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GC news | Cofece announces investigation for potential abuse of dominance in the electricity market

On May 6th, 2021, the Mexican Antitrust Commission (“Cofece”) published that since the end of March 2021 (stemming from a complaint it received), it launched an investigation for alleged abuse of dominance in the market for the generation, wholesale, and supply of electric power and associated products (as well as services and activities related to these markets within Mexico).

Under Mexican law, an abuse of dominance exists when an agent with market power abuses it and excludes, displaces, or hinders access to its competitors by engaging in conduct that would otherwise be legal under different circumstances. To determine whether they are illegal, Cofece analyzes the context of the behavior and the possible efficiencies it may bring to end consumers.

Considering the markets under investigation and their configuration, it appears that the agent under investigation is the Comisión Federal de Electricidad, the federal state-owned productive enterprise that generates most of Mexico’s electricity, for possible refusals to supply and margin squeezes. However, the identity of the investigated parties is confidential during the inquiry.

Cofece’s Investigating Authority (“IA”), which is functionally independent of the Board of Commissioners (Cofece’s decision-making body), is in charge of the inquiry and has up to approximately 2.5 years to investigate.  If enough evidence suggesting anti-competitive conduct is found, a formal complaint is issued against the accused parties, which is followed by a trial-like procedure lasting approximately an additional year.

Cofece’s final resolution could impose high fines and, more importantly, order the fulfillment of conditions for the economic agents to refrain from anti-competitive behavior. If found liable, the affected parties could sue for damages.

Any person who has information or presumes is affected by this type of conduct may approach the IA. In addition, those involved in the electricity industry will probably receive a request for information from Cofece, which they will be obliged to answer.

At Gonzalez Calvillo, we have advised a wide variety of national and multinational companies in different industries, either as complainants, investigated agents, or as third parties, in and out of the immunity program, particularly in the most relevant energy and monopolistic practices matters of the last few years.

Our Antitrust Area is ranked by recognized legal publications and our team is composed of former public officials of the Cofece, including a former Commissioner and a former investigator, as well as other highly specialized lawyers, having conducted studies and worked both in Mexico and abroad.

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Note To Editors

For over 30 years, Gonzalez Calvillo has been at the forefront of the legal market in Mexico as a full-service leading law firm due to its transactional core and expertise in a wide range of practice areas. The firm is recognized for its ability to build cross-disciplinary teams for the most complex legal challenges and long track record of successfully providing groundbreaking business and regulatory advice to high profile domestic and international companies. Often described as a pioneer of the Mexican legal services industry, the firm is known for its commitment to do things differently, bespoke solutions, and creating transformational legal changes that enable clients achieving their objectives.

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