The Federal Economic Competition Commission (Cofece), the regulatory body in charge of supervising competition in Mexico, warned this Monday that it could impose a fine of up to 8% of its income on Walmex, the local subsidiary of Walmart, if it fails to comply with a ruling that prohibits the retailer from engaging in certain illegal practices.
Why will Walmart be fined?
According to Cofece, the fine imposed on Walmart is due to its involvement in a monopolistic practice related to its suppliers.
The regulatory body stated that, for 13 years, Walmart used its market power to impose abusive conditions on its suppliers, gaining illegal advantages over its competitors.
Walmart Mexico, Cofece detailed, operated a system that allowed it to apply arbitrary discounts, pressuring its suppliers not to offer better prices and terms to other retailers. This severely impacted suppliers, especially small and medium-sized businesses.
Walmex did not immediately respond to a request for comments on Cofece’s statement; however, in a press release, the company said it believes the regulator’s analysis is incorrect and that it will appeal the ruling.
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The Federal Economic Competition Commission also announced that it has prohibited Walmex from demanding or imposing prices on its suppliers, as well as requesting them to share information on prices or terms offered to other companies.
How much is Walmart’s fine?
In a statement, Cofece noted that it has ordered the company to pay a fine of over 93 million pesos, equivalent to 4.62 million dollars.
What is Walmex?
Walmart de México y Centroamérica is a company dedicated to the retail sector. It operates a wide range of formats, including discount stores, supermarkets, warehouses, hypermarkets, and membership-based warehouse clubs.
What companies are owned by Walmex?
Currently, Walmart Mexico operates the following stores:
- Bodega Aurrera Express
- Despensas Familiares
- Palí
- Superama
- Supertiendas Paiz
- La Despensa de Don Juan
- La Unión
- Más x Menos
- Bodega Aurrera
- Mi Bodega Aurrera
- Maxi Bodega
- Walmart
- Hiper Paiz
- Hipermás
- Sam’s Club
- ClubCo
Where does Walmex operate?
The company currently operates in six countries:
- Costa Rica
- El Salvador
- Guatemala
- Honduras
- Mexico
- Nicaragua
How many branches does Walmex have?
Walmart de México y Centroamérica, a subsidiary of the international supermarket chain Walmart, operates more than 3,000 stores in Mexico. The Bodega Aurrera stores, a discount format, are the most common, representing about 80% of Walmex’s total stores in the country.
As for Superama stores, which are mainly aimed at middle and upper-class segments, a total of 102 establishments have been registered nationwide.
What is Cofece?
Cofece is an autonomous body of the Mexican state, whose mandate is established in Article 28 of the Constitution. Its main responsibility is to oversee, promote, and guarantee competition and free market entry in the country to ensure that markets operate efficiently and for the benefit of consumers.
This means that its role focuses on creating the necessary conditions for businesses, retailers, and professionals offering goods and services to compete fairly for customers’ preferences.
Thanks to this regulation, companies are incentivized to improve the quality of their products and services, reduce costs to offer lower prices, and provide higher quality service, allowing consumers to choose the options that best meet their needs.
