Main Legislation

In Mexico, the relevant merger control legislation is the Federal Economic Competition Law (FECL) and its regulatory provisions.

Secondary Legislation

The Federal Economic Competition Commission (Comisión Federal de Competencia Económica, or COFECE) and the Federal Telecommunications Institute (Instituto Federal de Telecomunicaciones, or IFT) have issued Guidelines for Notification of Concentrations and the Technical Criteria for the Calculation and Application of a Quantitative Index to Measure Market Concentration.

There is no additional legislation specifically applicable to merger control in Mexico. However, in the oil and gas industry, there are certain additional regulatory requirements when an economic agent owns or acquires a shareholding interest in companies active in different portions of the downstream segment.

Also, the Foreign Investments Law requires that transactions related to certain restricted sectors or that meet the monetary thresholds must initiate an authorisation process. The law is very lax, however ‒ only a few sectors are restricted and the monetary thresholds are high.

In terms of merger review, there are two enforcers in Mexico. The IFT is in charge of all the transactions related to the broadcast and telecommunications sectors, whereas COFECE is in charge of reviewing all other markets. However, depending on the relevant markets and whether there are government concessions concerning the broadcast and telecommunications sectors, it is possible that a single transaction might need to be notified to both COFECE and the IFT.

Additionally, there are specialised tribunals in case the transactions or investigations end up in litigation before the Mexican judicial branch.

Compulsory Notification

If a transaction meets any of the monetary thresholds set forth in the FECL (see 2.5 Jurisdictional Thresholds), the transaction must be notified to the corresponding authority (ie, the IFT, COFECE, or both).

Voluntary Notification

The FECL includes the option to submit a voluntary pre-merger filing, which is normally used in transactions in which it is not clear if the thresholds are met and also to ensure that the enforcers will not investigate the transaction later.

Exemptions from Compulsory Notification

The FECL includes the following seven exceptions to compulsory notification:

• internal corporate restructuring with no third parties involved;
• a controlling entity (that has had control since the incorporation of the target or since the antitrust authorities authorised such acquisition) increases its participation in the controlled entity;
• the incorporation of management, guarantee or any other kind of trusts to which an economic agent contributes assets, shares or interest without the purpose or necessary consequence being the transfer of said assets, shares or interest to a company other than both the settlor and the corresponding fiduciary institution;
• the transaction involves shares or partnership interests of foreign entities, as long as the participating economic agents neither acquire control over Mexican entities nor accumulate in Mexico shares, partnership interests, participation in trusts or assets in general in addition to those already owned (directly or indirectly);
• the acquirer is an investment company (sociedad de inversion de renta variable) and the purpose of the transaction is the acquisition of securities in the stock markets, unless the outcome of the transaction allows the acquirer to acquire decisive influence over the target; and
• the concentration involves transactions in the stock exchange not exceeding 10% of the capital stock of the issuer and the acquirer is not entitled to:
1. appoint or revoke managers, directors, or board members;
2. directly or indirectly impose decisions in the shareholders’ meetings or other equivalent corporate bodies;
3. directly or indirectly maintain any interest that would allow it to exercise 10% or more of the voting rights; or
4. directly or indirectly influence the administration, operations, strategy or principal policies of the target.

In Mexico, there is a penalty for failing to notify when the transaction triggers any of the Mexican thresholds. The penalties for failing to notify range from MXN542,850 (approximately USD31,753) (all figures in US dollars hereinafter consider an exchange rate of MXN17.0958 per US dollar) up to 5% of the total income in Mexico for the previous fiscal year. It is worth noting that the fines are imposed on each of the economic agents that carried out the transaction. Additionally, Mexican law contemplates recidivism, which can double any future sanctions within ten years of the first sanction.

These penalties are applied frequently in Mexico. A list of recent fines imposed by COFECE for failure to notify can be found in 2.13 Penalties for the Implementation of a Transaction Before Clearance.

