Antitrust  I  March 14th, 2023

COFECE imposes 62 million peso fine on two companies for failing to comply with the merger notification procedure

The Federal Economic Competition Commission (“COFECE”), the autonomous agency responsible for ensuring fair competition in Mexican markets, imposed a sanction on HP, Inc. (HP) and Plantronics, Inc. (POLY) for prematurely closing a merger before COFECE issued its resolution. The total amount of the sanction is around MXP 62 Million Pesos (approximately USD 3.5 Million Dollars), as both companies failed to comply with the provisions of the Federal Antitrust Law.

In dealing with certain thresholds, the merger notification process is mandatory and it involves fulfilling certain obligations, starting with the filing of the merger notification before COFECE. The process ends with the issuance of a resolution by COFECE, which may authorize, deny, or subject the authorization of the merger to certain conditions. The Federal Antitrust Law specifically imposes the obligation to first obtain a resolution that authorizes or conditions the merger transaction before completing same.

On August 29th, 2022, HP indirectly acquired all shares and control of Poly. This triggered a verification procedure by COFECE to determine whether the transaction should have been notified and to analyze whether it posed any risks to fair competition and free market processes.

Once the verification procedure was completed, COFECE determined that the transaction did not pose any risks to the fair competition and free market process, thereby granting authorization for the merger. However, due to HP’s and Poly’s omission to notify the merger as required by the Mexican Antitrust Law, COFECE imposed the above-mentioned sanctions.

Unfortunate cases like this prove how valuable it is to rely on preventive legal advice in any commercial transaction, to avoid preventive actions commonly referred to as “gun jumping”.