Mexico’s antitrust watchdog, the Federal Economic Competition Commission (Cofece), has officially summoned a prominent supermarket retailer to address concerns related to potential violations of competition laws. It was confirmed that Walmart’s Mexican subsidiary, often referred to as Walmex, is under scrutiny, following a three-year investigation by Cofece into alleged monopolistic practices.
Walmex, a subsidiary in which Walmart holds a majority stake of 71%, disclosed that it received a notification from Cofece regarding the investigation. The notification pertains to aspects related to the supply chain, wholesale distribution, and marketing of consumer goods. Walmex is currently in the process of reviewing the notification and is preparing to present its arguments and evidence within the allotted 45-day timeframe. The company has expressed confidence in its adherence to legal practices, emphasizing its commitment to offering competitive prices and ensuring a consistent supply of products.
In response to these developments, Walmex’s stock performance faced a decline, with shares experiencing a 5.5% decrease in value on Mexico’s S&P/BMV IPC stock index. Analysts anticipate potential short-term volatility in share prices due to uncertainties surrounding the impact on the company’s operations, although a precise estimation of this impact remains pending.
Cofece’s statement indicates that the company involved will have the opportunity to mount a defense against the allegations during a procedure resembling a trial. The violations in question include potential vertical price fixing and other practices considered relative monopolistic behaviours. In Mexico, penalties for such violations can reach up to 8% of a company’s annual income.
Cofece has identified the food and beverage sectors as priority areas for monitoring anti-competitive behaviour, underscoring the significance of these markets in Mexican households’ expenditures. Walmex, as the country’s largest supermarket chain with 2,890 locations, plays a pivotal role in these sectors.
This development underscores the importance of adherence to competition laws within the Mexican retail industry and raises questions about the potential implications for one of its major players, Walmex.
