Walmart's Mexican unit faces more fines if it defies antitrust resolution, regulator says

MEXICO CITY (Reuters) -Mexico's antitrust watchdog Cofece said on Monday it could fine Walmart (NYSE:WMT )'s local unit, Walmex, up to 8% of its income if it does not comply with a resolution prohibiting the retailer from engaging in certain conduct deemed illegal.  

Cofece's statement offered more details on a ruling that Walmex reported on Friday, in which the regulator ordered the company to pay a fine of more than 93 million pesos ($4.62 million) for engaging in a monopolistic practice involving its suppliers.

"For 13 years, Walmart used its market power to impose abusive conditions on its suppliers, obtaining illegal advantages over its competitors," the watchdog said in the statement, outlining several prohibitions it levied on Mexico's top retailer.     

According to the statement, Walmart de Mexico, known as Walmex, "had a system that allowed it to impose discretionary discounts, pressuring its suppliers not to offer better prices and terms to other retailers, which severely harmed them, especially small and medium-sized businesses."

Walmex did not immediately respond to a request for comment on Cofece's statement, but said on Dec. 13 that it believes the regulator's analysis is incorrect and that it will appeal its ruling.

Cofece on Monday said it had prohibited Walmex from taking reprisals against suppliers in the form of sanctions or terminated contracts in retaliation for the supplier's commercial relations with other self-serve stores.

The antitrust body said it also prohibited Walmex from demanding or imposing prices on its suppliers and from requiring its suppliers to provide information on the prices or conditions they offer to other businesses.

"Cofece will verify compliance with the measures for ten years and may fine Walmart up to 8% of its income if it does not comply with this resolution," the regulator said.

Cofece is one of several autonomous government watchdogs that Mexico's Congress voted last month to abolish while giving its competition policing powers to other government agencies under the president's direct control.

The watchdog's resolution followed a roughly four-year investigation into Mexico's largest private employer, which also operates stores in Central America.



Markets reacted positively after Walmex initially reported the fine, with analysts noting that the penalty of around $4.6 million could have been worse for the company, which in the third quarter reported more than $650 million in net profit.

($1 = 20.1190 Mexican pesos)

Source: Investing.com