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Cofece prepares to face more cases on digitalization

The Federal Economic Competition Commission (Cofece) of Mexico informed that it is preparing to face a growing trend of cases related to digitalization.

“Digitalization is an irreversible process, the Federal Economic Competition Commission is aware of this and is preparing to face the challenges that involve markets with high levels of concentration, gatekeepers, the possibility of killer acquisitions, etcetera,” said the alternate president of Cofece, Brenda Gisela Hernandez, during the inauguration of the Mexico 5G forum.

Among others, the event was attended by representatives of the Federal Telecommunications Institute (IFT), Anatel, AMIAC, the Internet Association MX and the Digital Policy Law Group.

Hernández then shared part of Cofece’s trajectory in the analysis of economic competition in information technologies and digital markets.

Cofece has had a continuous activity in the field of ICTs, mainly through the analysis of concentrations, where it has conducted analysis in markets ranging from integrated circuits, production of screens, software, computers, distribution of technology products, to lighting solutions for smart homes.

From Hernández’s perspective, these mergers were authorized because they did not represent a problem to competition, contributed to the competition process in the information and communication technologies sector and have given Cofece a solid experience in these markets.

Cofece

Now, as part of the digital markets that use the Internet as an input, the Commission has been active since its inception.

Only a year after its creation, it issued the first opinion on digital platforms, in which it recommended to the Mexico City government to allow the entry of transportation network companies such as Uber or Didi to the City and limiting the regulation to passenger safety issues, (such as driver identification, or car safety).

In 2018, following notification of Walmart’s intent to acquire the Cornershop platform, the Commission assessed for the first time, the value of data collected by a platform and the effect this could have on other Walmart competitors within Cornershop. This and other competitive risks were part of the reasoning for the transaction not to be authorized.

A year later, and once the Specialized Courts confirmed the Commission’s competence over this type of digital platforms, Cofece analyzed the acquisition of Cornershop, but this time by Uber, both multi-sided platforms operating entirely in the digital economy.

Internet

In addition, Hernandez exposed that other operations have been integrated to the Commission’s experience in digital markets and platforms, as several concentrations involving dedicated economic agents have been analyzed.

For example, to the commercialization of off-season products through a website and an application for mobile devices; to the purchase and sale of used cars directly or through an application; to the offering of travel products and services through B2C (Business to Consumer); B2B (Business to Business); B2B2C (Business to Business to Consumer) lines of business and where online advertising services are also offered, and so on.

Fintech

In particular, Hernandez mentioned that one sector that deserves special mention is the Fintech sector, which is integrated into the Commission’s track record in the Financial sector, considered a strategic sector since 2014.

The Commission issued an opinion in 2017 in the framework of the legislative process of the Law to Regulate Financial Technology Institutions, the Fintech Law.

In it, it recommended: making it explicit that users own their information; regulating considerations for data transmission; guaranteeing the provision of financial services by credit institutions to Fintech companies; and eliminating any technological or infrastructure restrictions. In March 2018, the Fintech Law enacted and addressed some of Cofece’s recommendations.

In addition, Cofece has analyzed more than 10 concentrations related to the provision of digital financial services and startups, including those related to non-bank mobile payment solutions to small and medium-sized companies; the granting of simple credits, offering credit cards and financial services through apps.

Finally, in June, Cofece initiated a study of the financial payment services market in order to evaluate market conditions and areas of opportunity in terms of economic competition.

 

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