Mexico‘s Federal Economic Competition Commission (Cofece) informed that it is investigating possible relative monopolistic practices in the market for the development, distribution and payment processing of mobile applications and digital content, as well as related services.
As a starting point, Cofece published this Friday the excerpt of the agreement to initiate an ex officio investigation, IO-005-2022, for the possible conduct of relative monopolistic practices in the market for the development, distribution and processing of mobile application payments and digital content, as well as related services.
In this regard, the Federal Economic Competition Law (FECL) establishes that relative monopolistic practices are acts, contracts, agreements, procedures or combinations carried out by one or several economic agents with substantial power and that have, or may have, the purpose or effect of unduly displacing other market participants, substantially impeding their access or establishing exclusive advantages in favor of one or several economic agents.
Examples of these practices are tied purchases or sales, exclusivity, price or treatment discrimination, raising costs to other economic agents and denial of treatment, among others.
Cofece also stated that this investigation is based on articles 12, section I, 28, section II, 52, 66 and 71 of the FECL , as well as 16 and 17, section II, of the Organic Statute of the Federal Economic Competition Commission, in order to analyze if any of the conducts foreseen in article 56 of the FECL and/or 10 of the FECL of 1992 are actualized, since there is an objective cause that could indicate the realization of possible relative monopolistic practices foreseen in the aforementioned regulations.
In order to carry out this investigation, the Investigating Authority has a term of up to 120 business days, counted from the date of initiation of the investigation, which may be extended for the same period up to four times.
This investigation, which began on September 30, 2022, should not be understood as a prejudgment on the responsibility of any economic agent. The foregoing, given that so far no violations of antitrust regulations have been identified.
Mobile applications allow adding a wide variety of functionalities and content to electronic devices, including smart watches, tablets and cell phones. Among the most common applications are those related to video games, entertainment, photography and social networks.
These applications are produced by developers and distributed to users of these devices, mainly through App Stores.
Developers can generate revenue from their applications through different business models, including advertising, in-app purchases and in-app downloads.
The research analyzes developers’ business models and the mechanisms by which payments are processed in App Stores.
This investigation is relevant considering the millions of Mexicans who download from these stores, which amounted to more than 4.8 billion in 2021, which represented around 29 billion pesos in revenues for app developers that same year.