Possible monopolistic practices in the non-residential real estate rental market

Having warned the Federal Commission of Economic Competition (Comisión Federal de Competencia Económica) (COFECE) that, due to the situation Mexico is facing due to the COVID-19 epidemic, it would be especially vigilant against any possible anti-competitive behavior, the authority has published in the Official Federal Gazette that it has become aware of facts that constitute evidence of the possible existence of absolute monopolistic practices in the investigated market of leasing of non-residential real estate spaces in the national territory, among others, those provided for in sections I and V of Article 53 of the Federal Law on Economic Competition (Ley Federal de Competencia Económica).

The relevant sections provide that contracts, agreements, arrangements or combinations between competing economic agents whose object or effect is to fix, raise, arrange or manipulate the price of sale or purchase of goods or services offered or demanded in the markets, as well as to exchange information with any of the objects or effects referred to in the sections of Article 53 of the Law, are considered unlawful.

As a result of the foregoing, COFECE has decided to exercise its investigative faculties and has initiated an ex officio investigation identified under file number IO-004-2020.

In the event that, derived from this investigation procedure (which may not have a duration of less than thirty working days or exceed one hundred and twenty working days with the possibility of extension), the existence of acts constituting violations of the applicable laws is determined, an opinion of probable responsibility will be issued, from which an administrative procedure will be initiated to identify those likely to be responsible.

The aforementioned information has been published on the website of COFECE and in the Official Federal Gazette so that any person may assist in the procedure during the investigation period.

The investigation was issued after COFECE had warned the National Association of Real Estate Developers (Asociación Nacional de Desarrolladores Inmobiliarios) (ADI Mexico) to avoid possible agreements between competitors in the market under investigation, since the association apparently promoted the granting of discounts to tenants by its affiliates, due to the contingency that the country is experiencing as a result of the COVID-19 epidemic, which could be contrary to the provisions of the applicable law on economic competition if it was set forth through agreements that had the purpose or effect of determining a maximum quota or discounts to be granted to the tenants and/or lessees or if it had involved the exchange of information between competitors with the purpose or effect of carrying out the indicated conduct.

The above mentioned prevention was issued by COFECE together with an invitation to ADI Mexico to join the Immunity Program in case of having participated in agreements contrary to the economic competition laws and a recommendation to consult the Guide for the Exchange of Information between Economic Agents.

Should you have any questions or require advice in relation to the above, please do not hesitate to contact any of our partners or associates.

Yours sincerely,

Cannizzo, Ortiz y Asociados, S.C.