Mexican Legal Framework of Business Insolvency - White & Case
Mexican Legal Framework of Business Insolvency - White & Case
Mexican Legal Framework of Business Insolvency - White & Case
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Until recently, C<strong>of</strong>eco had not taken an <strong>of</strong>ficial position regarding horizontal mergers involving<br />
failing firms. 81 Since 2004, C<strong>of</strong>eco has sustained the non-binding criterion that it may be<br />
more efficient for a failing firm to be acquired by a competitor than to let it fail: 82<br />
114<br />
3.10. Enterprises in Financial Distress<br />
In connection with market efficiencies, there is the case where an agent in the relevant<br />
market acquires another agent in the same market, and the latter risks disappearing.<br />
If the bankruptcy <strong>of</strong> that [latter] agent is highly probable and a real possibility, then<br />
its ceasing operations would be more inefficient than if it were acquired by another<br />
[agent], even if the acquiring agent has substantial power [in the relevant market].<br />
In March 2011, C<strong>of</strong>eco issued a new criterion in that respect. While stating that the failing<br />
firm exception is not expressly available in an antitrust framework, C<strong>of</strong>eco cites a 2001 case<br />
where it did take such argument into account in its pre-merger authorization process: 83<br />
Enterprises in Economic Distress.<br />
Neither does the [Antitrust] Law nor C<strong>of</strong>eco’s practice foresee a specific mechanism<br />
to notify transactions in which the target is found in financial distress, where the transaction<br />
could give place to a significant market concentration. [Footnote 27: In the file CNT-149-2001,<br />
C<strong>of</strong>eco analyzed the acquisition <strong>of</strong> Promotora de Marcas Nacionales, SA de CV, which was<br />
the holder <strong>of</strong> trademarks relating to Mundet products, by subsidiaries <strong>of</strong> Fomento Económico<br />
<strong>Mexican</strong>o, SA de CV (Femsa). This is one <strong>of</strong> the few cases which C<strong>of</strong>eco has analyzed from the<br />
failing firm perspective. C<strong>of</strong>eco determined that the target was in such a state <strong>of</strong> decay that its<br />
prospects were compromised, and [whose failure] would have reduced the consumers’ selection<br />
opportunities. C<strong>of</strong>eco authorized the transaction subject to a [certain specified] condition…].<br />
81 Cfr. Chapter 11 <strong>of</strong> the US DOJ/FTC 2010 Horizontal Merger Guidelines.<br />
82 C<strong>of</strong>eco (2004).<br />
83<br />
C<strong>of</strong>eco (2011).