or unlawful concentrations. Therefore, both direct and indirect purchasers, as well as other economic agents, may file a complaint with the competition authority.

The basis to file a complaint is set forth in Article 68 of the FECL and sets out the following requirements:

• a brief description of the facts that justify the complaint.
• in the case of relative monopolistic practices or unlawful concentrations, a description of the main services and goods involved, specifying their use in the market, like or similar goods and services, and the main economic agents that manufacture, distribute, or sell the goods and/or services; and
• to enclose evidence related to the facts, etc.

It is also important to consider that to initiate an investigation for monopolistic practices or unlawful concentrations, the FECL establishes that an objective cause is required. This is an indication of the existence of anti-competitive conduct or unlawful concentration.

In Mexico, NCAs (COFECE and the IFT) conduct the entire administrative proceeding until the issuance of a final resolution that may impose sanctions on the accused economic agents, without judicial intervention.

As explained before, the proceeding conducted with the competition authorities is divided into two phases; the first one is the investigation and the second is the trial-like proceeding.

The investigation begins with the issuance of a notice of initiation by the investigation authority and may conclude with the issuance of a statement of probable responsibility (SPR) or with the closure of the file. The investigation period has a minimum duration of 30 business days and a maximum of 120 business days. This term may be extended up to four times by the investigating authority. Considering all the possible extensions, the investigation may last approximately two and a half years.

The second phase begins with the notification of the SPR to those presumed responsible for conducting an absolute or relative monopolistic practice, or an unlawful concentration, and concludes with the resolution issued by the Board of Commissioners of the NCA. This phase is conducted in an analogous way to a judicial proceeding in which the parties are provided with due defence rights and lasts between one and one and ½ years.

These phases are successive and may not be conducted simultaneously. There is no order to stay proceedings available under Mexican law related to antitrust proceedings. In fact, according to Article 28 of the Constitution, there are no intraprocedural remedies available for the economic agents that may suspend the proceeding conducted by the NCA. Only in exceptional circumstances may a suspension of the NCA proceeding be granted by the judicial authority through the Specialised Courts.

The general rule is that only after the issuance of the resolution of the Board of Commissioners of the NCA may the sanctioned economic agents resort to the Specialised Courts through an amparo proceeding, to review whether the NCA's actions complied with the provisions of the federal constitution and international treaties to which Mexico is a party.

Collective actions are available and regulated in the FCCP. Individuals may decide whether they prefer to bring the action by themselves or through a public entity, which would be classified as a collective action.

If an individual files an individual action and afterwards they find out that there is a collective action taking place as well, with the same claim, they can choose between continuing with their individual action or abandoning it to join the collective action.

Regarding the filing of a collective action by indirect buyers, this has not yet been specifically regulated by Mexican laws. Article 2110 of the Federal Civil Code sets forth that damages must be the immediate and indirect consequence of the non-performance of the obligation.

Several Mexican doctrinaires propose to expand the active legitimacy to indirect buyers so that anyone who has suffered damages because of anti-competitive practice may be able to seek compensation.

The entities and individuals that can initiate a collective action on behalf of an affected group of people are the following.

• The Federal Attorney's Office for Consumer Protection (PROFECO).
• The Federal Attorney’s Office for Environmental Protection (PROFEPA).
• The National Commission for the Protection and Defence of Users of Financial Services (CONDUSEF).
• COFECE and the IFT.
• The Republic General Attorney.
• Non-profit civil associations constituted at least one year prior to the time the action is filed.
• The common representative of a group made up of at least 30 members.

According to Article 588 of the FCCP, the following are requirements to file a collective action:

• the act that caused the damage must have been declared existent by a final resolution issued by the NCA;
• the action shall be common for all members of the group;
• there should be at least 30 members in the community, when applicable;
• there should be a relation between the object of the action and the effect suffered;
• the matter of the dispute should be res judicata;
• the action should not have expired; and
• any other requirements determined by the applicable laws.

In addition to the above, applicants must prove their legal interest to file the collective action.

There is judicial involvement in the settlement of collective actions since the procedure is managed by a Specialised Court.

