App stores under antitrust investigation in Mexico

As has been the case in other jurisdictions, the major app store operators for mobile devices are now under formal investigation in Mexico for potential anti-competitive practices.

Recently, both the Federal Economic Competition Commission (COFECE) and the Federal Telecommunications Institute (IFT) each publicly announced the launch of separate, seemingly unrelated, antitrust investigation processes on the app store space in Mexico.

COFECE's investigation

COFECE's investigation was initiated ex officio and was announced on September 30 through a press release published on its website. Per COFECE's press release, this investigation:

• will focus on potential vertical anti-competitive practices (prácticas monópolicas relativas) in the relevant market that COFECE has identified as "development, distribution and payment processing of mobile applications and digital content, and other related services."
• was initiated due to "reasons that objectively suggest the presence of potential vertical anti-competitive practices in the relevant market."

IFT's investigation

A week after COFECE's press release, on October 7, IFT announced through a publication in the Federal Register (Diario Oficial de la Federación) that it has launched a similar investigation.

Unlike COFECE's, the investigation launched by IFT came as a result of a claim filed by an undisclosed petitioner, and while also centered on potential vertical anti-competitive practices in the app store space, IFT has identified a broader relevant market subject matter of the investigation as "app marketplace for mobile operating systems and related markets."

What's next?

As of now, both COFECE's and IFT's investigations are underway, but it will be interesting to see how do both processes develop since this may lead to a potential conflict of competence between COFECE and IFT.

As a general rule, COFECE is the Mexican agency entrusted with all competition matters except for the telecom sector, which is reserved to IFT (together with all other telecom regulatory matters). Because both investigations deal with vertical anti-competitive practices in extremely similar (arguably identical) relevant markets, it is very likely that at some point both investigations will overlap.

To the extent the investigations continue, both will be subject to the Mexican Federal Economic Competition Law. COFECE and IFT will each have 120 business days to conduct its investigation. This term may be extended up to four times, and at the conclusion of the initial probe each agency will issue a resolution either formally initiating a process against the involved economic agents or dismissing the case.

If as a result of the investigations and ensuing processes 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 IFT or the parties under investigation by IFT and COFECE have not been disclosed.

Any other party affected by potential anti-competitive practices in the app store space in Mexico (e.g., product tying, excessive pricing, general barriers of entry, among others) may seek to join the ongoing processes as collaborating party in interest and / or file a claim of its own.