Mexico: Digital goods and services market under antitrust investigation

Mexico's Federal Economic Competition Commission (COFECE) announced that it has launched an antitrust investigation for potential vertical monopolistic practices (prácticas monopólicas relativas) on the development, distribution, marketing and sale of digital goods and services (the Investigation).

According to COFECE's press release, the Investigation came as a direct result of a claim filed by an undisclosed party and will focus on potential vertical anti-competitive practices such as tying, excessive pricing and creating general barriers of entry, among others. Due to its nature, vertical monopolistic practices require the involved economic agent (or agents) to hold substantial market power in order to be punishable conducts.

While the Investigation has been launched on digital goods and services in general, as part of its press release COFECE specifically named e-books, software, videogames, images, music and movies as "examples" of key goods and services that are relevant to the market subject matter of the Investigation. This suggests that the Investigation will be at least mostly focused on those particular products.

COFECE also highlighted how, compared to previous years, during 2021 the Mexican market saw an increase of 35 percent in e-book sales, 24 percent in videogames sales and 19 percent in digital images and video sales.

The launch of the Investigation, in and of itself, does not prejudge on the existence of potential anti-competitive practices. COFECE will have 120 business days to conduct the Investigation. This term may be extended up to four times. At the conclusion of the initial probe, COFECE will issue a resolution either formally commencing a trial-like process against the involved economic agents or dismissing the case.

If as a result of the Investigation and ensuing process anti-competitive practices are found to have occurred, involved parties may face fines of up to 8 percent of their revenue and will be ordered to cease the anti-competitive practices. These fines would be irrespective of, and in addition to, any criminal or civil liability that the economic agents may face. Any individuals found guilty of participating in the prohibited conducts may also face substantial fines in addition to civil and criminal liability.

The identities of the petitioner that brought the claim before COFECE and the party and/or parties subject matter of the Investigation have not been disclosed.

Any other party affected by potential anti-competitive practices in the digital goods and services space in Mexico may seek to join the ongoing processes as collaborating party in interest and/or file a claim of its own.

The Investigation marks the latest incursion of COFECE in the digital markets space in recent months. Late last year both COFECE and the Mexican Federal Telecommunications Institute launched separate investigations on the app stores space in Mexico. Please refer to this link for our team's initial thoughts on the app stores investigations, which are ongoing and seem to be unrelated to the Investigation.