Walmart Unit Abused Market Power, Mexico Investigators Say

Michael O'Boyle
·2 min read

(Bloomberg) -- Walmart Inc. will face an antitrust panel in Mexico after a three-year probe concluded the retailer’s local unit abused its market power, a charge that could result in billions of dollars in fines.

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The company, Mexico’s biggest retailer, is reviewing the allegations and will get its first opportunity to defend itself in an administrative process before the board of antitrust regulator Cofece, according to a Walmart de Mexico statement Friday. Under Mexican law, Cofece’s board reviews findings from agency investigators and the company’s defense before deciding how to resolve the case.

“Walmex is confident that it has always acted in accordance with applicable law to guarantee the best prices, quality and assortment to its customers and will exercise all rights and remedies available under applicable law,” the company said.

Cofece launched the probe three years ago into alleged abuse of Walmex’s market position in the wholesale supply and distribution markets, as well as retail operations and related services. At the time, the agency cited its own recently concluded study that found small businesses were disadvantaged by large retail chains that imposed tough conditions, such as delaying payments or requiring vendors to carry the risk of unsold products. Small companies in the US have also described Walmart as a demanding customer that can make or break their businesses.

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Walmart, based in Bentonville, Arkansas, didn’t provide information about the specific allegations it’s facing. It has 45 days to present its defense.

The antitrust regulator can fine companies in such cases for up to 8% of their Mexico unit’s revenue. Walmart had sales of $33.8 billion last year in Mexico. The company’s local operations are run by Wal-Mart de Mexico SAB, a publicly traded company controlled by the US parent. Shares of Walmex have dropped 6.7% this year, compared with a 2.5% gain for Mexico’s benchmark index and a 10% increase in Walmart shares.

Cofece is independent of President Andres Manuel Lopez Obrador’s administration, whose tax authorities used potential criminal fraud charges to push Walmex to pay an 8.1 billion peso tax settlement back in 2020 that heralded an aggressive charge by the government to collect more from big companies.

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