Bid rigging agreement in chemical substances

MEXICO, 2002

Reliable de Mexico, SA. de CV (Reliable), filed a complaint challenging a bid rigging agreement between Kodak Mexicana, SA. de CV (Kodak), Juama, SA. de CV. (Juama), and GPP Mexicana, SA de CV (GPP). Reliable is the exclusive distributor of both the Belgian Agfa Gebeart and its affiliated company Agfa de Mexico, SA. de CV., and is authorized to sell radiographic film and chemical substances to the Mexican Social Safety Institute, the Social Safety Institution for Government Employees and the health sector. The investigation provided sufficient elements to sustain the allegation and the defendants were summoned to submit evidence.

The proceeding against Kodak was terminated in advance, in view of the commitments this firm proposed, according to Article 41 of the Regulations of the FLEC. The Plenum considered that these undertakings were appropriate and economically feasible since they would allow the FCC to assess market functioning regarding public auctions in which the company participated and the prices charged for chemical developers. In addition, the FCC imposed a fine.

Regarding to Juama and GPP the FCC found that the alleged violators had bid identical prices in eleven auctions that were to be awarded to a single bidder and thus each had been awarded a share of 33%, including Kodak. Furthermore, the FCC observed that the defendants had bid the same prices for several product codes whenever two or the three of them participated in the same auction, whether awarded to a single winner or simultaneously to several winners. Thus, Juana and GPP were found responsible for engaging in contracts, agreements, arrangements, or combinations among competitive economic agents, to establish, agree upon or coordinate bids or to abstain from bids, tenders, public auctions or biddings called by health sector institutions to acquire radiographic material. The FCC ordered the responsible parties not to commit the forbidden practice, and imposed a fine on each of them.

Juama and GPP filed a reconsideration appeal but the agents�� grievances were unfounded and the resolution was confirmed.