MEXICO Trends and Developments Contributed by: Gabriel Robles, Héctor Cárdenas, Eric Silberstein and Eduardo Aiza, Ritch Mueller
lowered, as has the percentage of asset or stock accumulation that requires regulatory clearance. While this change broadens the scope of transac - tions subject to review, it also underscores the importance of early stage guidance from antitrust counsel to ensure timely compliance. • Higher fines and economic penalties – enforcement measures have intensified, with increases in the fines that can be imposed on parties found guilty of monopolistic practices or illegal concentrations. For private equity funds, this means the cost of non-compliance has risen, reinforcing the need for robust due diligence and careful structuring of portfolio acquisitions, especially in sectors that are more prone to market dominance issues. In addition to these statutory changes, budget cuts and transitional uncertainty surrounding the transi - tion from COFECE to the CNA may result in delayed enforcement or shifting regulatory priorities, at least in the near term. Nonetheless, the overarching trend is clear: private equity sponsors should anticipate more vigilant review of deals, particularly in industries with moderate to high levels of market concentra - tion. Thorough competition analysis at the outset of a transaction becomes essential to mitigate the risk of investigations or penalties further down the line. These changes are expected to result in more conservative approaches in respect of regulatory approvals as the CNA is likely to be more difficult to predict. Legislative and regulatory considerations In the context of private equity transactions, thorough attention to regulatory compliance has become ever more critical. The concurrent changes in the judiciary and the instalment of the CNA elevate the importance of legal due diligence at the earliest stages of a deal. Private equity sponsors must be especially mindful of the following. • Authority approvals and notification require - ments – transactions that exceed lowered antitrust thresholds must secure prior regulatory authori - sation from the CNA. Given the newly expanded investigative powers, sponsors are well advised to file timely notifications and prepare comprehensive competitive analyses to reassure regulators of the transaction’s market objectives.
• Sector-specific regulations – the Mexican regula - tory environment can be stringent in strategic sec - tors such as telecommunications, transportation, and energy. Depending on the intended portfolio company’s line of business, investors may need to secure concessions, permits, or other approvals from government entities. In certain industries, for - eign ownership restrictions or specific ownership caps remain in place, requiring creative transac - tion structures – such as joint ventures with local partners – to achieve compliance. • Labour and employment reforms – in recent years, labour reforms have restricted the use of out - sourcing arrangements and increased employer responsibilities for social security and benefits. Further, labour reforms have aimed to regulate, as employees, the independent contractors within the gig-economy. Private equity-driven turnarounds often rely on cost efficiencies derived from labour strategies, so fund managers must be vigilant about compliance with relevant labour laws, which could affect entire business models, with non-com - pliance resulting in significant liabilities (including criminal). • Judicial enforcement mechanisms and dispute resolution – even though the judiciary reform may generate some uncertainty in the short term, it is also meant to streamline judicial processes and impose stricter deadlines on courts. Private equity sponsors typically rely on robust dispute resolution mechanisms to ensure that enforcement of rights proceeds predictably, such as international arbitra - tion or specialised commercial courts. The reform’s emphasis on reducing backlogs, if realised, could ultimately lower litigation risk and shorten the timeline to resolve investor-state or commercial disputes. Fundraising and capital markets access Notwithstanding complex legal developments, Mex - ico’s private equity ecosystem continues to raise capital successfully. Institutional investors, including domestic pension funds (AFORES) and internation - al development finance institutions, remain critical sources of capital. Over the past year, larger funds have been able to target specialised verticals, like renewable energy, technology, or infrastructure, while
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