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Antitrust / Competition

Mexico: COFECE investigates the market of services related to credit card transactions

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In brief

On 27 October 2022, the Investigating Authority of the Federal Economic Commission (COFECE) published a notice initiating an investigation into the marketing of services related to credit card transactions in the form of deferred payments with interest-free months (market under investigation) due to alleged absolute monopolistic practices (or cartel practices), in particular, price fixing and the exchange of commercially sensitive information.

It is important to mention that the investigation does not include cardholders, but only the economic agents that are participating in the market under investigation. That is, in order to carry out such transactions, there must be payment systems that allow it, physical stores with point-of-sale terminals, or virtual stores that offer the option of making purchases under this modality. Additionally, the investigation includes financial institutions that offer credit lines and associated cards, payment clearing, and settlement services, among others, all of which make interest-free purchases possible.
 

Contents

  1. Recommended actions
  2. Background 
  3. Comments

Recommended actions

  • In this type of proceedings it is normal for the antitrust authority to request information from companies offering products and services related to the market under investigation. In the event of receiving a request for information from the antitrust authority, it is essential to respond to such request, otherwise, the defaulting company will be subject to a fine.
  • In some cases, the antitrust authority considers it pertinent to subpoena individuals who are presumed to have knowledge of wrongdoings in the market under investigation, e.g., technical personnel or managers of companies that offer products and services related to the market under investigation. 
  • The Mexican antitrust authority is empowered to conduct dawn raids (on-site unannounced visits at the company’s offices, through which they may request information and/or photocopy documents/files related to the market under investigation). Obstruction or failure to comply with a dawn raid may result in fines and/or criminal penalties.
  • In case of receiving a subpoena, a request for information, or if your company has experienced a dawn raid, it is recommended to consult with an attorney specializing in antitrust & competition matters. 

Background 

  • The market under investigation includes products offered to a user (cardholder) by a financial institution through which they can make payments for products and services using a line of credit. Payments for such purchases can be made on the next credit card cut-off date, or payments can be deferred to interest-free months (usually 6, 12, 18 or 24 months).
  • Absolute monopolistic practices are anti-competitive agreements, contracts or arrangements between competing economic agents, whose object or effect is the manipulation of prices, market segmentation, bid rigging and/or establishing mechanisms to restrict the supply in the investigated market. Please note that the exchange of sensitive business information between competing economic agents that could cause any of the above mentioned conducts also qualifies as an absolute monopolistic practice.
  • If the existence of an absolute monopolistic practice is proven, the responsible economic agents could be fined up to 10% of their annual revenues in Mexico. Additionally,  those individuals who directly participated and/or contributed to such illegal conduct may be subject up to 10 years of imprisonment.
  • The investigation should not be understood as a prejudgment, but as an action by the authority to verify compliance with the Federal Mexican Antitrust Law.
  • This antitrust investigation was initiated on 29 April 2022. The inquiry period, of 120 business days,  shall be counted as of the date in which the investigation period begun. Each period has 120 business days, which may be extended for the same period up to four times.

Comments

  • On 26 October 2022, COFECE reaffirmed its commitment during Competition Day, and in its Strategic Plan for 2022-2025, to keep the financial market as a key priority sector for the competition authority.   
  • The financial sector is a priority matter, given that the offered services are essential to carry out  multiple economic activities, such as purchases with credit cards with interest-free months. In addition, this sector generates a significant percentage of the country’s Gross Domestic Product, while digital financial services can have an impact on the financial inclusion of Mexicans and facilitate access to credit for small and medium-sized enterprises. According to the National Institute of Statistics and Geography (INEGI), in 2021 the financial sector generated 3.8% of the country’s Gross Domestic Product and 67.8% of the population was a user of some type of financial service. 
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Author

Raymundo Enriquez is currently the managing partner of the Mexico offices and the lead partner of Baker McKenzie's Antitrust Practice Group in Mexico City. He was a member of the Firm’s Executive Committee and a previous chairman of the Latin America Regional Council where he also served as the Latin America chair of the Global Diversity and Regional Pro Bono Committees. Mr. Enriquez is recognized as a leading lawyer for competition / antitrust and for business by Chambers Latin America. He served as a board member for several Mexico companies. In addition, he was a visiting lecturer at the Mexican Bar Association and a part-time tax and foreign trade law professor at Universidad Iberoamericana, where he obtained his JD from the university’s School of Law.

Author

Luis Amado is a partner in the Antitrust & Competition Practice Group of the Firm's Mexico City office. He has more than 10 years of experience in his field and has conducted several antitrust and competition seminars for the telecommunications, automotive, electronics, medical, mining, metal, home appliance and white goods industries. Luis was part of the Firm’s EU Competition & Trade Practice Group in London, where he advised on antitrust matters. He was appointed Latin America's representative in the Firm committee responsible for abuse of dominance matters. He has also been a guest professor at Universidad Iberoamericana and IPADE, giving lectures on antitrust and competition.

Author

Alina de la Luz is an associate in the Firm's Antitrust Practice Group in Mexico. Prior to joining the Antitrust Practice Group at the Firm, she was part of the Mexican competition authority (Federal Economic Competition Commission), as part of the investigating authority. With more than 8 years of experience in economic competition, mainly in abuse of dominance and analysis of competition conditions, she has conducted investigations in several markets: financial, energy, ports, digital, telecommunications, and transportation, among others. Likewise, she was head of the economic competition subject at UNAM and has taught about competition in several forums.

Author

Natalie Flores is the regional knowledge attorney for the Americas in Baker McKenzie’s Global Antitrust & Competition Group, based in the Firm’s Mexico City office. With over fourteen years of legal experience, she leads strategic knowledge initiatives across the Americas, including legal content development, client training, and thought leadership. Her work supports the Firm’s global competition practice and enhances client engagement through tailored insights and resources.
Natalie began her career as a litigator, focusing on consumer protection and unfair competition, including class actions under Section 5 of the FTC Act. She continues to advise clients on multijurisdictional competition matters and regulatory processes, drawing on her deep understanding of enforcement trends and cross-border dynamics.
She is actively involved in the Firm’s industry groups, particularly Energy & Infrastructure, and serves on the board of Mujeres en Energías Renovables en México (MERM), where she advocates for clean energy and gender equity in the renewable energy sector.

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