By Marco Antonio Tena López
In Mexico, the regulation of mergers and acquisitions by means of the Federal Economic Competition Law is a crucial component to maintain a fair and competitive market, with regard to certain operations that must be approved by the regulatory authority so they can create the intended effects.
When conducting a transaction, it is essential for companies to understand the thresholds established by the Federal Economic Competition Law (LFCE) for them to be able to report these operations to the Federal Economic Competition Commission (COFECE).
The LFCE sets specific thresholds that, when exceeded, require companies to notify COFECE of any concentration operation.
These thresholds aim to prevent concentrations that could limit competition in the market through the monopolistic power acquired.
Based on the current minimum wage, the thresholds engage significant monetary values that determine whether an operation should be evaluated by COFECE.
Firstly, any transaction that directly or indirectly exceeds the equivalent of 18 million times the minimum wage needs to be notified. This means operations that exceed approximately $4,480 million MXN.
Secondly, the accumulation of 35% or more of the assets or shares of an economic agent, whose sales or assets exceed this same threshold, also requires notification.
Thirdly, the notification is required for the accumulation of assets or capital stock that exceeds $8.4 million times the minimum wage (approximately $2,091 million MXN) when the operation involves agents whose sales or assets exceed $48 million times the minimum wage (approximately $11,944 million MXN).
This framework guarantees that COFECE can review and, if necessary, intervene in operations that could potentially harm the competitive environment. The notification allows a proactive assessment to prevent the formation of monopolies or reduce competition. If not approved, the act does not take effect.
In conclusion, compliance with the notification thresholds before COFECE is essential for any company seeking to operate within the Mexican legal framework.
Understanding these thresholds and the notification process is not only a legal requirement but also a responsible business practice that promotes a competitive and fair market in Mexico.
