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04 November 2004
Article 16 of the Federal Economic Competition Law defines a 'concentration' as a merger, acquisition of control or any other transaction through which companies, associations, shares, equity interests, trusts or assets in general are concentrated, and which takes place between competitors, suppliers, customers or other economic agents. Article 20 of the law provides that notice of concentrations that exceed the thresholds established in Article 20 must be filed with the Federal Competition Commission prior to the concentration taking place.
Article 21 of the regulations to the law provides that it is not necessary to give notice of an operation which exceeds the amounts provided by Article 20 where: (i) the transaction concerns shares or equity interests in foreign companies through which the economic agents involved do not acquire control of a Mexican company or accumulate shares, equity interests, a trust interest or other assets in Mexico in addition to those held directly or indirectly prior to the transaction; or (ii) an economic agent involved has directly or indirectly owned or possessed 98% of the shares or equity interests in the target or the economic agents involved in the transaction for at least the previous three years.
According to Article 21, the only exceptions to the duty to notify under Mexican law concern corporate restructuring, whether in Mexico or abroad. For this reason, notice of any transaction which exceeds the amounts provided by Article 20 and does not fall within the strict requirements of Article 21 must be filed with the commission. Given that only two exceptions have been provided during the 11 years the law has been in force, a very high percentage of transactions are approved without conditions after notice has been given to the commission.
It is public knowledge that the commission has been working on amendments to the law. These will almost certainly modify the section dealing with concentrations in order to limit, as far as possible, notification of concentrations where adverse consequences to the competitive process are genuinely possible. A simple increase in the notification thresholds stated in Article 20 will not be sufficient to achieve this; rather, additional exceptions will need to be provided. These could include acquisitions of the following:
For further information on this topic please contact Amílcar Peredo at Basham Ringe y Correa SC by telephone (+52 55 5261 0400) or by fax (+52 55 5261 0496) or by email (firstname.lastname@example.org).
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