WORLD TRADE
ORGANIZATIONWT/WGTCP/W/196
14 August 2002
(02-4437)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM MEXICO
The following is the final text of a paper received from the Permanent Mission of Mexico
which was circulated as an advance copy for the Working Group's meeting of 1-2 July 2002.
_______________
HARD CORE CARTELS
Introduction
The Federal Competition Commission (CFC) is an administrative organ, deconcentrated from
the Ministry of Economics, created in 1993 to enforce the Federal Law on Economic Competition
(LFCE).  It is endowed with technical and operativ e autonomy to pursue its functions and to issue its
decisions.  Its structure supports impartial decision-making and, to the extent possible, independency
regarding political pressure.
The CFC protects the competition process by eliminating monopolistic practices based on
procedures initiated through the filing of private claims or ex-officio, as a result of an investigation
undertaken by the CFC.
The document presents the regulatory framework and the analytical elements the CFC applies
to combat so-called absolute monopolistic practices, defined under the LFCE as agreements,
arrangements or combinations among competing agents having the object or effect of fixing prices or
supply, allocating markets or rigging bids.
General Information
According to the LFCE, anti-competitive conduct s are classified into absolute and relative
practices1.  Absolute monopolistic practices are collusion acts celebrated between competitors to fix
prices or output, divide markets or rig bids.  Th e CFC is empowered to address and sanction cartels,
and to do so it only needs to prove the collusive practice actually occurred.  No determination ofsubstantial market power or damage is required as, pursuant to the law, these acts are deemed to
always harm competition, economic efficiency and the consumer, and are forbidden per se .  A cartel
is aimed at raising prices above the competitive level and reducing production and supply of goods
                                                     
1 The LFCE also prohibits the so-called relative monopolistic practices, which include vertical restraints and
abusive conducts and are evaluated under a rule of reason approach.  In order for these practices to infringe the LFCE, itmust be determined that they unduly displ ace, or intend to displace, competitors from the market, and that the presumed
responsible party has substantial power in the relevant market.  See LFCE, Arts. 8, 10, 11 and 12.WT/WGTCP/W/196
Page 2
and services.  The LFCE also explicitly forbids as an absolute practice the exchange of information
aimed at or with the effect of fixing , increasing, or manipulating prices.
Article 9 of the LFCE establishes that absolute monopolistic practices are contracts,
agreements, arrangements, or combinations among competitive economic agents, whose aim or effectis any of the following:
I. To fix, raise, to agree upon or manipulate the purchase or sale price of the
goods or services supplied or demanded in the markets, or to exchange
information with the same aim or effect;
II. To establish the obligation to produce, process, distribute or market only a
restricted or limited amount of goods, or to render a specific volume, number,or frequency of restricted or limited services;
III. To divide, distribute, assign or impose portions or segments of the current or
potential market of goods and services, by means of a determinable group of
customers, suppliers, time or spaces;  or
IV. To establish, agree upon or coordinate bids or to abstain from bids, tenders,
public auctions or bidding.
The acts mentioned in this article will have no legal effects and the economic agents engaged
in such acts will be subject to the penalties es tablished under the LFCE, notwithstanding any criminal
liability that may ensue.
The Plenum is the CFC’s decision-making organ in charge of resolving and imposing
administrative sanctions for the infringement of the LFCE and its Regulations, and of agreeing on the
filing of claims before the Federal Public Ministry.
Regarding the latter power, the Plenum is resp onsible for notifying criminal authorities the
commission of monopolistic practices that may imply criminal violations.
These practices may be in breach of the Federal Criminal Code in terms of title Fourteen,
Chapter I, Article 253 (and further) regarding "Crimes against national consumption and wealth".
According to these provisions, besides being abso lute monopolistic practices, the following conducts
are considered crimes:
(a) Hoarding, hiding or refusing to sell goods without reason, in order to affect supply or
to increase consumer prices.
(b) Any act or proceeding that is aimed at or actually impedes or hinders free access to
producing or trading.
