Exclusive Dealing in Market Research Services

MEXICO, 1998

In 1996, Integra Mercadotecnia, SA de CV(Integra), consulted the FCC on possible restrictions to competition imposed by Farmacias Guadalajara, SA de CV (Farmacias), in the provision of commercial information (This consisted of their sales data as a self-service drugstore), necessary for market research activities. The FCC issued recommenddation to Farmacias to provide the above mentioned data to Integra (the market research firm), under non-discriminatory conditions. The FCC warned Farmacias that the failure to comply with the recommendation would prompt an ex officio investigation on relative monopolistic practices in the market research services.

Due to the apparent persistence of such restrictions, an investigation began in 1997. As part of the proceedings the FCC summoned AC Nielsen Co., (a competitor of Integra), and Farmacias, as a provider of commercial information inputs for market research services. The investigation found that the exclusivity agreements between Nielsen and several department store chains (providers of commercial information), prevented the entry of new market research service firms and unduly displaced Nielsen� competitors. This situation reflected Nielsen� substantial power in the relevant market, arising from its large market share in the supply of market research services, product diversification, capacity to reduce supply unilaterally, and control over the strategic inputs and the commercial information generated by self-service chains.

The FCC found that Farmacias has substantial power in the geographic area of Guadalajara, & even more so in the consumer segment. Under these conditions, it was determined that Farmacias� refusal to deal with Integra was a relative monopolistic practice prohibited in Article 10(IV) of the FLEC. Based on Art. 41 of the RFLEC, Nielsen requested the suspension of the investigation and committed itself to eliminate the exclusivity clauses in its dealings with information suppliers, and to make public this measure. Previously the FCC had recommended to various department store chains to suppress their exclusive arrangements with Nielsen and to provide their sales information on a nondiscriminatory basis to all market research firms. Based on the facts found:

In August, 1998, The FCC resolved to ordered Farmacias to stop refusing to deal with Integra and, imposed fines on both, Farmacias and Nielsen for engaging in actions (refusal to deal, and exclusivity agreements, respectively) that unduly displaced competitors or prevented their access to the relevant market.

On October 1998, Farmacias filled an appeal for review . Nevertheless, alleged injuries did not establish a lack of legality in the resolution but only established once again, the arguments already analyzed in the administrative file, so the FCC declared the appeal for review without grounds and confirmed the resolution issued in August, 1998.