The Investigative Authority (IA) of the Mexican Federal Economic Competition Commission (COFECE) has announced that, following an investigation conducted from March 2022 through October 2023 (the Investigation), it has found evidence that “preliminarily” indicate the lack of effective competition conditions in the marketplace and eCommerce spaces in Mexico.

The Investigation comprised both sellers’ and buyers’ markets (i.e., the services offered to retail vendors and customers in the leading marketplaces) and was focused on the two main marketplace operators in Mexico.

As a result of the Investigation, the IA found the “probable” existence of several conditions that translate into three specific barriers of entry for new competitors in the marketplace and eCommerce, in turn leading to the lack of effective competition conditions to the detriment of end users:

1. The IA held that the loyalty programs and subscriptions packages offered by the two main marketplace operators in Mexico, have led to an “artificial strategy to attract and retain users” by (i) including unrelated services such as streaming, and (ii) allowing consumers the possibility to access additional benefits such as discounts and free shipping.

According to the IA, this approach has created a barrier of entry as costs to enter market for potential new competitors are prohibitive due to the factual impossibility to offer similar benefits to attract customers.

The Investigation also found that the loyalty programs and subscriptions packages offered by the two main marketplace operators in Mexico, have “influenced the behavior of the customer base” such that it has caused the customer base to very rarely use more than one platform (i.e., singlehoming), further discouraging the possibility of new competitors in the space.

As a remediation measure, the IA has proposed that the two main marketplace operators stop providing and promoting any marketplace and e commerce unrelated services (such as streaming) as part of their subscription and loyalty program models.

2. The Investigation resulted in the IA concluding that the two main marketplace operators lack transparency in the terms and conditions that vendors shall meet to gain access to the Buy Box in each platform (e.g., promoted or trending items highlighted and suggested by the platform), or to have their products promoted in the frontpage.

The IA held that this strategy by the two main marketplace operators has caused vendors using their platforms to lack necessary information that allows them to come up with an efficient and effective market analysis strategy and business plan. This, according to the IA is contrary to the competition principles of effectiveness, efficiency and minimum restriction in the market.

As a remediation measure, the IA has proposed that the two main marketplace operators communicate to vendors using their platforms the full terms and conditions that are required to have their products promoted and to gain access to the Buy Box, including creating a specific relevant section in the platform that allows any user (1) review the relevant terms and conditions, and (2) file complaints or reports of improper application.

3. The IA found that the logistic solutions offered by the two main marketplace operators in Mexico, effectively translates into a barrier of entry which prevents competition in the marketplace space, as the current configuration of the logistic solutions does not allow for a full and proper application programming interface (API) integration with all logistic solutions third party companies.

In addition, the Investigation concluded that the two main marketplace operators prioritize (1) logistics for products sold by vendors that acquire the subscriptions that the operators offer, and (2) fulfillment and dropshipping of products linked to the Buy Box positioning.

As a remediation measure, the IA has proposed that the two main marketplace operators modify their current logistic solutions to allow full integration with all third party companies and refrain from considering the subscription or Buy Box status of vendors and products sold to fulfill logistics.

The IA has granted terms ranging from 20 days to six months for the two main marketplace operators to implement the proposed remediation measures outlined above. In addition, any party with legal standing will have 45 days to argue in its best interest or submit evidence in connection with the Investigation or the relevant markets subject matter thereto.

As part of its press release, COFECE noted that the two main marketplace operators in Mexico concentrate more than 85 percent of the vendors market and more than 61 percent of the customers market. This marks the latest incursion of COFECE in the eCommerce space, following recent investigations on the digital goods and services market and the Appstore space.



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International Partner, Norton Rose Fulbright US MX, S.C.

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