On March 27, 2020, the Federal Antitrust Commission (“COFECE”) established its position by means of a press release regarding the application of the Federal Antitrust Law in the context of the health emergency resulting from the pandemic generated by the COVID-19 virus. In the same, they mention that collaboration agreements between economic agents, whether vertical agreements or agreements between competitors, will not be subject to prosecution.
COFECE specifies that such measure will be maintained in the current context, with respect to agreements that “are necessary to maintain or increase supply, satisfy demand, protect supply chains, avoid shortages or hoarding of goods.
COFECE clarified that the measures are applicable to any collaboration agreement, however, it pointed out those characteristics that could cause a collaboration agreement to be considered as a concentration, that is to say: (i) the duration of these, since concentrations are generally designed to have permanent or long-term effects; (ii) the determination as to whether the agreement involves the creation of a new economic agent, and whether it is independent of the shareholders in its decision making; (iii) the scope of the agreement, in the sense that the economic agents that enter into an agreement must maintain a competitive pressure that is exercised in all other activities that are outside such agreement, in addition to the fact that the exchange of information must be limited exclusively to the agreement, especially with respect to competitors; and, finally, (iii) the levels of competitive pressure exerted by the parties to the agreement.
By virtue of the foregoing, COFECE reiterates the responsibility of the economic agents involved in an agreement that complies with the characteristics described above (in accordance with the thresholds established in the law), to determine whether it could be considered a concentration, in which case, it must notify COFECE so that the commission may issue a resolution in this regard.
In addition, COFECE mentions that price increases or price determination should be an individual and independent decision of each company. However, they committed to review the markets where indiscriminate price increases are observed in order to evaluate and rule out that the causes of these increases are undue barriers or arrangements between competitors, and if necessary, to initiate an investigation procedure.
In addition, COFECE will be expeditious in the analysis of concentrations that may arise in order to create synergies and add production capacity to meet the needs arising from the current crisis in a timely manner.
Finally, COFECE warned that any agreement between competitors whose sole purpose or effect is to manipulate or fix prices, reduce supply or segment the market will be analyzed as an absolute monopolistic practice and, in such case, subject to investigation. In each case, the COFECE Investigating Authority will be aware of the intention of the mentioned agreements, so the economic agents must communicate it and state that it is temporary and that it is only made to cover the needs derived from the contingency caused by Covid-19. In this regard, the Investigating Authority must carry out the corresponding analysis to determine and inform the applicant whether or not such agreement will be subject to investigation.