(c) Limiting or handling output with the purpose of maintaining unfair prices.
(d) Any agreement or combination, however established, among producers, industries,
dealers or transportation business aimed at hindering competition that leads
consumers or users to pay excessive prices.
(e) Stop producing, processing, distributing, s upplying or selling goods or rendering
services with the aim of obtaining high er prices or affecting consumer supply.WT/WGTCP/W/196
Page 3
According to Article 5 of the Regulations to  the LFCE, instructions or recommendations
issued by business chambers or associations to their members with the aim or effect of engaging in the
type of conduct foreseen in Article 9 of the Law are circumstantial evidence of the existence of a
collusive agreement.
Circumstantial evidence of engaging in the conduct referred to in Article  9, Section I, of the
Law include, among other:
I. That the price offered by two or more competitors for goods or services liable
for international trade be significantly hi gher or lower than their international
reference price, except when the difference is attributable to the
implementation of fiscal provisions, or to transport or distribution costs.
II. That two or more competitors establish the same maximum and minimum
prices for a good or service, or adhere to selling or purchase prices for goods
or services as set by a business association or chamber or any competitor.
It is worth noting that the recommendations issued by business chambers or organisations
aimed at reducing learning and information costs, although intended to favour consumers andbusiness by providing them with elements to determine prices, occasionally have the effect of
promoting collusion among suppliers.  This provision has proved to be useful in a context of poor
competition culture, where the business community and its associations and chambers were used to
promote collusive acts.
Pursuant to Article 35, paragraph I of the LFCE, once the existence of an absolute
monopolistic practice has been detected, the CFC may require to responsible parties to bring such
infringements to an end.  In addition, the CFC determines the fines to be applied to the transgressors
taking into account the seriousness of the collusive act.
In the determination of fines applicable to absolute monopoly practices, the  considers the
following statutory criteria
2:
(i) statutory maximum fine of up to the equivalent of 375 thousand times the
general minimum wage in the Federal District  ($1,621,153.00 at current
exchange rate);
(ii) the seriousness of the violation;
(iii) the damage caused;
(iv) the degree of premeditation;
(v) the agent’s market share;
(vi) the size of the market affected;
(vii) the length of the practice or concentration;  and
(viii) the recurrence or background of the agent as well as his financial status.
In practice, to estimate the damage caused by transgressors to consumers and clients3 when
dealing with price fixing collusions, and dependi ng on the available information, the CFC considers
                                                     
2 Articles 35, paragraph IV, and 36 of the Regulations to LFEC.WT/WGTCP/W/196
Page 4
the price difference before and after the collusive arrangement and multiplies it by the average sales
volumes before and after the arrangement.
The LFCE foresees the application of the highest penalties to enterprises engaged in cartels.
Maximum permissible fines are expressed in minimum wages;  additionally the law provides finesagainst natural persons
4 ($32,423.00 at the current exchange rate).  The LFCE also provides for
imprisonment for natural persons but it is the judicial authority who determines such sanctions.
Fostering the existence of legal incentives to strengthen CFC ’s performance.
There are two issues affecting the adequacy of provisions that prohibit collusive practices:
the seriousness and amount of the sanctions against cartels that are available under competition, andthe probability that any given cartel is detected and prosecuted.
The LFCE establishes an adequate structure of sanctions, including fines to both companies
and natural persons engaged in illicit conducts, as well as criminal penalties for the latter.  Fines and
criminal penalties applicable to individuals provide incentives for cartel participants to desert secretagreements and submit information to the CFC.  The threat of large fines against enterprises provides
incentives in the same sense because such cooperation may induce the imposition of less severe fines.
However, the legal framework does not provide for leniency programs and so the CFC
frequently lacks elements to detect collusive agreements.  It also faces some opposition to informationand document requirements needed to compile legal evidence to substantiate proceedings.