Strikeout or summary judgment, as such, is not available in the Mexican antitrust legal regime. However, there are two ways to conclude an investigation before the issuance of an SPR by the investigation authority.

First, the investigation authority may advise the Board of Commissioners to close a case when it concludes that there are not enough elements to presume the responsibility of the investigated economic agents in the illegal conduct.

Second, in the case of relative monopolistic practices (abuse of dominance) or an unlawful concentration investigation, the investigated economic agents may choose to settle with the competition authority, provided that:

• they commit to suspending, eliminating, or correcting the illegal practice or concentration to restore the competition process; and
• the proposed means are legally and economically feasible and appropriate to eliminate the illegal conduct.

During the litigation phase with the judiciary, there is no recourse to strikeout, summary judgment or any similar mechanism to conclude the proceeding.

The FECL sets forth that:

• NCAs have federal authority;
• it applies to all areas of economic activity; and
• it applies to economic agents, including individuals, corporations, government entities and chambers of commerce, as well as any other form of participation in economic activities, and is obligatory within Mexico.

Case law has developed criteria establishing that competition authorities may investigate any case in which conduct has produced effects on the Mexican market, regardless of whether the illegal conduct was conducted within Mexico or abroad, by nationals or foreigners.

A recent case in which COFECE penalised anti-competitive conduct carried out abroad, taking into consideration the effects caused to the Mexican market, is case IO-005-2013. In this case, seven global shipping companies were fined after COFECE found them responsible for executing cartel conduct consisting in the allocation of the market of maritime transportation of vehicles and heavy machinery. In that case, there were several agreements implemented globally on international routes, which involved several Mexican ports as points of origin or destination. The authority found that competition within Mexican territory was affected.

The FECL sets forth that the competition authority’s powers to undertake investigations expire ten years after the anti-competitive conduct ceased or unlawful concentration was executed.

In the case of civil actions for damages, the limitation period is two years after the NCA’s decision is final. In the case of class actions, the limitation period is 42 months.

Pre-action or early disclosure is not available in the Mexican competition legal framework.

Article 16 of the Mexican Constitution states the following. “No one may be disturbed in his person, family, domicile, papers or possessions, except by virtue of a written order of the competent authority, which establishes and justifies the legal cause of the proceeding.”

The judiciary has interpreted such article in the following criterion. “Principle of proportionality. It is violated when the review of documents of a person is allowed, with generic terms.” This is explained in the sense that the judicial authority may decree, ex officio or at the request of a legitimate party, the production at a trial of specific documents related to the litigation, as long as the necessity, suitability, and proportionality of the measure adopted are duly grounded in law and fact. This standard may apply during the judicial phase of the litigation. However, the Mexican legal regime does not provide for any pre-action or early disclosure mechanism in antitrust matters.

In terms of the FECL, the NCA is not obliged to provide confidential information, it may not publish it, and it must keep it safe. When there is an order from a competent authority to submit information, the NCA and such authority must dictate the appropriate measures to safeguard confidential information under the FECL.

Notwithstanding the above, the FECL gives competition authorities wide latitude to gather the evidence they deem appropriate to perform investigations. It provides that any individual who has knowledge of, or is related to, any fact investigated by the NCA has the obligation to provide, within a ten-day period, any information, objects and documents under their possession by the means required; to appear for interviews; and to allow on-site inspections, where the NCA may also gather relevant documents. Failure to co-operate may result in a warning or a fine.

During antitrust investigations and trial-like proceedings conducted by COFECE, professional privileged documents may be withheld from disclosure.

On 30 September 2019, regulatory provisions on legal privilege applicable to antitrust proceedings entered into force. These provisions set out a proceeding for processing communications between individuals and companies involved in proceedings conducted by COFECE and their lawyers when such communications are intended to provide legal advice. According to the provisions, COFECE will neither take into consideration protected communications nor regard them as evidence.

To date, the IFT does not have an equivalent set of rules applicable to the treatment of documents protected by legal privilege.

In terms of the FECL, the information that the NCA gathers in its investigations may be classified as confidential, reserved or public information. Confidential information is defined as that which, in the event of disclosure, may damage or harm the competitive position of its owner, may jeopardise its security, contains personal data the disclosure of which requires its owner’s consent, or is prohibited by law from being disclosed.

