Mexico’s antitrust body probes Walmex ‘monopolistic’ moves, shares slump. Following Walmart de Mexico’s announcement that it will appear before an antitrust panel, Mexico’s antitrust watchdog, Cofece, announced on Monday that it had summoned a supermarket retailer to answer claims that it had imposed pricing and terms on its suppliers or distributors.
Cofece did not identify the business under investigation, but a person with knowledge of the situation claimed it was Mexico’s largest grocery chain, Walmex, a unit of Walmart (WMT.N).
The case may entail potential abuse of dominant power, sometimes known as “relative monopolistic practices,” which can result in a fine of up to 8% of a company’s annual revenue, according to Jose Manuel Haro, head of Cofece’s investigation team.
Walmex shares dropped more than 5% to their lowest point in more than 30 months, despite the company’s assurance that it had acted legally to assure fair prices and a supply of goods.
Walmart has a history of pressuring suppliers to cut their costs. In 2019, Reuters reported that the store had fined food suppliers to rival Amazon.com Inc (AMZN.O) for providing foodstuffs.
Haro said Cofece would provide additional information in its conclusion and declined to name the corporation or comment on whether the Cofece investigation was connected to such practices.
“In this case, it’s about the imposition of a price, or other conditions, with a distributor or supplier,” Haro said in a telephone interview. “The economic agent in question is making an imposition, and could be distorting the process of free competition.”
When questioned about the Cofece statement, Walmex said it had received a communication from the authority on Friday, when it first made known that an investigation into the supply, wholesale distribution, and marketing of consumer goods was underway.
“The company is reviewing the notification, with 45 business days to present arguments and evidence,” Walmex stated.
Having 2,890 locations nationwide, Walmex is owned by Walmart 71% of the time.
According to a statement from Cofece, the alleged firm can defend itself in a trial-like setting against accusations of “probable vertical price fixing and/or other relative monopolistic practices.” It has the right to take Cofece’s ruling to court.
Considering that Mexican families spend more than half of their income on consumer products, Cofece stated that the food and beverage industries are priority areas to watch for anti-competitive activity.
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