Currently, possible amendments to the legislation are being studied to reduce (or even
eliminate) sanctions imposed on agents that, under a leniency scheme, promote observance of the
LFCE and its regulations.  These amendments are intended to provide the procedure with legalcertainty and to assure private agents, by specifying the benefits granted to agents that declare
infringement on a voluntary basis, recognise their participation or contribute to the proceeding.
Case-specific Information
Examples of hard core cartels investigated and sanctioned by the CFC follow.  A distinction
is made between cartels celebrated in the domestic market place and those agreed abroad that affected
the Mexican marketplace.
I. ABSOLUTE MONOPOLISTIC PRACTICES IN THE MEXICAN MARKETPLACE
A. T
ORTILLA5
In January 2000, the CFC learned that Club Cadena Maíz Tortilla, SA de CV (Camato)
suggested its members to set at $4 (domestic currency) the selling price per kg of corn tortillas inMexico City and surroundings.  The CFC initiated an ex-officio investigation into the commission of
absolute monopolistic practices.
Camato is a firm comprised of tortilla producers, millers and tortilla dough manufacturers,
that chairs the Masfresca program, aimed at the promotion of tortilla sales under this trademark.  Theobjective of Masfresca is to compete by offering enhanced quality and taste tortillas at an adequate
                                                                                                                                                                    
3 As mentioned before, estimation of damage is not needed to prove the violation of the LFCE.  However, the  uses
this estimation for the determination of the fines.
4 Monetary fines to be imposed to natural persons involved in collusive conducts may be of up to 7 500 times the
minimum general wage in the Federal District.
5 Tortillas are one of the products of the Mexican basic consumption basket.WT/WGTCP/W/196
Page 5
price.  Masfresca represents 17 thousand corn producers and millers supplying 10 percent of the
domestic market and 5.8% of the 12 thousand tortilla stores in Mexico City’s metropolitan zone.
Tortilla stores linked to Camato are not a single economic agent.  Therefore, the indications or
suggestions issued regarding tortilla prices for co mpeting tortilla stores are an absolute monopolistic
practice in breach of the LFCE.
The CFC decided that Camato and several tortilla stores that observed the price
recommendation were guilty of an absolute monopolistic practice.  It ordered them to refrain from this
practice and imposed a fine.  The CFC later confirmed its decision regarding the reconsideration
appeals filed by the infringers.
Without a collusive agreement, tortilla stores will be free to set their prices, thereby thousands
of tortilla consumers in Mexico City will have options to satisfy their demand.
B. CUSTOMHOUSE BROKERS ASSOCIATION
The CFC initiated an ex-officio investigation into the commission of absolute monopolistic
practices, upon learning of the establishment of an agreed rate among the members of Cancun
customhouse brokers association (AAAC).
This sector recently underwent an important deregulation process by means of which clear,
non-discriminatory rules were established for the granting of customs patents.  Customs brokers arethereby free to directly deal their wages with users.  AAAC issued an agreement regarding the
application of uniform rates, based upon criteria used before deregulation, including sanctions for
those failing to observe established charges.
The Plenum of the CFC decided to fine AAAC and ordered it to refrain from the practice, to
revoke the rate agreement and to make all its members aware of this decision.  It also ordered AAAC
to notify this decision to the National Confederation of customhouse brokers associations.
The CFC sanctions and tries to prevent this type of conducts in view of the harm they pose on
competition and society, and because they are not  justified on efficiency grounds.  The compulsory
nature of the agreement implies that its adverse effects may not be avoided by import or export
businesses, thereby affecting foreign trade.
C. M
EXICAN CARGO AGENTS ASSOCIATION
The CFC initiated and ex-officio investigation into the possible commission of absolute
monopolistic practices in maritime cargo downloadi ng services.  During its enquiry the CFC also
become aware of indications of similar conducts being carried out in air cargo within Mexico Cityairport.  A second investigation was thus initiated.  The alleged responsible agent was in both cases
the Mexican Cargo Association (AMAC).