In the case of a leniency programme, the FECL provides that the NCAs shall uphold the confidential nature of the identity of the applicant (whistle-blower) and the individuals covered by the application. This treatment applies on a permanent basis (during the leniency proceeding, the investigation, the trial-like proceeding, and thereafter). Additionally, COFECE treats the information that stems from the immunity and leniency programme to reduce or eliminate potential criminal and administrative liability for engaging in absolute monopolistic practices (collusive conducts) as confidential information, and thus it is protected from disclosure.

Regarding settlement agreements entered for the early conclusion of an investigation into relative monopolistic practices (abuse of dominance), the information is not protected from disclosure. Once an NCA enters into settlement agreements with the investigated economic agents, it makes the information public through a press release, to inform the public that it will suspend the corresponding investigation and the reasons it will do so.

By way of example, on 29 May 2018, COFECE made public that it had reached a settlement agreement with the economic agents Cryoinfra, Infra, and Praxair México to conclude the investigation into relative monopolistic practices No DE-006-2014, in which those companies committed to restoring the competition conditions in the markets for the distribution and commercialisation of oxygen, nitrogen and industrial liquid argon in bulk. In its press release, COFECE made public the content of the commitments accepted by the economic agents.

Witnesses of fact are relied on in antitrust proceedings. During the investigation phase, individuals may be summoned to render depositions in connection with the facts that they may directly witness, while during the trial-like proceeding, they may render their testimony as witnesses.

In both cases, evidence is provided orally, but during their testimony, a written record of the answers is drafted, and a transcript of the testimony is attached to the file.

The witnesses shall answer in a clear and precise manner, without ambiguities or evasions. They are not subject to cross-examination by other parties. However, during the phase of the investigation, they shall answer all clarifications that COFECE deems pertinent, and when rendering their testimony during the trial-like proceeding, they shall answer any follow-up questions raised by the investigating authority related to the witnesses’ answers.

Witnesses cannot be compelled to present evidence. However, the authority may submit documents to which they are related and ask questions and clarifications in this regard.

Economic agents may present expert evidence in trial-like proceedings. The evidence is provided in writing through an expert report. Although cross-examination is not applied by any other party to the proceeding, COFECE may request the expert to answer further questions in writing.

Since the stage at which the expert opinions are processed is the trial-like proceeding conducted by the NCA, the parties offering such evidence do not require the permission of a court to present expert witnesses, and nor do they need the permission of the NCA. It is the parties’ right to decide which of the evidentiary elements admitted in the FECL they wish to submit in each case.

Similarly, neither the courts nor the NCAs may require experts to produce joint statements indicating the areas in which they agree/disagree in advance of trial and there are no alternative methods of hearing expert evidence available, unlike in a regular proceeding, in which experts shall render their expert opinion in writing.

The process is regulated by the FCCP and the Federal Civil Code and is conducted by the Specialised Courts.

The assessment will consider the loss of economic value that results from the harmful act and the analysis of the damage under Mexican law must consider personal, certain, real, direct, and immediate elements. The defendant will be liable for those elements and the claimant can only be indemnified for the damage that it has suffered.

There has not yet been a final case awarding damages to a claimant in Mexico related to antitrust matters, so the quantification of damages has not yet been performed in practice.

In general, federal courts quantify damages according to the motion of the claimant and the court could appoint experts who will advise on the harm and the calculation method of damages.

The parties may appoint their own experts during the trial.

It is important to note that exemplary or punitive damages are forbidden under Mexican legislation.

The “pass-on” defence has not been regulated in the Mexican legal regime. In Mexico, it is only possible to file a lawsuit against the individual who has caused the damage directly.

This is a problem and limitation of this category of actions since, in practice, the overprice charged by the manufacturer is transferred along the value chain and is finally paid by the end consumers, since distributors are not willing to assume the corresponding cost.

