Walmart Mexico Faces $5 Million Fine Amid Antitrust Allegations

Mexico’s Federal Economic Competition Commission (COFECE) has announced that Walmart’s Mexican unit, Walmex, could face fines of up to 8% of its income if it fails to adhere to a recent ruling prohibiting certain business practices deemed illegal under antitrust laws. The warning, issued on Monday, follows the regulator’s decision to fine Walmex over 93 million pesos (approximately $4.62 million), according to Reuters.

The fine stems from a four-year antitrust investigation by COFECE, during which the watchdog scrutinized Walmex’s interactions with suppliers and competitors. The inquiry concluded that the retailer engaged in monopolistic practices, including actions perceived as unfair towards suppliers. Bloomberg reported that the regulator interviewed various suppliers and retailers to assess whether Walmex abused its market dominance.

A Complex Ruling with Broader Implications

The $5 million penalty represents a minor portion of Walmex’s substantial revenue but signals the regulator’s stance on enforcing fair competition in Mexico. COFECE’s resolution imposes restrictions on Walmex’s ability to negotiate two specific supplier contributions, part of a broader practice initially deemed problematic during the investigation. The watchdog clarified that Walmex can still negotiate other contributions with suppliers.

The enforcement of this ruling, however, may face challenges. According to Bloomberg, Mexico’s Congress has approved legislation to dismantle COFECE and shift antitrust enforcement responsibilities to an agency under the Ministry of Economy. This legislative shift could affect the watchdog’s ability to oversee similar cases in the future.

Related: Mexican Antitrust Authority Nears Decision on Walmart Probe

Walmex’s Response and Ongoing Compliance

Walmex has stated its disagreement with COFECE’s findings, asserting that its practices comply with applicable laws and benefit Mexican families by ensuring competitive prices and product availability. The company announced plans to challenge the ruling in court, citing alleged irregularities in the investigation process. Nevertheless, Walmex has committed to working with its suppliers in accordance with the antitrust authority’s decision while the legal challenge proceeds.

“Since Walmex and its subsidiaries believe they have acted in compliance with applicable laws to the benefit of Mexican families, and due to the irregularities in COFECE’s investigation and proceedings, Walmex will challenge COFECE’s decision,” the company stated in a release.

Allegations of Monopolistic Practices

The investigation into Walmex began following accusations that the retailer leveraged its market position to dictate terms and prices to suppliers, a potential violation of Mexico’s competition laws. Despite COFECE’s ruling, Walmex has consistently denied any wrongdoing, maintaining that its actions were lawful and aimed at benefiting consumers.