In the case regarding air cargo unloading, AMAC issued a notice indicating the applicable
rate for its services.  It later send another notice recommending its members to charge a given amountper downloaded air cargo ton or cubic meter.
It is worth noting that the agreement fixing prices for downloading air cargo was issued
previously to the enactment of the LFCE, but the rate agreement remained in force after the law's
enactment.
On the other hand, the rate recommendation for maritime cargo downloading was issued in
breach of the LFCE.WT/WGTCP/W/196
Page 6
Price fixing intended to homologate air cargo downloading rates delivered through a notice
was not liable to sanction before the entry into force of the LFCE, but following this date the
continued observance of the price fixing agreement was deemed in breach of Article 8, section I and
Article 9 of the law.
In turn, rate fixing for maritime cargo downloading was also considered to be in violation of
the LFCE, based upon the above-mentioned provisions.
The CFC decided to impose fines for the infringements incurred in maritime and air cargo
downloading.  AMAC was ordered to refrain from carrying out absolute monopolistic practices, to
revoke the agreements and notices and to tell its members the risks of incurring again in this practice.
D. AUCTIONS OF TREASURY CERTIFICATES OF THE FEDERATION
The CFC investigated possible anticompetitive practices among participants in the weekly
auctions of Treasury Certificates of the Federation, carried out by Banco de  Mexico.  The
investigation showed that in October and Nove mber 1993, Grupo Bursatil Mexicano, Casa de Bolsa,
S.A. de C.V., Banco Nacional de Mexico, S.A., Op eradora de Bolsa Serfin, S.A. de C.V., Casa de
Bolsa Grupo Financiero Serfin, Probursa, S.A. de C. V., Casa de Bolsa Grupo Financiero Probursa,
and Banco Internacional, S.A., Grupo Financiero Prime Internacional, coordinated their bids in some
auctions.  The involved parties thus obtained the certificates at a discount rate different from that
which would have prevailed in a competitive auction.
This conduct is incompatible with the LFCE, and thus agents involved were fined.
E. LAUNDRIES AND DRY CLEANERS
On 3 August 1993, the CFC began an investigation into the laundry and dry cleaner industry,
after finding important similarities in the rates charged by several competing companies.  The
investigation showed that the National Chamber of  Laundry Industries and the National Association
of Professional Cleaners, printed, sold and di stributed among their members price lists.  The
determined that these similarities were the direct result of information exchange among competitors in
order to set rates, in this case through the above mentioned chambers and associations.
The CFC collected the necessary evidence to prove the illegal practices by these organizations
and other companies chosen at random.  After analysing the evidence, the CFC found them, as well as
Jiffy Cinco, S.A. de C.V., and Industria Pegas o, S.A. de C.V., guilty of violating the Law.
The CFC imposed the  corresponding fines and ordered these two organizations to cease the
illegal practice and to order their members to remove the list of prices and rates from theirestablishments.
This case emphasizes that chambers and business associations must avoid facilitating
unlawful information exchanges among their members.  As all other economic agents, these
associations must also adapt their behaviour to the provisions of the LFCE.
II. COLLUSIVE PRACTICES WITH INTERNATIONAL EFFECTS
In recent years the number of detected cartels affecting several markets has increased.  This is
explained by the growing interrelation between in ternational markets and by the effects of economic
globalisation.WT/WGTCP/W/196
Page 7
The CFC has addressed international anticompetitive operations that affect Mexican markets
and has cooperated wherever appropriate with foreign competition agencies regarding such
enforcement actions.
In view of its relevance for the international community, a more detailed analysis of absolute
monopolistic practices with an international dimension that were sanctioned by the CFC follows.
Between 1996 and 2000, the CFC conducted an ex officio investigation6 into the lysine
market.  Additionally, the CFC initiated ex officio investigations about international cartels in the
citric acid and vitamin markets in 1998 and 1999, respectively.  In each case, the CFC initiated the
investigation based upon circumstantial evidence of possible damage to Mexican markets.  Such
evidence was found on the respective determinations of the United States Department of Justice (US
DoJ).  The following table summarises the CFC actions with respect to the three cases referred above.