A transaction must trigger any of the three Mexican economic thresholds (see 2.5 Jurisdictional Thresholds) in order for COFECE or the IFT to have the authority to review said transaction. However, internal restructurings or reorganisations in which no third party is involved are exempt from the obligation to notify.

In Mexico, a transaction would not be notifiable where there is no acquisition of Mexican assets or shares or no price allocation for the Mexican portion ‒ given that all the thresholds are monetary-based and not specifically related to control. However, COFECE has recommended adopting a conservative standpoint and notifying any transaction in which there are doubts concerning the thresholds, as well as other joint ventures (particularly among competitors).

In Mexico, the obligation to notify a transaction is purely based on monetary thresholds, regardless of whether or not the acquirer gains control. Thus, minority acquisitions can trigger a Mexican pre-merger control filing as long as one of the monetary thresholds is met.

The Mexican law and its regulatory provisions do not contemplate a definition of control. Nonetheless, the Supreme Court has defined control as the capacity to exert a decisive influence or control over other economic agents when it comes to acting in the markets, either as a result of legal acts or based on facts.

In Mexico, there are no specific thresholds applicable to a particular sector. In this respect, the Mexican thresholds are as follows.

• Price allocation ‒ if there is a specific price allocation for the Mexican portion (including for tax purposes), the amount of such price is equal to or higher than MXN11,954,260,000 (approximately USD114,312,287).
• Size of the target ‒ a transaction must involve (i) the acquisition of 35% or more of the assets or shares of an entity (ii) whose sales or assets in Mexico are valued at more than MXN1,954,260,000 (approximately USD114,312,287). Both parts of the second threshold must be met in order for a transaction to be notifiable in Mexico.
• Size of the parties ‒ a transaction must involve the acquisition of:
1. assets or capital stock with a value greater than MXN911,988,000 (approximately USD53,345,734); and
2. the undertakings involved in the transaction must have assets or sales in Mexico that (jointly or separately) amount to more than MXN5,211,360,000 (approximately USD304,832,766).

Please note that both parts of the third threshold must be met in order for a transaction to be notifiable. As regards the first part of this threshold, if the transaction only implies the acquisition of a certain percentage of the target, this percentage must be applied to the total Mexican assets or capital stock (eg, 20% of the total Mexican assets or capital stock should be greater than MXN911,988,000).

General Assessment of Jurisdictional Thresholds in Mexico

In terms of the price allocation threshold, the value of the Mexican portion must be included in the transaction documents or determined in any tax documents related to the transaction. If there is no price allocation for the Mexican portion, this threshold will not apply and the other two must be assessed instead.

For the size of the target threshold, the transaction must imply the acquisition of 35% of the assets or shares of an entity and its direct or indirect Mexican sales or assets must have a value above the second part of the threshold.

For the size of the parties’ threshold, the first part of the threshold refers to the assets or capital stock actually being acquired in Mexico. Thus, if the transaction only implies the acquisition of a certain percentage, such percentage should be applied to the total assets or capital stock in order to determine if the first limb of the threshold is met. As regards the second part, the Mexican sales or assets of all parties involved ‒ namely, seller, target and buyer ‒ must be considered.

Assets Considerations

In terms of assets, the value to be considered is either the asset value expressed in the balance sheet or the fair market value (whichever is higher).

Sales Considerations

The sales to be considered in the threshold analysis are Mexican sales, which can be carried out by a Mexican or foreign entity. In this respect, for a sale to qualify as a Mexican sale, the sale should be invoiced in Mexico, to a Mexican customer, or made by a Mexican entity to national or foreign customers. Also, the sales of third-party distributors that are not part of the distribution network of the entities involved in the transaction should not be considered in the thresholds analysis.

Exchange Rates for Assets and Sales Expressed in Other Currencies

For the conversion of US dollars to Mexican pesos, the exchange rate that should be used is the lowest exchange rate published by the Mexican Central Bank in the preceding five days counted from the date on which the transaction will be notified. The exchange rate can be reviewed here under the column titled “Para pagos”. Where the sales or assets are shown a currency other than US dollars, any exchange rate indicator that reflects the value of the Mexican currency with regard to the foreign currency in question can be used.

