Mexico's Antitrust Authority Considers Fines on Walmart's Local Unit

MEXICO CITY (Reuters) – Mexico's antitrust watchdog, Cofece, announced on Monday that it could impose fines on Walmart's local unit, Walmex, of up to 8% of its income if the retailer fails to comply with a resolution against certain illegal practices.

Cofece provided further details on a ruling reported by Walmex on Friday. The regulator has already ordered the company to pay over 93 million pesos (approximately $4.62 million) for engaging in monopolistic behaviors with its suppliers.

The statement from Cofece outlined that for 13 years, Walmart leveraged its market dominance to impose unfair conditions on its suppliers, gaining illegal advantages over competitors.

According to Cofece, Walmex operated a system that enforced discretionary discounts, pressuring suppliers not to offer better pricing or terms to other retailers, which significantly impacted small and medium-sized businesses negatively.

Walmex has yet to provide a comment on Cofece's latest statement, but it previously indicated on December 13 that it intends to appeal the regulator's findings, asserting that the analysis is flawed.

Cofece prohibits Walmex from retaliating against suppliers through punitive measures or terminating contracts due to the suppliers' relationships with other retailers. It also forbids Walmex from imposing pricing on suppliers or demanding information on their price offerings to other businesses.

The regulator stated it would monitor compliance with these measures for a decade and hold the authority to fine Walmart up to 8% of its income should it fail to comply with the resolution.

This ruling follows an extensive four-year investigation into Mexico's largest private employer, which also has operations in Central America.

Market responses to Walmex's initial fine announcement were positive, with analysts noting the approximately $4.6 million penalty could have been more severe, especially as the company reported over $650 million in net profit for the third quarter.

($1 = 20.1190 Mexican pesos)