Case Charge LFCE Initiated Resolved CFC decision
LysinePrice fixing
agreement
among
competitorsInfringement to  7
Article 9(I) of the
LFCE.8 July 199622 June
1998A Mexican and a
Japanese firm were
penalized with fines.
Citric
AcidPrice fixing
agreement
among
competitorsInfringement to
Article 9(I) of the
LFCE.27 November
199831 January
2002Three multinational
firms were penalized
with fines.
VitaminPrice fixing
agreement
among
competitorsInfringement to
Article 9(I) of the
LFCE.27 May 1999 Still in process
A. THE LYSINE CASE
On 25 October 1996, the CFC had notice that top executives of Archer Daniels Midland Co.
(ADM) pleaded guilty in a United States proceeding to the charges of conspiracy to fix prices and to
allocate sale volumes in the lysine world-wide market from 1994 to 1996.  And, that three Asian
companies, Ajinomoto Co. Inc. (Ajinomoto), Ky owa Hakko Kogyo Co. Ltd. (Kyowa), and Sewon
America Inc (Sewon), were convicted for their participation in these agreements.
The US Court resolution provided circumstantial evidence of possible damage to the Mexican
lysine market since ADM and Kyowa had directly and indirectly participated in the Mexican lysine
market in the period between June of 1994 to December of 1996.  As a consequence, on 8 July 1996
the CFC decided to initiate an ex-officio investigation (number IO-42-96) regarding a price fixingagreement among competitors in the commercialisation of animal feed-grade lysine in Mexico from
1994 to 1996.  The agreement investigated constitutes an absolute monopolistic practice that violates
paragraph 1 of Article 9 of the LFCE.
                                                     
6 The ex officio investigation is a proceeding pursuant to Article 15 of the LFCE.
7 The inherent illegality of absolute monopolistic practices  means that the procedure th e CFC follows to determine
their existence does not require a full competition analysis;  it is only required to determine the actual existence of an
arrangement between competing economic agents.  In economic terms, it is sufficient to determine that the economic agentsparticipate in the same market or markets for them to be cons idered competitors.  Confirming that a market was divided, or
that attempts to divide it were made, or that prices were coordinated, is generally enough to conclude that they are
competitors, since there would be no point in carrying out su ch practices if the agents involved did not or could not
participate in the same relevant market or markets.WT/WGTCP/W/196
Page 8
Identification of defendants
ADM BioProductos, SA de CV (hereinafter referred to as "BioProductos") is the ADM
import and sale office in Mexico.  During the period analysed, ADM held 99.9 % of the stock of
BioProductos's parent company, Controladora ADM, SA de CV.
Kyowa held the majority share of Fermentaciones Mexicanas, SA de CV (Fermex).  Fermex
is the major domestic producer of animal feed-grade  lysine, but it did not engage in imports during the
period investigated.
The CFC considered that the cartel was affecting the sales of animal feed grade lysine in
Mexico.  Lysine is an amino-acid used as an animal and human feed additive to meet varied
nutritional requirements.  It can be obtained from natural sources, such as fish and soy products, aswell as in a synthetic form.  Synthetic or mono-hydrochloride lysine, is produced by fermenting
carbohydrate-rich solutions, which are residual by-products of cereal processing.
In the synthetic lysine market, two different types can be distinguished:  the USP (United
States Pharmacopea) mono-hydrochloride lysine, which is top quality lysine used as a supplement for
human consumption and as an ingredient of phar maceutical products;  and the one with a minimum
content of 98.5 % of lysine mono-hydrochloride anhy drous, which is mainly used as a supplement in
the animal food-processing industry (hereafter an imal feed-grade lysine), mainly for swine and
poultry.
