New cartel investigation in Mexico

Mexico’s Federal Economic Competition Commission (COFECE) formally announced the commencement of an investigation on potential absolute monopolistic practices (i.e. horizontal cartel arrangements) in the market of distribution and marketing of Liquefied Petroleum gas in Mexico (Gas LP). Although COFECE was careful to note that the investigation does not prejudge on the conducts and omissions of the involved economic agents, according to COFECE there are strong indications of potential collusion and other anti-competitive practices by competing companies in the sector.

Although formally initiated late last week, the investigation comes as a direct result of a request filed by the Energy Regulatory Commission (CRE) in late 2017. As part of this request, CRE provided COFECE with information that shows that LP gas prices in Mexico have skyrocketed ever since the liberalization of the market in January 2017.

COFECE will have a 120 business days term to conduct its investigation. This initial term may be extended up to 4 times (for 120 business days each) and upon its conclusion, COFECE will issue a resolution either initiating a process against the involved economic agents or dismissing the case.

If found liable, economic agents involved in absolute monopolistic practices may face fines of up to 10% 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 10 years of prison.

Should you have any comments or questions or require any additional information, please contact Hernan González or Dante Trevedan.