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New Advertising Law In Mexico Affects Competition

The Official Gazette published on 3 June 2021 the Law for Transparency, Prevention and Combating Irregular Practices in Advertising Contracting (“Advertising Law”) The new Advertising Law came into effect on the 1st of September 2021. The Mexican Competition Authority, COFECE, issued Emergency Regulations, setting out the procedures for filing complaints, the investigation process, as well as the rules for ruling on complaints of violations under the new Advertising Law.

These are the key points

The Advertising Law provides that the COFECE shall monitor and handle all complaints regarding alleged violations. COFECE had already filed a constitutional challenge to the Advertising Law at the Supreme Court of Mexico. COFECE’s arguments included the alleged harm that the Advertising Law could cause, especially to the autonomy of the Competition authority. They also claimed matters that were not related to antitrust issues. The Mexican Supreme Court declared that the Advertising Law will not be suspended. This Law must be fully implemented once it is in effect. The Advertising Law empowers the Commission to hold them accountable, while the competition authority is responsible for investigating and sanctioning any violations. The Emergency Regulations give legal certainty as to how complaints are handled, investigated, and resolved in relation to the new Advertising Law.

Background

31 August 2021, COFECE released Emergency Regulations that provide information on the complaint process. A party may file a complaint for violation of the Advertising Law. These Provisions set out the procedures and rules for investigating and handling complaints.

All investigations into Advertising Law violations must be initiated via a formal complaint. As the competent authority for such complaints, the Investigative Authority COFECE shall handle the investigations.

Before filing, parties should determine if there is any violation of an agreement or contract between two or three economic agents that are subject to this Advertising Law. Additionally, a party must consider whether there is sufficient cause to bring a case, as well as evidence to support the claim. A complaint may not be admissible if a party isn’t allowed to file or has not suffered an injury as a result of the violation.

Each period of the investigation may last up to 120 business days. During these periods, the Investigative Authority could request further information, gather documentation, and order dawn raids to support their investigation.

Once the investigation has concluded, if possible liability is established, a trial will be initiated and defense will commence.

All evidence and arguments of any identified parties that may be held responsible will be heard and analysed at this stage.

The Advertising Law violation can only be determined by the Board of Commissioners. If the Board decides that the conduct is a violation of Article 10 Advertising Law, it may impose the appropriate sanction.