In spite of the technical feasibility to use ly sine for human consumption instead of the animal
feed-grade one as an ingredient in the animal food process industry, they do not belong to the same
relevant market.  The highest quality of the former also represents a significant price difference
compared with the latter, such price differences make substitution economically unfeasible.
According to CFC calculations, the domestic market of animal feed-grade lysine had a
turnover of 423.2 million of pesos (equivalent to US $32,423.00, at the average exchange rate for the
period) from June 1996 to December 998.
According to internal information disclosed by the defendants, in the period 1994-1996:
• BioProductos and Fermex were under management control of ADM and Kyowa,
respectively.
• Weighted average prices for animal feed-grade lysine sold in Mexico by both firms
showed similar level and increases, such pattern disclosed a correlation index
of 0.9967 in the referred period.
• The market share held by BioProductos increased from 24% in 1994, to 36% in 1995,
then decreased to 31% in 1996.  The average share was 30%.  On the other hand,
Fermex’s average market share was 66% from 1994 to 1996, which is lower than the
73% average market share from 1991-1996.
Sanctions
In the lysine case, the CFC imposed fines to BioProductos, and Kyowa.  It considered the
following factors to assess the fines:WT/WGTCP/W/196
Page 9
(i) Lysine constitutes an important ingredient in the food-processing industry;
thus the consequences of anti-competitive behaviour had widespread effects
to the detriment of consumers in Mexico.
(ii) Fixing prices is a grave fault designed to severely damage or even eliminate
any form of competition in the market of animal feed-grade lysine for sale inMexico.
(iii) BioProductos and Fermex carried out such practices with premeditation.
(iv) The financial capacity of the companies involved in the cartel was settled as
equal to the value of their respective total assets registered in 1996.
The CFC additionally ordered to BioProductos and Fermex to bring the violations to an end,
and henceforth to refrain from any agreements or behaviour which may have the same or similar
object or effect.
B. T
HE CITRIC ACID CASE
Between 1996 and 1998, several companies admitted their guilt before the US Department of
Justice (DoJ) for taking part in a price fixing and market segmentation conspiracy in the international
citric acid market, thus making themselves liable to various sanctions in the United States of America.
On 27 November 1998, the CFC initiated an ex-officio investigation into the commission of
price fixing in the Mexican citric acid market.
Identification of defendants
During the period covered by the investigation almost all of the US convicted firms
participated, directly or indirectly, in the Mexican citric acid market.  Three out of five cartel
members investigated under the ex officio proceeding were found to be involved in anticompetitive
practices in the Mexican marketplace:  Archer Daniels Midland Company (Archer), Haarmann &
Reimer Corporation (Haarmann) and F. Hoffmann-La Roche (La Roche).
Citric acid is an organic acid naturally obtained from lemon and Aspergillus niger  fungus and
may also be industrially produced from various sugars.  Citric acid is used as flavour additive and
preservative in soft drinks and processed foods, as well as in the manufacture of detergents, chemical,
textile, pharmaceutical and cosmetic products.  The cartel affected the production, marketing,
distribution and sale of citric acid.
Price fixing abroad took place from July 1991 to June 1995, but the enquiry into its effects on
the Mexican market only included the period starting from June 1993 (date on which the LFCE
entered into effect) to June 1995.
Evidence of collusion
• Defendants were under management control of undertakings convicted in the US
under parallel charges.  In addition, all of them imported citric acid from cartelisedproviders.
• Domestic producers revealed reduced availability of suppliers and, in consequence a
strong commercial dependence on the defendants.WT/WGTCP/W/196
Page 10
• Several trading firms imported citric acid at the price fixed by the agents investigated,
and therefore the international price agreement had effects on the Mexican market.
• The analysis concluded that citric acid prices in Mexico tended to the international
fixed price.
During the process, Archer presented various commitments in accordance with Article  41 of
the Regulations of the LFCE8, accepting its responsibility in the practice investigated and requesting
an early conclusion of the proceeding.