The entities to be considered in the Mexican thresholds will depend on the specific threshold that is being analysed. When it comes to the size of the target threshold, the parties will only have to consider the Mexican sales or assets of the target.

In terms of the size of the parties’ threshold, the parties involved need only take into account the Mexican capital stock or assets value of the target for the first part. However, the second part of the analysis contemplates the Mexican assets or sales of all parties involved in the transaction ‒ ie, seller, buyer and target (as applicable).

As regards changes in the business, it is worth noting that these should not affect the assessment, as Mexican law requires that only the financial information contained in the audited financial statements for the past complete year is analysed ‒ therefore, if any business was divested or acquired, the relevant financial values should be excluded or included from the threshold analysis (as applicable).

In Mexico, there is no explicit local effects test for foreign-to-foreign transactions. However, the Mexican thresholds imply the necessity of a certain local presence through either the acquisition of Mexican assets/capital stock or the existence of Mexican sales. Hence, a foreign-to-foreign transaction could trigger a Mexican filing if it implies the acquisition of Mexican capital stock/assets or where the parties’ Mexican sales exceed the threshold.

Based on the foregoing and the Mexican thresholds, a filing would not be triggered if the target has neither Mexican sales nor assets/capital stock.

It should be noted that in Mexico all thresholds are monetary-based. As such, there are no market share thresholds.

Joint ventures are subject to merger control and the general thresholds apply. Joint ventures can qualify as a transaction subject to merger control as long as they involve the union of two or more economic agents to jointly carry out economic activities either contractually or through a vehicle with legal personality ‒ in the latter case, through which said agents will make contributions and participate jointly in the profits and losses.

Mexican antitrust enforcers have a limitation period of one year within which to investigate transactions that were below the thresholds. However, in cases in which a transaction met any of the Mexican thresholds and the parties to the transaction failed to notify it, the enforcers have up to ten years to investigate the transaction.

In Mexico, all transactions that trigger a Mexican filing must not be closed until COFECE or the IFT authorise the transaction. In fact, Mexican competition law requires the parties to include a clause in the transaction documents suspending the closing until clearance is obtained.

As mentioned in 2.2 Failure to Notify, Mexican competition law sets forth a fine ranging from MXN542,850 (approximately USD31,753) up to 5% of the income generated in Mexico for the previous fiscal year for failing to notify or implementing the transaction before obtaining the clearance. This fine is applied to each of the economic agents involved in the transaction.

It should be noted COFECE has been very active in sanctioning this kind of conduct recently. In the past five years (2020–24), COFECE has imposed penalties on 14 occasions, with a total fined amount of MXN163,273,585 (approximately USD9,550,509).

These penalties are frequently applied in Mexico and, in many cases, are related to foreign-to-foreign transactions. For reference, here are some of the recent fines imposed by COFECE for failing to notify.

• In 2023, Engie, Sonate Bidco and Veolia Environment were sanctioned with fines totalling MXN11,029,331 (approximately USD645,149).
• In 2023, HP, Inc (HP) and Plantronics, Inc (POLY) were sanctioned with fines totalling MXN61,580,800 (approximately USD3,602,101).
• In 2022, AT&T, Inc (AT&T) and Warner Bros Discovery, Inc (Warner Bros Discovery) were sanctioned with fines totalling MXN51,573,920 (approximately USD3,016,760).
• In 2022, IAC Holdco, GCM and Franklin were sanctioned with fines totalling MXN9,098,000 (approximately USD532,177).
• In 2022, Cemex, ABC Capital and ABC Holding were sanctioned with fines totalling MXN9,748,587 (approximately USD570,233).

No exceptions to the suspensive effect are set forth in Mexican law.

The general rule is that there are no circumstances in which the parties are permitted to close the transaction before obtaining clearance. Nonetheless, it is possible to execute carve-outs of the business, assets or entities in order to close the general transaction and continue with the pre-merger filing in Mexico.

