By Daina Beth Solomon
MEXICO CITY (Reuters) -Mexico’s antitrust watchdog, Cofece, on Monday said it has summoned a supermarket retailer to face allegations of imposing prices and terms on its suppliers or distributors, after Walmart (NYSE:) de Mexico said it would face an antitrust panel.
Cofece did not name the company under investigation, but a source familiar with the matter said it was Walmart’s Mexico unit, often known simply as Walmex, the country’s biggest supermarket chain.
The head of Cofece’s investigative unit, Jose Manuel Haro, said the case involves potential abuse of dominant power, known as “relative monopolistic practices,” which can carry a fine of up to 8% of a company’s annual income.
While the company said in a statement that it was confident it had acted lawfully to ensure good prices and product supply, Walmex shares slumped more than 5% to their lowest level in more than 30 months.
Walmart has long had a reputation for demanding lower prices from vendors. Reuters reported in 2019 that the retailer had penalized food companies supplying groceries to rival Amazon.com Inc (NASDAQ:).
Haro declined to name the company or comment on whether the Cofece probe was related to such tactics, and said Cofece would present more details in its final decision.
“In this case, it’s about the imposition of a price, or other conditions, with a distributor or supplier,” Haro said in an interview. “The economic agent in question is making an imposition, and could be distorting the process of free competition.”
Asked about the Cofece statement, Walmex said it had received a notification from the authority on Friday, when it first disclosed the probe, related to the supply, wholesale distribution and marketing of consumer goods.
“The company is reviewing the notification, with 45 business days to present arguments and evidence,” Walmex said.
Walmart owns 71% of Walmex, which has 2,890 stores in the country.
Cofece said in a statement that the company in question can defend itself in a trial-like procedure against findings of “probable vertical price fixing and/or other relative monopolistic practices.” It can appeal Cofece’s decision to a court.
Cofece said the food and beverage sectors are priority areas to monitor for anti-competitive behavior, noting that Mexican families spend more than half their income on consumer goods.
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