MEXICO Law and Practice Contributed by: Gustavo A. Alcocer, Luis Astorga, Isabella Montero Torres and Fernanda Martínez Zolezzi, OLIVARES
However, in certain cases, such requirements may raise competition-law concerns where they effectively impose exclusivity or constitute a tied sale. A Mexican competition precedent is particularly relevant in the franchising context. In the PEMEX-Refinación case, the competition authority found that requiring gas-station franchisees to use PEMEX’s transportation services as a condition for obtaining fuel constituted a tied sale, as the arrange - ment prevented franchisees from selecting alternative service providers. 6.4 Channel Reservation A franchisor may, in principle, reserve particular sales or distribution channels for itself, including online channels. However, the competition-law analysis will depend on the structure and effects of the reservation. A reservation of the internet or another channel could potentially constitute a form of vertical market seg - mentation or exclusivity if it restricts franchisees from selling through that channel or reserves particular customers or geographic markets to the franchisor. Such restrictions may fall within Article 56 of the LFCE where the statutory requirements for a relative monop - olistic practice are met. Accordingly, a channel reservation should be assessed based on the relevant market, the franchisor’s market power, the extent of the restriction, the ability of fran - chisees and competing businesses to reach consum - ers through alternative channels and any efficiency or legitimate business rationale supporting the arrange - ment. A limited reservation of a channel for the fran - chisor would not, by itself, constitute a violation of the LFCE. In practice, the reservation of digital channels by the franchisor is common and may be defensible as a legitimate aspect of the design of the franchise sys - tem, including to avoid cannibalisation among fran - chisees and internal price competition. 6.5 Vertical Agreement Block Exemptions Mexico is not a member of the European Union and, therefore, the Vertical Block Exemption Regulation (VBER) does not apply. The LFCE does not provide
for an automatic category-based exemption or “block exemption” equivalent to the European regime, nor does it establish a market-share threshold that would provide an automatic “safe harbour”. Instead, vertical restraints are assessed under the framework applicable to relative monopolistic prac - tices, as explained in 6.1 Treatment of Competition Restrictions in Franchise Agreements . Consequently, there is no automatic Mexican exemption applicable to franchise agreements as a category. Each restric - tion should instead be assessed individually, taking into account the relevant market, the parties’ market power, the scope and duration of the restriction, its potential effects on competition and the efficiencies or other pro-competitive justifications associated with it. The fact that a franchise network covers the entire Mexican territory does not, by itself, exempt its con - tractual restrictions from the LFCE. 7. Joint Employer Risk and Vicarious Liability 7.1 Joint Employer Laws There are no Mexican judicial decisions in which a franchisor has been held jointly liable with a franchisee for employment-related claims. Nevertheless, in light of existing criteria regarding joint and several employ - ments liability, it is advisable for franchise agreements to expressly provide that the franchisee is solely responsible for the hiring, compensation, supervision, management and termination of its personnel. The agreement should also expressly state that: • no employment relationship exists between the franchisor and the franchisee’s employees; • no agency, representation or partnership rela - tionship exists between the franchisor and such employees; • the franchisee must comply with all applicable employment, social security and tax obligations; and • the franchisee must indemnify and hold the fran - chisor harmless for any employment-related claims brought by its employees.
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