.webp)
.webp)
COFECE's Immunity Program is a crucial tool in the fight against absolute monopolistic practices (cartels), offering significant benefits such as reducing administrative penalties to a minimum and avoiding criminal liability. However, this umbrella of protections doesn’t extend to potential damages claims and class actions.
While damages claims and class actions arising from COFECE’s resolutions have historically been limited in Mexico, this is a shifting landscape.
Immunity programs, also known as "leniency programs" in other jurisdictions, have played a significant role in economic competition law, both historically and practically. First introduced in the United States in 1978 and in the European Union in 1996, these programs allow companies involved in absolute monopolistic practices, or cartels, to report their illegal activity to authorities in exchange for reduced or waived penalties. This approach aims to destabilize existing cartels and deter the formation of new ones, improving the quality of information available to antitrust authorities and making it easier to prosecute colluding companies.
In Mexico, the Immunity Program was initially launched in 2006 by the then Federal Competition Commission (COFECO) as an internal policy. Although it had limited success in its early years, subsequent reforms and the release of the Immunity and Reduction of Sanctions Program Guide in 2010 solidified its importance. Since then, the program has proven to be an effective tool for detecting and dismantling cartels, as evidenced by a significant increase in immunity applications.
COFECE’s Immunity and Reduction of Sanctions Program offers economic agents the opportunity to significantly reduce the penalties they would face for participating in absolute monopolistic practices. To access these benefits, applicants must meet specific requirements: formally request immunity from COFECE, acknowledge their involvement in the monopolistic practice, provide detailed information about the illicit activities to the authority, fully and continuously cooperate with COFECE, and immediately cease participation in the illegal conduct.
Participating in the Immunity Program and meeting its requirements offers highly attractive incentives for companies. These benefits include the possibility of reducing administrative penalties to a minimum, specifically down to just one Measurement and Updating Unit (UMA). Additionally, individuals who take part in this program are shielded from criminal liability.
The program’s benefits are granted on a tiered basis. The first person who, either directly or through their legal representative, applies to the program and provides the necessary information that allows COFECE to initiate an investigation or suspect the existence of anticompetitive conduct will receive the greatest reduction in administrative penalties. For this reason, it is recommended that as soon as an economic agent detects its involvement in a collusive agreement, it evaluates the advantages of applying for the program to secure the best position among the applicants. However, even if an agent is not the first applicant, significant reductions in fines are still possible, ranging from 50%, 30%, or 20%.
Despite the benefits offered by the Immunity Program, companies that participate may still face civil damages claims from those affected by the monopolistic practices they reported. Article 134 of the Federal Economic Competition Law (LFCE) establishes that individuals who have suffered damages due to monopolistic practices have the right to file lawsuits to protect their rights before specialized courts in economic competition, broadcasting, and telecommunications matters, once COFECE's resolution is final.
This concern is supported by international experience. If applicants were assured that they would not only be exempt from fines and penalties imposed by the competition authorities but also from damages claims filed by those affected, the program would be more effective, as more economic agents would be willing to participate.
In the United States, for example, affected parties can sue companies involved in anticompetitive practices for up to three times the amount of damage caused. However, companies that have cooperated with authorities, especially those that have received immunity benefits, may only be liable for single damages.
The European Commission has also noted that damages claims play a significant role in maintaining effective competition within the European Union. However, it acknowledges the complex balance between obtaining information regarding such claims and the need to maintain confidentiality and encourage participation in immunity programs.
Like any legal matter, pursuing a damages claim in the context of monopolistic practices involves a rigorous legal process. While a final resolution issued by COFECE in a trial would confirm the illegality of the economic agent’s conduct for indemnity purposes, it is also necessary to present concrete evidence that not only demonstrates the damage suffered but also establishes a causal link to the reported anticompetitive practices. This process can be complex and costly, involving precise quantification of economic damages, gathering sufficient evidence, and clearly determining the responsibility of the defendant company.
Class actions can level the playing field for consumers and small competitors, allowing for more robust and effective representation against large corporations by pooling resources and claims. These actions promote fairness and transparency, ensuring that affected parties have access to justice and fair compensation.
Even if there is no adverse judgment in damages claims or class actions, merely undergoing the judicial process can result in significant financial implications due to legal costs. Moreover, if these cases become public, the reputational damage can severely impact a company’s market position and consumer trust.
To mitigate these risks, companies may consider entering into agreements that help reduce both litigation costs and time.
However, the best approach is to implement preventive measures that avoid anticompetitive practices altogether, ensuring more transparent and responsible corporate behavior.
Specialized legal advice is crucial for accurately assessing the risks and benefits of participating in the Immunity Program, ensuring an informed and strategic decision. Additionally, in cases involving multiple jurisdictions, it is essential to develop a coordinated strategy that identifies the need for immunity programs in other countries and ensures effective coordination between various legal actions.
Conducting internal audits and establishing control processes can also be crucial for early detection and correction of anticompetitive practices, helping companies avoid sanctions and improve transparency and regulatory compliance.
Companies should adopt a proactive and transparent approach in their business practices. Considering the Immunity Program with a clear understanding of its risks and benefits is essential, as is maintaining ongoing cooperation with competition authorities. Specialized legal advice and the implementation of preventive measures are key to maximizing the program’s benefits and minimizing risks. At Mijares, we have extensive experience in evaluating and, where appropriate, implementing the Immunity Program. Our highly trained team, with both national and international experience, is equipped to provide the necessary guidance and support to our clients in these processes, ensuring compliance with regulations and protecting their interests.
.svg){kind=small}
