The Federal Economic Competition Commission (Cofece) reported on Monday that it will monitor Walmart de México (Walmex) for the next 10 years, that is, until 2034, after the company engaged in illegal conduct in the supply and distribution of food, beverages and hygiene and cleaning items for the home in Mexico.
“For 13 years, Walmart used its market power to impose abusive conditions on its suppliers, obtaining illegal advantages over its competitors,” Cofece explained in a statement.
“The Cafe will verify compliance with the measures 10 years and may fine Walmart up to 8% of your income if you do not comply with this resolution“added the organization.
According to the regulator’s investigations, Walmart de México had a system that allowed it to impose discretionary discounts to force its suppliers not to give better prices and conditions to other self-service stores, “seriously affecting them,” especially small and medium-sized stores.
“Through these behaviors, Mexican families were also harmed, since Walmart made it difficult for other self-service stores to offer better offers without this necessarily translating into better prices for Walmart consumers,” the institution said.
Read: Cofece sanctions Walmart with 93.4 million pesos for monopolistic practices
For this reason, the Plenary of the Cofece le Walmart de México stop these illegal behaviors and prohibited for the next 10 years:
- Retaliate against your suppliers (how to sanction or terminate contracts) as a result of the commercial relationships they have with other self-service stores.
- demand or impose to your suppliers pricesso that they are able to make attractive offers to other self-service stores.
- Require information from your suppliers about the prices or conditions they offer to other businesses.
- Apply discounts in the prices at which you purchase the products without consent prior and express from the supplier.
- Update your internal policies, guidelines and contracts to fit the resolution.
- Establish a communication channel for providers to report any irregularity that goes against the resolution.
- Implement a compliance program in economic competition matter and designate a compliance officer high level.
La Cofece indicated that the measures were “carefully designed” so that Walmart de México can continue to negotiate freely and competitively with its suppliers, without this giving it illegal advantages over other self-service stores.
“Thus, these measures do not imply that Walmart does not offer low prices to its customers; but rather it must do so by competing under equal circumstances for the preference of Mexican families,” he noted.
Last Friday, the country’s main retailer announced that the competition regulator had informed it of a penalty of 93.4 million pesos for engaging in monopolistic practices, after a four-year investigation.
Lee: Walmart de México fined, a ‘nip’ to its income
Walmart de México will challenge
The company reported that day that it will challenge the decision, considering that the authority’s analysis “is incorrect” and that it “made errors in the application of the law.”
The Mexican unit of Walmart has denied having “substantial power” and maintains that Cofece “did not meet its burden of proof,” ensuring that it has the fundamental right to the presumption of innocence and that the study “makes direct accusations to Walmart.” . Furthermore, he maintained that he was not allowed an adequate defense.
The investigation against Walmart de México began in mid-2020, after a complaint from its competitor Chedraui and points to relative monopolistic practices in the wholesale supply and distribution market for consumer goods, their retail marketing and related services.
Ignacio Caride, executive president and general director of Walmart de México, said in early October that an unfavorable resolution could force the company to adjust its operations, but would not affect the announced investments.
Walmex’s revenues in Mexico, its main market, grew 6.1% to 190,018 million pesos in the third quarter, according to its financial statements.
In the third quarter it opened 32 stores in Mexico of different formats for a total of 3,065, while in Central America it opened seven for a total of 912.
The company’s shares on the Mexican Stock Exchange lost just over 2% almost at the close of the session this Monday, according to data from investing.com.
With information from Diego Aguilar, Reuters and Francisco Rivera
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