However, it should be noted that COFECE is not fond of these alternatives and, in one case, even ordered the parties to refrain from closing the transaction until Mexican clearance had been obtained. In any case, if a transaction must be closed and the parties desire to execute a carve-out for Mexico, it is highly advisable to inform COFECE about the carve-out before it is implemented in order to mitigate against the possibility of penalties for closing before clearance.

Pursuant to the FECL, where a mandatory filing is required, a transaction must be notified and cleared by the authority before any of the following takes place:

• the legal act by which the transaction is carried out is perfected in accordance with the applicable legislation or, if the case may be, fulfils the condition precedent to which said act is subject;
• the direct or indirect acquisition or exercise of factual or legal control of another entity (or the factual or legal acquisition of another entity’s assets, trust participation, partnership interest, or stock);
• the execution of a concentration agreement among the involved economic agents (unless it is conditional upon clearance by the authority); or
• the culmination of the last in a sequence of acts, owing to which any of the Mexican thresholds are met.

If the parties to a transaction carry out any of the above-mentioned acts before notifying and obtaining clearance, they will be subject to a fine ranging from MXN542,850 (approximately USD31,753) up to 5% of their income.

Pursuant to the law, the parties should submit the executed agreement or at least the draft of the agreement by means of which the transaction is going to be executed. However, the merger guidelines establish that the authority could accept a draft of the transaction agreement or a Letter of Intent or Memorandum of Understanding ‒ and even a description of the transaction ‒ as long as the structure and the main terms and conditions of the transaction (including any non-compete and non-solicitation covenants) are not modified later.

In view of the foregoing, the parties are permitted to notify their transaction even with a description of the transaction instead of a formal agreement. However, it is advisable to submit at least the draft of the agreement, letter of intent or memorandum of understanding and to keep in mind that there should be no substantial changes to the structure and/or the main terms and conditions of the transaction ‒ given that, if the authority believes the transaction carried out differs from the authorised transaction, the parties could be subject to the fines described in 3.1 Deadlines for Notification.

There is a joint-filing fee of MXN237,058 (approximately USD13,866), which is updated annually in the law. The filing fee receipt must be submitted with the initial notice.

At the outset, the parties responsible for filing are those directly involved in the transaction ‒ namely, those that are signing parties to the transaction agreements. If it is not possible for any of these parties to appear in the filing and such situation is evidenced before the authority, the appearance of the acquirer will suffice.

It is also relevant to mention that, where there are multiple signing parties that are all controlled by a single entity, the controlling entity can submit the filing on behalf of all the others.

Simple copies of the following information/documents pertaining to the involved parties must be submitted along with the concentration notice in Mexico:

• business plan;
• detailed description and structure of the transaction;
• transaction agreements;
• organisational documents;
• audited financial statements for the preceding fiscal year;
• detailed direct and indirect capital structures;
• confirmation of direct and/or indirect participation in the capital structure and/or management of entities with activities in Mexico in the same markets and/or related markets by the parties (as well as their shareholders and subsidiaries);
• competitive assessment and market shares in the national territory and any other relevant geographic market;
• facilities and plants in Mexico;
• filing fee receipt; and
• list of jurisdictions in which the transaction will be notified.

For Mexican entities, original or certified copies of the powers of attorney for each of the notifying parties, which should be granted in favour of their legal representatives. When the powers of attorney are granted abroad or by foreign entities, these powers of attorney shall be apostilled/legalised and notarised.

All the information/documents must be submitted in Spanish. If the documents are in another language, a certified Spanish translation of the main terms of the document must be submitted along with the original document.

If the notification does not include all the information/documents referred to in 3.5 Information Included in a Filing, the authority will request the outstanding documents within the first request for information (RFI). If these are not submitted within the legal term for answering the first RFI (ie, ten business days, which can be extended by another ten business days), the filing is dismissed.

A fine of up to MXN18,999,750 (approximately USD1,111,369) may be imposed for submitting false information to the authority and an investigation into the transaction could be launched. Additionally, such conduct might carry criminal consequences.

