What is a Merger?

The law defines mergers as the fusion, acquisition of control, or any act that consolidates corporations, associations, actions, partnership interests, trusts, or assets in general among economic agents.

The Dirección General de Concentraciones, when analyze mergers and acquisitions seeks to determine if the transaction can negatively affects the conditions of the competition and free concurrence process.

Preventive Nature

The analysis and authorization process of mergers constitutes one of the preventive activities of the Commission. The goal is to prevent the creation of  monopolies or oligopolies  with improper behavior and market power  after the merger.

To strengthen the preventive capacities of the Commission about merger procedure, the Law authorizes it to issue orders of the non-execution operation until it is authorized, within 10 days after notification.

Which operations can be the most harmful?

The worldwide practice of competition law indicates that horizontal mergers, this means, those among competitors, have more possibilities to causing concern. The reason is that one competitor is eliminated through this type of operations, while the share market of the merger grows.

There are also other types of operations, as vertical operations, where the merger of related companies is produced in a different stage of the productive chain, which can cause some excluding behaviors. It is also possible that operations in which merger companies participates in related markets, those operations may generate contrary effects through competition.

What kind of decision the authority can issue?

The Law set forth that the Commission can authorize, condition or not authorize the merger execution. In the event of non-compliance, it is possible the sanction of companies by the CFC.

The Commission can issue a non-authorization if the merger might confer market power to fix prices unilaterally or restrict supply; to displace other agents of the market; or facilitate the commission of monopolistic practices.

In the case of conditioning, the Commission prefers to adopt those of structural nature conditions over those of behavior, because the latter can have undesired effects on efficiency and lower effectiveness.

Mergers notice:

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