However, since the producer is not selling directly to final consumers, even though they are the ones that end up paying the overprice in most cases, consumers have a limitation to bring a damage claim under the current language of Article 2110 of the FCCP and, for that reason, several doctrinaires have proposed its acceptance in Mexican legislation, as it would allow the final customer to bring an action against the producers responsible for overpricing.

Interest is payable on damages if the party that loses the trial does not pay them in a timely manner. Said interests begin accruing once ordered in a final judgment. According to Article 2395 of the Federal Civil Code, the legal rate for interests is 9% per year.

Liability is managed on a joint basis and there are no limitations on the liability of immunity applicants. The reason is that, in Mexico, the liability of illicit acts is always joint, and leniency applicants are not exempted from having to cover damages, especially if they acknowledge their illegal conduct before the NCA at a previous procedural stage.

However, as has been explained, in practice, civil damages actions have been scarce and unsuccessful in Mexico. To date, there have not been individual or economic agents penalised because of these matters.

In Mexican legislation, a procedure for bringing contribution proceedings against a third party does not yet exist. To date, the only economic agent with actual liability is one that has a final resolution issued by the NCA. If other members of the cartel are not declared responsible through a final decision issued by the NCA, they will not be deemed liable.

Injunctive relief is available if it is necessary to avoid damage that would be difficult to repair or to ensure the effectiveness of the investigation result and resolution of the procedure. The investigating authority may, at any time, request the Board of Commissioners to issue the injunctive relief when it deems necessary. This cannot be obtained without notice to the other parties.

When facing injunctive relief, the economic agent may request the Board to set a guarantee to lift said measures. The guarantee must be enough to repair the damage that could be caused to the process if the economic agent does not obtain a favourable resolution.

Alternative dispute resolution is not available in antitrust litigation. The reason the law does not provide for it is because antitrust litigation is a matter of public interest. Alternative methods for dispute resolution are only available in litigation between private parties. In this case, since one of the parties is the state, alternative methods for dispute resolution are not available.

Third-party or alternative funding is available, as there is no law that prevents it. According to Article 624 of the FCCP, funding can be available in collective actions when there is a justified social interest involved. In this case, the payment will be made against a fund created by the Council of the Federal Judiciary, as far as the availability of resources allows it. Said fund will be financed by the resources from the judgments that derive from diffuse collective actions.

During the NCA’s administrative phase, funding by third parties is not provided for in the FECL.

In the case of collective actions, according to the FCCP, each party will bear its own costs, as well as the fees of its own representatives, regardless of who loses the trial.

Representative fees are regulated by law as follows:

• fees will be up to 20% if the liquid amount of the main lot does not exceed 200,000 times the daily minimum wage;
• if the liquid amount of the main lot exceeds 200,000 times the minimum wage but is less than two million times the daily minimum wage, fees will be up to 20% on the first 200,000 and up to 10% on the surplus; and
• if the liquid amount of the main lot exceeds two million times the daily minimum wage, the fees will be up to 11% on the first two million, and up to 3% on the surplus.

According to the FCCP, expenses and costs are regulated by law as follows:

• the judge will determine how the expenses and costs, as well as the fees of the plaintiff's representatives, will be covered, seeking to ensure the corresponding payment;
• in the case of judgments that establish a quantifiable amount, the plaintiff will pay between 3-20% of the total amount sentenced for fees to their representatives; the judge will take into consideration the work done and its complexity, the number of members, the benefit for the respective community and other circumstances that it deems pertinent; and
• if the resolution is not quantifiable, the judge will determine the amount of the fees.

In the case of individual actions, according to the FCCP, costs are awarded to the party that loses the trial. It is possible for a party to apply for a guarantee when there is a well-founded fear that the losing party may not be able to respond, at the right time, for the payment of the costs. This guarantee is conducted with the seizure of sufficient assets that cover the costs.

During the NCA’s administrative phase, each party covers its costs related to its representation and expenses.

Only constitutional trials (amparo indirecto) are available to challenge final resolutions issued by the NCAs in antitrust legal proceedings. According to Article 28 of the Mexican Constitution, those sanctioned may file indirect amparo lawsuits against final resolutions issued by the Board of Commissioners of the corresponding NCA. Appeals are only on points of law.