Standard Review Process

The authority has, in principle, 60 business days to review the transaction and issue its decision. This term is counted from the date on which the authority receives all the information that was requested for the analysis. If the authority does not issue a decision within this term, the transaction will be considered authorised. The merger review process is suspensive in all cases; therefore, the parties cannot close a transaction prior to receiving clearance by the authority.

The authority is empowered to request additional information (to complete the file) within the following terms.

• The authority has ten business days following the date of filing to request basic information that should have been included in the initial filing. The notifying parties will have a period of ten business days to satisfy the request and this term can be extended in justified cases.
• The authority has 15 business days from either the date of filing (or the date on which the request for the above-mentioned information is satisfied) to request additional information that it considers necessary for the analysis of the transaction. The notifying parties will have a term of 15 business days to answer the request and this term can be extended by another 15 business days in justified cases.

Additionally, the authority may further request additional information that they deem relevant for their analysis from any person ‒ including the notifying parties, authorities or economic agents ‒ that is related to the concentration. Whoever receives such requests for information will have a period of ten business days to satisfy such request and this term can be extended in justified cases. Such requests will not restart the clock in terms of the time period in which the authority must issue their resolution.

If the authority issues a request for additional information pursuant to the above-mentioned terms, the 60 business days for review and resolution will start running from the date on which the authority has received all the requested information. In complex cases, the authority can extend the review period for up to 40 additional business days in order to request additional information and/or issue a decision.

It should be noted that, pursuant to the FECL, the clock will be restarted and the antitrust authorities will have 60 business days to analyse the remedies and to issue a decision if – following the submission of the pre-merger filing ‒ the parties offer remedies or conditions in order to dissipate any possible concerns.

The decision issued by the antitrust authorities will be valid for a term of six months. Upon request from the parties involved in the transaction, the term can be extended only once for an six additional months. If a transaction is not closed within the above-mentioned timeframe, the parties will need to re-submit a pre-merger filing in order to obtain a new authorisation to close the transaction. This also applies to decisions obtained through the expedited review process (see 3.11 Accelerated Procedure).

The parties can engage in pre-notification discussions with the authority, especially in cases where an expedited clearance is essential. Even though it is not very common for these communications to occur, the authority is open to engaging in these on a confidential basis.

When the transaction does not imply substantive horizontal overlaps or vertical links, the authority usually only issues a basic request for information such as:

• documents and/or information not initially included in the concentration notice;
• clarifications on the structure of the transaction; and
• certain statements related to the absence of the involved undertakings in certain markets.

If the transaction implies substantive horizontal or vertical overlaps, the authority usually issues a burdensome second request for additional information, which mainly concerns detailed procurement, production and marketing information ‒ as well as market data that allows the authority to carry out an in-depth analysis on the involved markets.

The deadline for the authority to resolve the transaction starts again once the issued RFIs are deemed as fully answered.

The law also contemplates a simplified pre-merger review process if the parties demonstrate to the authority that it is evident that the transaction does not have the aim or effect of diminishing, damaging or impeding competition.

When the parties request this simplified review, which must be within five business days following the date of the filing, the authority has 15 business days from the date on which the filing was received to issue a resolution on the transaction. Pursuant to the law, it is considered evident that – provided the purchaser does not participate in any related market and it is not an actual or potential competitor of the target ‒ a transaction does not have the aim or effect of diminishing, damaging or impeding competition if:

• the transaction implies the first participation of the purchaser in the relevant market (the structure of the relevant market should not be modified as a consequence of the transaction and should only involve the substitution of the undertaking);
• the purchaser holds no control of the acquired agent before the transaction and, through the transaction, it increases its relative participation in the acquired agent without having additional power to influence the operation, management (including the appointment of managers and board members), strategy and main policies of the company; or
• the purchaser has the control of a company and increases its relative participation in the capital stock of the company.

If the authority determines that a transaction submitted via this process does not meet the legal requirements or if the filing is not submitted together with all the information legally required, then the authority will issue an official communication denying the expedited review process and initiating a standard review process.