Haarmann and la Roche did not succeed in lessening the merits of the monopolistic practice
for which they were summoned.
Sanctions
Based upon the above analysis, the Plenum of the Commission determined that Archer,
Haarmann and La Roche were responsible for the commission of an absolute monopolistic practice,
and therefore imposed a fine on each of them.
La Roche and Haarmann filed appeals for reconsideration against the aforementioned
resolution and its clarification.  However, on 18 January 18 2002, La Roche presented commitments
in terms of Article 41 of the Regulations to the LFCE which the CFC considered suitable and
economically feasible for preventing the monopolistic practices sanctioned.
The arguments expressed by Haarmann were invalid, and could not lessen the merits of the
considerations on which the CFC based its decision.
The Plenum resolved to declare the appeal for reconsideration filed by Haarmann unfounded,
and it therefore confirmed the resolution in all its terms.  It also resolved to accept the commitmentproposed by La Roche and modified the challenged resolution, reducing the amount of the fine
imposed on La Roche.
C. T
HE VITAMIN CASE
On 20 May 1999 the US DoJ released an informative note related to the prosecution of the
Swiss pharmaceutical F. Hoffmann La Roche Ltd (Hoffmann La Roche), and a German firm, BASF
Aktiengesellschaft (Basf AG), for their participation in a decade-long worldwide conspiracy to fix
prices and allocate sales volumes of vitamins used as human food and animal feed additives and as
nutritional supplements, including vitamins A, B2, B5, C, E, Beta Carotene and vitamin premixes.  As
to Rhone-Poulenc, the French cartel member, the note confirmed it had qualified for protection from
criminal prosecution by cooperating with the inve stigation under the Antitrust Division’s Corporate
Leniency Program.
Due to the existence of Mexican subsidiaries of the undertakings involved in the above
mentioned agreement and circumstantial evidence contained in the DoJ informative note, the CFC
undertook an enquiry into the cartel’s impact on the Mexican marketplace.
                                                     
8 Article 41 of the Rulings to the LFCE establishes that at any stage of a proceeding pursued before the , and
before the latter emits a final decision, the alleged violator shall be entitled to present a written undertaking whereby it
undertakes to suspend, suppress, correct or not carry out the alleged relative monopoly practice or prohibited concentration.
For this purpose economic agents shall accredit that:I. The process of competition and free participation in the market shall be restored, and
II. The measures proposed shall be appropriate and economically viable to leave without effects the monopoly
practice or concentration, indicating the periods and terms for their verification.WT/WGTCP/W/196
Page 11
On 27 May 1999 the CFC initiated an ex officio investigation (number IO-09-99) into the
commission of absolute monopolistic practices consisting of:  (i) international price fixing with effects
in Mexico, and (ii) price fixing among domestic competitors.  In addition, affected consumers are
filing complaints to provide evidence against the defendants.  The CFC has not issued a decision in
this case, however, the main findings are provided.
Productos Roche, SA de CV (Roche) and Sy ntex, SA de CV (Syntex) are Mexican
subsidiaries of Roche Holding, Ltd, the parent company of Hoffmann La Roche.  BASF Mexicana,
SA de CV (Basf Mexicana), is a Mexican subsidiary of BASF, AG. Roche, Syntex and Basf
Mexicana import and distribute bulk vitamins to human, animal food, pharmaceutical and cosmetic
producers.
Notwithstanding Rhone Poulenc’s participation in the US Corporate Leniency Program, in
Mexico its subsidiaries were also subject to inve stigation:  Rhone Poulenc Rorer, SA de CV, and
Rhone Poulenc Animal Nutrition, SA de CV. Rhon e Poulenc undertakings (hereinafter collectively
referred as Rhone Poulenc) process bulk vitamins to produce and commercialise vitamin premixes
within Mexico, whereas  Rhone Poulenc Anim al Nutrition, SA de CV also imports them.
Likewise, the CFC requested information and documents from several related firms.
