Refusal to trade and group boycott in the distribution of newspapers and magazines
Mexico
Unide Voceadores, Expendedores y Repartidores de Periicos, Revistas y Similares del Puerto de Veracruz, Unide Voceadores de Veracruz, and Jose Espdola Gez
On August 26, 1994, the Commission began an ex officio investigation into alleged relative monopolistic practices by two newspaper and magazine salesmen unions (UVER and UVV) and an exclusive magazine distributor of a publishing company (Intermex) in the city of Veracruz. The investigation began after consideration of the facts reported to the Commission by the General Secretary of a third regional salesmen union (UUVP).
Pursuant to article 3, both the unions and the distributor are subject to the terms of the law. Unions are a form of participation in economic activities, in that they govern the commercial activities of their members. Such associations therefore have the status of economic agents. The same is true of the distributor, whose activities have a commercial nature. The following elements of the evidence provided by the UUVP's leader are particularly noteworthy:
- An agreement entered into by Intermex with the UVER and the UVV, in which he accepts, under his responsibility, to be the exclusive and absolute distributor of those associations and refuses to accept any other Union or Association. These provisions refrained Intermex from selling its merchandise to any person that is not a member of the aforesaid unions.
- A letter sent by the UVV, instructing Intermex to "suspend dealings" with former members named therein, and expressing its opposition and that of the UVER to "the emergence of any other association that could cause them harm".
- A letter sent by the UVER, informing Intermex of the expulsion of several members and ordering him to suspend sales and returns of all kinds of magazines and similar products to them. In addition, the letter warns Intermex that should it fail to observe the terms contained therein, actions would be taken against its agency.
In spite of the distributor's refusal to sell to non-members of the UVER and the UVV and, in particular, to former members expelled therefrom, they were able to secure partial supplies from the Intermex agency in Jalapa, Veracruz. In spite of the greater costs, this option allowed them to survive on the market.
The investigation performed by the Commission detected the following relative monopolistic practices:
- Pressure brought to bear on the distributor by the UVER and the UVV, with the aim of ensuring that the distributor refrained from selling his products to non-members of the two unions.
- Intermexs refusal to trade with magazine and newspaper sellers not belonging to the two associations.
Pursuant to articles 8 and 10, of the Federal Economic Competition Law, both practices constitute infractions. The Commission determined the relevant market of these practices to be that of the sale, distribution, and marketing of intermediate wholesale magazines in the city of Veracruz. The restriction of the geographical area was based on the fact that the contract between the distributor and Intermex gave him exclusive rights in that locality and that obtaining regular supplies from Jalapa was not viable because of the costs and risks involved.
Furthermore, the Commission ruled that UVER and UVV held substantial power in that market, since most magazines were sold through their channels and the two unions were able to influence the distributor's activities. Similarly, Intermex had substantial power over the market as a result of his exclusive rights and of the existence of high costs and risks for customers willing to obtain supplies from alternative cities.
In order to eliminate the relative monopolistic practices described, the Commission's Plenum resolved:
To order UVER and UVV:
- To immediately cease all kind of behavior having the actual or potential aim or effect of exerting pressure against distributors in order to dissuade them from freely offering their merchandise to all sellers and other interested economic agents.
- To refrain from initiating or carrying out the practices described.
- To inform their members regarding the resolution and the sanctions imposed, so that henceforth they would refrain from participating in activities prohibited by law.
To order Intermex:
- To immediately cease all kinds of behavior having the actual or potential aim or effect of withholding the distribution and sale of magazines to persons not associated with the UVER and the UVV.
- To freely offer his products to all sellers and economic agents interested in distributing and selling Intermex's magazines, and not solely to the members of the UVER and the UVV.
- To refrain in the future from carrying out actions prohibited by law.
- To impose on the UVER, the UVV, and Intermex the corresponding fines.
- In order to apprise the Veracruz authorities of these practices and the corrective measures adopted, the Commission sent a copy of its resolution to the state government.