It should be noted that this simplified procedure is not commonly used because, in many cases, it is more complicated to prove that the transaction does not have the aim or effect of diminishing, damaging or impeding competition and the authority is highly likely to consider that the legally required documents and information are incomplete. Thus, the undertakings are reluctant to follow this procedure and instead prefer to file their transactions through the standard process.

The initial test employed by the authorities to analyse a transaction is the Herfindahl-Hirschman Index (HHI). Pursuant to the authority’s technical criteria, the transaction has a low probability of harming the market if:

• the post-transaction HHI is below 2,000 points; and/or
• delta is below 100 points as a consequence of the transaction.

Additionally, when the transaction requires a more complex analysis, the authority is able to use other tools such as the SSNIP (Small but Significant Non-transitory Increase in Price) test.

Pursuant to the law, the following factors should be taken into account when analysing a transaction:

• the definition of the relevant market;
• the identification of the main undertakings that supply the market, an analysis of their power in the relevant market, and the degree of concentration in said market;
• the effects of the transaction on other competitors or consumers of the goods or service in the relevant market, as well as with regard to other related markets and undertakings;
• the equity participation of the involved parties in other economic agents and the equity participation of other economic agents in the parties involved in the transaction – provided these undertakings engage, directly or indirectly, in the relevant market or its related markets (when it is not possible to identify such participation, this circumstance must be fully justified); and
• the information provided by the undertakings in order to demonstrate greater market efficiency as a result of the transaction and which will impact favourably on the process of competition and free market access.

Although there is no de minimis criteria for analysing a transaction, when the increase in market shares as a consequence of the transaction is low and the HHI criteria referred to in 4.1 Substantive Test is met, the authority may not carry out an in-depth competition analysis.

It is common practice for COFECE and the IFT to refer to their own case law and that of other relevant jurisdictions (mainly the USA and the EU), as long as the assessment used to identify the relevant market is applicable to Mexico. The main competition authorities usually relied upon by the Mexican authorities are the EC, the US Federal Trade Commission and the US Department of Justice.

The competition concerns investigated by the authorities includes unilateral effects, co-ordinated effects, conglomerate or portfolio effects, vertical concerns and the elimination of potential competition. However, their main assessments concern unilateral and vertical effects, as well as the elimination of potential competition.

Pursuant to the competition law, economic efficiencies can be argued by the parties and studied by the authorities. Ultimately, the authority can rule whether the economic efficiencies derived from a transaction compensate for the potential competition risks – although there are no clear criteria according to which the Mexican authorities should carry out their assessment. In any case, it is up to the parties to demonstrate that such economic efficiencies exceed the competition risks.

The review process carried out by the Mexican authorities must be related only to competition issues and the criteria outlined in the law for such assessments. However, lately the COFECE has started marking a deeper and thorough analysis of the non-compete provisions in the transaction documents. COFECE has adopted a stricter point of view in analysing this kind of provisions.

There are rules for foreign direct investment; however, these are separate from the competition regulations and the merger control rules. There are specific filings required for foreign direct investments in certain scenarios, but this is a different procedure before a different authority – namely, the Ministry of Economy.

The legal thresholds established to determine whether a transaction must be notified and cleared by the competition authorities are not structured in a fashion that applies directly to joint ventures. The competition authorities have nonetheless issued guidelines on how to determine whether joint ventures require a pre-merger filing. When joint ventures are analysed by the competition authorities, one of the main priorities is to examine the possible co-ordination between the joint venture partners.

The authorities can prohibit the execution of a transaction; however, they must first evidence that the transaction presents a risk to the competition process in the market(s). When issuing a resolution on the parties’ proposed transaction, the authorities may either clear the transaction, clear the transaction subject to remedies, or prohibit the transaction.

When the authorities have concerns about a transaction, the parties are allowed to offer and negotiate both structural and behavioural remedies, as well as amendments to the initial terms of the proposed transaction.

