MEXICO Law and Practice Contributed by: Christian Lippert, Carlos Chávez, Juan Carlos Burgos and Édgar Martín, Galicia Abogados
5. Decision: Prohibitions and Remedies 5.1 Authorities’ Ability to Prohibit or Interfere With Transactions While the CNA can object to a transaction, it is not common that it does and it would usually accept rem - edies to address the competition concerns it finds. In the few cases where the CNA has prohibited a transaction from going through, it has grounded its decision on the bases that the proposed transaction would allow the resulting entity to increase prices or exclude competitors and that the remedies proposed by the parties did not adequately address its con - cerns. 5.2 Parties’ Ability to Negotiate Remedies The proceedings before the CNA allow the parties ample opportunity to propose and negotiate reme - dies. Generally speaking, the CNA favours fix-it-first remedies, which usually take the form of a pre-closing divestiture or the exclusion (in Mexico) of a certain product or portion of business from the perimeter of the proposed transaction. Post-closing divestitures are challenging for the CNA as it would have to devote meaningful resources to verifying compliance and, potentially, manage litiga - tion in connection therewith. Accordingly, the CNA does not favour this approach. A similar comment can be made with respect to behavioural remedies; these require verification mech - anisms that place additional burdens on the CNA. Behavioural remedies that can be implemented prior to closing are usually effective (ie, stepping down from a board, waiving an exclusivity clause, etc), whereas post-closing remedies (ie, not entering into certain arrangements, providing non-discriminatory access to facilities, etc) are more challenging. The legal standard of remedies is only that they ade - quately address the competition concerns identified by the CNA. Accordingly, no remedies beyond com - petition matters have either been imposed or accept - ed by the CNA.
5.3 Legal Standard As stated in 5.2 Parties’ Ability to Negotiate Rem- edies , remedies must adequately address the com - petition concerns identified by the CNA. 5.4 Negotiating Remedies With Authorities Remedies can be proposed at any time during the process. While not common, the parties may elect to offer remedies from the outset (for instance, in global transactions where a remedy has already been offered in the primary jurisdiction). Staff can opine on the remedies and provide guidance but cannot propose remedies themselves. Once the matter is turned over to the Board of Commissioners, it has the ability to accept the remedies as proposed, reject them and object to the transaction, or approve the transaction subject to the remedies that it deems appropriate. Usually, approval is conditioned on the prior written acceptance of such remedies by the par - ties. If, however, the parties offer remedies after the filing has been perfected (ie, after any RFIs have been satis - fied), the statutory clock to clear the matter restarts. 5.5 Conditions and Timing for Divestitures As noted in 5.2 Parties’ Ability to Negotiate Rem- edies , post-closing remedies are possible though not favoured by the CNA. To the extent that approval is granted subject to remedies and the parties accept such remedies but fail to comply with them, the CNA can impose fines of up to 12% of each agent’s tax - able income in Mexico. In addition to these fines, the CNA retains the ability to order the unwinding of the transaction. 5.6 Issuance of Decisions All merger control filings result in a final, formal and written order from the CNA (unless the parties with - draw such filing before the CNA reaches a decision). Public versions (with confidential information redact - ed) of all CNA decisions are publicly available on the CNA’s website.
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