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Mexico’s First-Ever Class Action Targets Pharma Giants for Price Fixing

By  |  November 3, 2024
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Mexico’s Federal Economic Competition Commission (Cofece) has filed its first-ever class action, seeking damages of approximately 100 million euros (US$109 million) from three major pharmaceutical distributors and an industry association. This landmark case aims to address alleged anticompetitive practices that affected medicine availability and pricing across the country, underscoring Cofece’s expanded commitment to protecting consumer interests in Mexico’s largely untested private litigation landscape.

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    According to a statement from Cofece, the class action targets Casa Marzam, Casa Saba, Fármacos Nacionales, and the Association of Pharmaceutical Products Distributors of Mexico. The case accuses the companies of orchestrating restrictive agreements over a ten-year period, during which they allegedly limited medicine distribution on certain days, restricted quantities supplied to pharmacies, and manipulated pricing practices to curb discounts. Cofece contends that these actions led to artificial price inflation and limited access to essential medications, especially impacting lower-income households who spend a larger portion of their income on healthcare. Cofece estimates that these practices have cost Mexican consumers more than 2 billion pesos in inflated medicine prices.

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    In 2021, Cofece imposed a record fine of 903.4 million pesos on several pharmaceutical companies and 21 individuals involved, marking the maximum allowable penalty under the current legal framework. Additionally, ten executives linked to the agreements were disqualified from their roles. This class action goes further by seeking to secure an additional 2.316 billion pesos in compensation, which, if awarded, would be allocated to the IMSS-Bienestar program to improve healthcare services in underserved areas. The proposed allocation aims to benefit those most affected by these alleged anticompetitive practices.

    “Through this historic class action, we seek not only justice for those harmed by inflated medicine prices but also accountability for the practices that have hindered the healthcare sector,” Cofece’s statement noted. “This legal action highlights our commitment to fully exercising our authority in competition law, ensuring that the damages caused by such violations are repaired.”

    The case is also a significant milestone in Mexican competition law, as it marks the first use of collective action within this framework. Under collective action, Cofece assumes the role of representing affected individuals or groups, covering the legal costs associated with pursuing compensation. This approach allows those impacted by anticompetitive behavior to seek redress without bearing the expense of lengthy litigation.

    Source: Cofece