Typically, the Mexican authorities prefer structural remedies, rather than behavioural – particularly in transactions with horizontal overlaps. The authorities are usually reluctant to accept behavioural remedies, as these require periodical review. In Mexico, the authorities consider behavioural remedies to be more effective for transactions involving vertical link – although they are not usually accepted, even in these circumstances, as their surveillance takes more time, is more expensive and difficult.

In practice and when required, the authorities issue an official announcement – in which the possible risks to competition are identified – rather than directly requesting remedies from the parties. Afterwards, the parties usually offer remedies to address the identified risks, whereby they specifically address the authorities’ concerns.

Finally, all remedies imposed or accepted shall be directly related to correcting the competition concerns derived from the transaction.

For remedies to be deemed acceptable, they must meet the following legal standard:

• COFECE or the IFT may only impose or accept conditions that are directly related to correcting a concentration’s effects; and
• the conditions that are imposed or accepted must be proportionate to the intended correction.

The parties can offer remedies from the initial notification of the proposed transaction until one day after the transaction is listed in the agenda for the board of commissioners to review. If the remedies are proposed after the initial notification of the transaction, the term for the authority to resolve the transaction is restarted.

The authority can propose the remedies on their own motion. However, it is standard practice for the authority to defer to the parties in this respect – given that the parties are knowledgeable when it comes to their own business and, ultimately, can suggest remedies that will best address the competition concerns raised by the authorities.

If the transaction is cleared subject to remedies, the parties must accept said remedies or the transaction will be blocked by the authority.

The parties have a period of six months (which can be extended for other six months) to evidence the closing of the transaction on the terms authorised in the decision. Where the remedies contemplate the divestment of certain assets and/or entities (ie, structural remedies), they can include a request for the divestment business to operate as a “hold separate” during the closing of the main transaction.

If remedies are not complied with, the parties can be fined up to 10% of their total income and ultimately be forced to dissolve the transaction.

The authorities issue a decision by which the transaction is either cleared, cleared subject to remedies, or blocked. A non-confidential version of the decision is published by the authority on its website.

In recent years, the only foreign-to-foreign transaction to be prohibited was the acquisition of Cornershop proposed by Walmart. Even though the parties offered behavioural remedies in order to address the competition concerns raised by the authority, the latter considered that these were not enough to solve the concerns. Other foreign-to-foreign transactions – for example, Bayer-Monsanto (2018) – have been conditioned on remedies by the authority.

When a transaction is notified, the parties must provide the authority with the transaction documents and specify whether the transaction contemplates any ancillary restraints (eg, non-solicitation or non-compete provisions) or related transactions.

The authority takes ancillary restraints very seriously and conducts a deep analysis. It is worth noting that, if any of the restraints are amended after the authority authorises the transaction, the authority is highly likely to open a gun-jumping procedure for closing the transaction on terms other than those authorised. The ancillary restraints have to be notified and cleared within the same analysis of the whole transaction.

As regards related transactions, the parties can include them within the description of the main transaction and seek authorisation of both the main and ancillary transactions. It is highly recommended that the parties provide clear and straightforward descriptions of all the transactions involved. However, in order to contemplate these other transactions within a single decision, it also possible that the authority will request that other entities related to the ancillary transactions adhere to filing requirements and provide information and documents.

There is no process foreseen in the law through which third parties can be involved in the pre-merger review procedure. However, aside from information requested by the authority (if any), third parties can submit White Papers containing evidence/arguments on why the merger should be assessed in a specific fashion or ultimately rejected.

The authority contacts third parties (competitors, clients, suppliers or other authorities) only in complex transactions or when the transaction raise competition concerns. Usually, the authority notifies written RFIs; however, in some transactions, telephone calls will suffice.

When remedies are offered by the parties, the authority analyses whether these remedies actually address the competition concerns identified. When the remedy completely resolves the competition concern (eg, divestment of a business unit or eliminating the overlap among the parties), the further assessment carried out by the authority is easier; otherwise, an in-depth analysis is required.

Both COFECE and the IFT publish a redacted version of the decision by means of which the transaction is authorised. These public versions of the decisions omit information identified by the parties as confidential. Commercial information and business secrets are completely redacted in the public versions of the decisions and, in some cases, part of the description of the transaction can also be redacted if the parties involved justify why such parts should be classified as confidential.