Vitamins A, B2, B5, C, E, Beta Carotene are sold in bulk and as premixes to be added to other
products.  Bulk vitamins are homogeneous products mainly processed as nutritional additives to
animal and human food, cosmetic and pharmaceutical products.  Vitamin premixes are differentiatedproducts elaborated according to customer’s technical requirements, main customers are animal food
manufacturers.  Thus, differences in packaging, distribution, customer profiles and different pricing
structures among bulk vitamins and premixes lead to separate the bulk vitamins market from the
vitamin premixes market.
Basic vitamins consumed in Mexico are imported and premixes for animal consumption are
produced using imported basic vitamins.
Although the international conspiracy lasted from January 1990 through February 1999, in
Mexico the investigation was jurisdictionally lim ited to the period from 1993, the LFCE enactment
year, to 1999.
During the investigation, the CFC has found the following evidence:
• The Mexican market of bulk vitamins is supplied basically through imports, mainly arriving
from France, Switzerland, Germany and the US , where, excluding the US, the cartel
members' headquarters are located.  In a ddition, Rhone Poulenc Rourer, Roche and Basf
Mexicana were under management control of Rhone Poulenc, Hoffmann La Roche and BasfAG, respectively, which are also the main exporters of bulk vitamins in their respective
countries.
• According to CFC estimates, over-prices were charged on bulk vitamins imported to Mexico
by Roche, Basf Mexicana and Rhone Poulenc Rourer from 1994-1999;  i.e. import prices in
Mexico were above estimated cartel import prices in the US.  Additionally, thecommercialisation policy followed by the cartel members impedes arbitrage among their
respective subsidiaries;  such situation supports the existence of significant over-pricing of
most vitamins under the cartel’s control.
• During the 1996-1998 period, Roche and Basf Mexicana held an average joint share of
approximately 68% of the sales of all vitamins under the cartel's control, which evolved from
59.2% in 1994 to 77.2% in 1998.WT/WGTCP/W/196
Page 12
• In order to assess the likelihood that Mexico was affected by the international vitamin cartel,
the prices of US imported vitamins were comp ared with those prevailing in Mexico during
the periods for which HLR and Basf AG pleaded guilty.  Significantly higher or lower prices
in Mexico were considered an important element to analyse the international collusion’s
effect in Mexico.
• Another element taken into account in the evaluation of the vitamin cartel was to study the
price behaviour of five out of six vitamins investigated.  These were compared to the prices of
another group of vitamins not identified under the DoJ’s investigation.  For this purpose, price
indexes were calculated, based upon the implicit prices that resulted from dividing the value
of total imports by the total volume.
The investigation concluded that F. Hoffman-La Roche Ltd., Basf Aktiengesellschaft, Rhone
Poulenc S.A., Productos Roche, S.A. de C.V., Syntex, S.A. de C.V., Basf Mexicana, S.A. de C.V. and
Rhone Poulenc Animal Nutrition, S.A. de C.V., were allegedly responsible of an absolute
monopolistic practice, in violation of Articles 8 and 9, I of the LFCE.  This practice consisted in
taking part in an international agreement to fix the level and subsequent price increases for vitamins
A, E, 2 (riboflavine), B5 (Cal Pan), C and beta carotene, which affected the Mexican market byeliminating competition among colluded agents a nd generating anticompetitive effects through the
imposition of higher prices than would have prevailed under competition conditions.
Consequently, the Plenum decided to summon F. Hoffman-La Roche Ltd., Basf
Aktiengesellschaft, Rhone Poulenc S.A. (at present Aventis, S.A.), Productos Roche, S.A. de C.V.,Syntex, S.A. de C.V., Basf Mexicana, S.A. de C.V. and Rhone Poulenc Animal Nutrition, S.A. de
C.V., as alleged responsible parties to enable them to submit their declarations and evidence.
The case is still pending.  Following the end of the second stage of the proceedings, the CFC
will be able to analyse the evidence presented by the alleged responsible parties and issue its decision.
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