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Cofece initiates an investigation in the leasing market of non-residential real estate

Cofece initiates an investigation for potential cartel behavior in the leasing market of non-residential real estate.

The Mexican Antitrust Commission (“Cofece”), announced through an official communication the start of an ex-officio investigation for possible cartel behavior in the leasing market of non-residential real estate.[1]

Under the Federal Antitrust Statute (“LFCE”), cartel behavior are contracts, agreements, arrangements, or combinations amongst competitors that have the purpose or effect of any of the following:   

  1. To fix or manipulate prices at which products or services are offered in the market.
  2. To restrict output.
  3. To allocate markets.
  4. To coordinate bids in the context of public tenders.
  5. To exchange information for any of the above purposes or effects.

Cartel behavior constitutes a violation to the LFCE and are punished severely by the statute and also by the Federal Criminal Code as follows:

  1. Fines for economic agents found to be guilty of as much of 10% of their annual revenue.
  2. Fines for the individuals that on account and representation of economic agents, implement cartel behavior for up to MXN$17 million (approximately USD$800,000).
  3. Ineligibility of 5 years to represent or serve as executives of companies, and
  4. Prison for up to 10 years.

Also, private parties may also seek civil action for damages.

In relevant communication, the Cofece states that the services rendered in this market are among the most affected by the Covid-19 pandemic and that the sector is worth over MXN$108 billion.

As background information to this investigation, on March 31, 2020 the Cofece issued a warning to the National Association for Real Estate Developers (“ANDI”), to avoid cartel behavior in the market (available here). Through such communication, Cofece indicated that it knew that due to the Covid-19 pandemic, ANDI had encouraged its members the award discounts and benefits to lessees that where up to date with their payments.

The Antitrust Practice at Gonzalez Calvillo is a ranked practice area recognized by  renowned  legal publications, our team being comprised of former competition enforcers, including an ex Commissioner and two former senior prosecutors, with other highly-qualified attorneys with ample analytical (qualitative and quantitative), having undertaken studies and worked both in Mexico and abroad.

We have assisted a variety of domestic and multinational companies, in a wide array of industries, whether appearing as investigated agents or as third parties, within and outside the leniency program, that have been involved in the most relevant cartel cases over the past years. These include lab and blood bank services, cellulose products, fuels retail, digital markets, maritime transport services and freight rail transport of chemicals, among others. Learn more about our work here.

To deliver comprehensive legal solutions to our clients, we have combined our efforts with top criminal attorneys, economists, communications, and crisis management experts, as needed.

[1] COFECE’s Official Communication available here, and Spanish version of the publication in the  Federal Official Gazette available here.

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