In specific cases where the transaction involves a complex antitrust assessment that requires the clearance of competition agencies in several countries, the latter might co-operate with each other. In Mexico, both COFECE and the IFT have to request a waiver from the parties in order to disclose the information contained within the file to foreign competition agencies. It is more common for COFECE or the IFT to request such a waiver when remedies are being offered or negotiated.

The decision can only be appealed when it is final and this is done before courts that specialise in antitrust, telecommunications and broadcasting cases (“specialised courts”). The appeal is carried out by means of a constitutional appeal called juicio de amparo indirecto.

The typical timeline for appeals ranges from one to three years (depending on whether the initial decision of the courts is challenged by the parties). In the past ten years, no appeal has succeeded in overruling the main decision by the IFT or COFECE on a merger – although there is a precedent whereby the parties appealed one of the remedies imposed by COFECE and the specialised courts eliminated this remedy.

It is not clear whether a third party can appeal a clearance decision. This has never been done and the applicable law does not grant third parties the right to challenge clearance decisions if they were not involved. However, if a third party is able to argue and evidence its legal interest before the specialised courts pursuant to the required standards, the appeal might be admitted.

The authors are not aware of any legislation or regulatory provisions in respect of foreign subsidies. However, Mexico has foreign direct investment regulations that are contemplated in the Foreign Investment Law (Ley de Inversión Extranjera, or LIE), as well as mechanisms to compensate the effects of foreign subsidies in terms of foreign trade.

The LIE establishes certain thresholds for the notification of foreign direct investment in Mexico. These thresholds are based on the value of the assets of the company being invested in and the type of commercial activity it carries out. The National Foreign Investments Commission (Comisión Nacional de Inversiones Extranjeras, or CNIE) must approve the investment in advance if the following thresholds are met:

• direct or indirect investments of more than 49% interest in the capital stock of a Mexican entity with assets valued at more than MXN22,647,201,250.50 (approximately USD1,34,723,105) (please note that this authorisation is only required when it is the first participation by the corresponding foreign investor in a Mexican entity); and
• direct or indirect investments of more than 49% interest in companies engaged in any of the following commercial activities in Mexico:
1. port services in order to allow ships to conduct inland navigation operations (eg, towing, mooring and barging);
2. the exploitation of ships solely for high-seas traffic;
3. licensed use of air fields for public service;
4. private education services at pre-school, elementary, secondary, middle school, high school, college and higher education level (or any combination thereof);
5. provision of legal services; and
6. construction, operation and exploitation of general railways and provision of public railway transportation services.

There have not been any recent changes to Mexican merger control legislation or its implementing regulations. There are no publicly available proposals to amend the existing legislation or implementing regulations in this area either.

Based on public information provided by COFECE for the past five years (ie, 2020‒24), Mexico’s recent enforcement record includes:

• 14 fines for gun-jumping (ie, failing to notify a compulsory notification), each averaging approximately MXN11,662,399 (approximately USD682,179);
• two transactions that were rejected – none of which was a foreign-to-foreign transactions; and
• two transactions that were authorised subject to remedies.

Investigations related to digital markets have been very relevant, both for COFECE and the IFT in the past three years. Both authorities have begun investigations related to those markets and several judicial controversies have emerged concerning the jurisdictions of both agencies with regard to these markets.

COFECE has been working to establish internal criteria for the analysis of private equity funds (PEFs) in order to adapt to controlling and shareholding structures that do not necessarily resemble the traditional structures of Mexican legal entities. In recent years, however, there has been a trend to analyse potential overlaps among all the portfolio companies of a co-investing PEF in a particular transaction – regardless of whether or not they are involved in or related to the transaction.

Finally, during the course of the past year, there has been a trend by COFECE to intensify the scrutiny of non-competition and non-solicitation provisions. In those cases in which these types of restrictive agreements do not meet COFECE’s standard parameters, the parties must fully prove the need for the provision.