By Brendan O’Boyle and Diego Oré
MEXICO CITY (Reuters) -Mexico’s antitrust watchdog Cofece has ruled that the local unit of U.S.-based retail giant Walmart, known as Walmex, has engaged in monopolistic behavior regarding its suppliers, the company said in a statement on Friday .
Walmex said it has been ordered to pay a fine of just over 93 million pesos, or about $4.6 million, while emphasizing that it believes the regulator’s analysis is incorrect and that it will appeal go against the ruling.
“Walmex is disappointed by this decision, but will comply with Cofece’s resolution while contesting the decision,” the company said, adding that the ruling by Cofece’s governing body was not unanimous.
The company said it believes Cofece’s analysis, released in a 900-page ruling, “erred in the application of the law.”
Markets reacted positively, with Walmex shares on Mexico’s main stock exchange rising more than 5% on Friday as analysts noted the punishment for the company could have been worse.
“Our initial reaction is that determination is even more off the table regarding scenarios of mandating divestments or imposing high fines,” said Rodolfo Ramos, analyst at Banco Bradesco.
According to Actinver Equity Research, the fine is less than 0.2% of the net profit Walmex will post in the 2024 financial year.
“The low size of the fine and the fact that no potential divestments are required lead to a neutral to positive assessment,” said Actinver analyst Antonio Hernandez.
Cofece did not immediately respond to a request for comment.
The Cofece resolution follows an investigation into Mexico’s largest retailer, which also operates stores in Central America, that lasted just over four years.
Cofece had accused Walmex of imposing prices and conditions on its suppliers and distributors, in a case that focused on a lack of competition in the retail sector in many parts of Mexico.
Walmex has maintained that it and its subsidiaries acted lawfully.
The investigation followed an exclusive 2019 Reuters report that showed Walmex penalized food companies that supplied groceries to rival Amazon, a push that forced some to source their products from the world’s largest online retailer.
In its statement on Friday, Walmex said the regulator recognized that the retailer can continue to negotiate payments to its suppliers, with the exception of two specific cases out of the four originally investigated.
Walmex, Mexico’s largest private employer, added that it does not believe the ruling will ultimately affect its operations.
Since the investigation became public late last year, Walmex shares have plummeted. It was valued at 66.77 pesos at the end of September 2023 and closed at 57.10 pesos on December 11.
Cofece is one of several autonomous government watchdogs that Congress abolished last month, while giving its competition oversight powers to other government agencies under the president’s direct control.
($1 = 20.2422 Mexican pesos)
(Reporting by Brendan O’Boyle and Diego Ore; Editing by David Alire Garcia, Bill Berkrot and Nick Zieminski)
