MEXICO LAW AND PRACTICE Contributed by: Fernando Carreño, Sergio López, Michel Llorens, Andoni Garza and María García, Von Wobeser y Sierra
USD28,908) (all figures in US dollars hereinafter consider an exchange rate of MXN19.5688 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 undertak - ings that carried out the transaction. Additional - ly, 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 the Authority for failure to notify can be found in 2.13 Penalties for the Implementation of a Transaction Before Clearance . 2.3 Types of Transactions A transaction must trigger any of the three Mexi - can economic thresholds (see 2.5 Jurisdiction- al Thresholds ) for 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 mone - tary-based and not specifically related to con - trol. However, the Authority has recommended adopting a conservative standpoint and notify - ing any transaction in which there are doubts concerning the thresholds, as well as other joint ventures (particularly among competitors). 2.4 Definition of “Control” In Mexico, the obligation to notify a transaction is purely based on monetary thresholds, regard - less of whether the acquirer gains control. Thus, minority acquisitions can trigger a Mexican pre- merger control filing as long as one of the mon - etary thresholds is met.
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 undertakings when it comes to acting in the markets, either as a result of legal acts or based on facts. 2.5 Jurisdictional Thresholds In Mexico, there are no specific thresholds appli - cable 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 MXN2,036,520,000 (approximately USD104,069,744). • 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 MXN2,036,520,000 (approximately USD104,069,744). Both parts of the second threshold must be met for a transaction to be notifiable in Mexico. • Size of the Parties: A transaction must involve the acquisition of: (a) assets or capital stock with a value great - er than MXN950,376,000 (approximately USD48,565,880); and (b) the undertakings involved in the transac - tion must have assets or sales in Mexico that (jointly or separately) amount to more than MXN 5,430,720,000 (approximately USD277,519,316). Both parts of the third threshold must be met for a transaction to be notifiable. Regarding 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
356 CHAMBERS.COM
Powered by FlippingBook