Mexico’s antitrust agency finds evidence of possible cartel arrangements in the LP gas market

The Mexican Federal Economic Competition Commission (COFECE) announced, after a long-standing investigation, it has found evidence of possible horizontal cartel arrangements (i.e., absolute monopolistic practices) in Liquefied Petroleum gas (LP Gas) distribution and marketing activities in Mexico.

According to COFECE, this investigation, which initiated in early 2018 after a direct result of a request filed by the Energy Regulatory Commission (CRE), is the most thorough investigation conducted by COFECE’s Investigative Authority as it entailed the “review and analysis of conducts incurred in by several parties in many states throughout Mexico”.

As a result of the findings of COFECE’s Investigative Authority, COFECE has served the involved parties with a notice of probable responsibility (oficio de probable responsabilidad). This notice (akin to a service of process) formally initiates the trial-like procedure before COFECE’s Technical Secretariat, and allows the involved parties to argue and produce evidence in their favor.

COFECE did not name the involved parties, but some recent information suggests that there are as much as 56 LP Gas suppliers and 34 individuals named as responsible parties. COFECE did not specify the nature of the absolute monopolistic practices that the involved parties potentially incurred in. However, given the scope of CRE’s request and the contents of COFECE’s publications on the matter, it is reasonable to conclude that the alleged horizontal cartel arrangements include price-fixing and market allocation agreements.

If found liable, economic agents involved in absolute monopolistic practices may face fines of up to 10 percent of their revenue (irrespective of and in addition to any criminal or civil liability that the economic agents may face). Individuals found guilty of participating in the execution or negotiation of anti-competitive agreements may face up to ten years of prison.

Read Norton Rose Fulbright’s original article on COFECE’s LP Gas investigation.