Mexico antitrust body probes Walmex ‘monopolistic’ moves, shares slump

Mexico’s antitrust watchdog, Cofece, has taken action against a leading supermarket retailer for alleged unfair pricing and contractual terms imposed on its suppliers and distributors. While Cofece did not disclose the company’s name, sources have identified it as Walmart de Mexico, also known as Walmex, the largest supermarket chain in the country. The investigation focuses on potential abuse of dominant power, which could result in fines of up to 8% of the company’s annual income.

In response to the allegations, Walmex has expressed confidence in its adherence to the law, emphasizing its commitment to providing competitive prices and ensuring a steady supply of products. However, the news has impacted the company’s stock, causing a temporary decline of over 5%, reaching its lowest level in more than two and a half years.

It is worth noting that Walmart has a history of negotiating lower prices with its vendors. In 2019, the retailer faced criticism for penalizing food companies supplying groceries to rival Amazon.com. While Cofece’s probe has not explicitly linked the investigation to these tactics, the watchdog’s focus on potential distortions of free competition suggests a broader examination of market practices.

Cofece’s head of investigative unit, Jose Manuel Haro, highlighted the case as an instance of a distributor or supplier imposing prices or other conditions on their partners. The authority aims to prevent any distortion in the process of free competition, ensuring fair practices within the market.

Walmex has acknowledged receiving a notification from Cofece regarding the investigation, which pertains to the supply, wholesale distribution, and marketing of consumer goods. The company now has 45 business days to present its arguments and evidence to the authority.

Walmex, which operates 2,890 stores across Mexico, is majority-owned by Walmart, a globally recognized retail giant. The company’s commitment to providing affordable products and contributing to the local economy has made it an integral part of Mexican households. As Cofece focuses on monitoring anti-competitive behavior in the food and beverage sectors, it underscores the importance of fair practices in an industry where Mexican families allocate a significant portion of their income.

While the investigation is ongoing, both Cofece and Walmex have the opportunity to present their cases in a trial-like procedure. The company in question can also appeal Cofece’s decision in court. As the situation unfolds, stakeholders will be closely watching for the final outcome, which will shed light on the extent of any potential violations and the measures taken to ensure fair competition within the Mexican retail market.