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The Antitrust Source

Antitrust Magazine Online | June 2022

Interview with Brenda Hernández

Brenda Hernandez


  • Brenda Hernández speaks about COFECE’s priorities, navigating the current political environment, it’s relationship with the telecommunications regulator, international cooperation, and its use of market investigations and studies.
Interview with Brenda Hernández
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Brenda Gisela Hernández Ramírez became Acting Chair Commissioner of Mexico’s COFECE on September 10, 2021, having served as a Commissioner in 2016. A lawyer, Hernández has spent most of her entire career at COFECE and its predecessor, the Federal Competition Commission (CFC), including in the General Department of Legal Affairs, an advisor to two Commissioners for five years, and as the General Director for Coordination at the COFECE Investigative Authority. She also served briefly as the Assistant General Director of the Economic Competition Unit at the Federal Telecommunications Institute (IFT), which is responsible for competition issues in that sector. She was interviewed for the Antitrust Magazine Online by Carlos Mena Labarthe on April 6, 2022.

Antitrust Magazine Online: Thank you very much, Brenda. We’d like to start by discussing the Federal Economic Competition Commission’s (COFECE) activities, current challenges, and general issues.

You are new to this job as President but not to the agency. You are one of the most experienced competition lawyers at the agency and you know it very well, so we wanted to ask you how do you feel as head of the agency? What have you changed? What will remain the same?

Brenda Hernández: Thanks for this interview. It is an honor for me to be in charge now as the Acting Chairwoman of COFECE, after twenty years of specialized work in competition, especially in the Commission.

There are many challenges these days, but let me highlight the most important one. There are some federal and state government authorities that are neglecting the value of economic competition as an engine of national growth and social welfare. We are well aware that competition is one of several criteria that should regulate economic policy but, as you know, completely ignoring it in administrative or legislative decision policy making only harms companies and consumers.

Given this trend, the Federal Economic Competition Commission is deploying all its technical, legal and advocacy resources with the aim of safeguarding economic competition. It’s a key factor for consumers to choose the goods and services that best suit their needs.

I feel confident that we have a responsible Commission governing body, as well as highly rigorous technically capable human capital, with which we will continue to pursue, sanction and challenge any anti-competitive decision, both in the public and private sectors. More than pursuing institutional change, I work for increasing the specialization and effectiveness of the competition authority.

In accordance with our institutional responsibility, COFECE will continue to defend the constitutional principle of economic competition.

Antitrust Magazine Online: You are the first lawyer as head of the agency. Many lawyers are very happy about this. Some say this will ensure better due process and respect for legal principles. How do you see this?

Brenda Hernández: Even though economists have held the Chair position in the past, the Commission has distinguished itself by strictly following due process. Economists know that they can’t move forward without law; lawyers need economic analysis for the law to render its benefits. Also, The design of checks and balances within the Commission ensures that analysis and decision-making comply with legal obligations beyond other legitimate considerations that arise naturally in these processes.

Our institutional commitment to due process is proven, because legality is one of our main values. We consider it not only as an obligation, but as the most certain way to guarantee that our decision making will have a positive and certain impact in the markets.

Antitrust Magazine Online: COFECE has presented a new strategic plan for the next four years. What are your priorities, the priorities you are identifying for the agency, and why? Maybe you can expand a bit on specific markets.

Brenda Hernández: Yes. As you know, every four years we develop a strategic plan, and in 2022–2025 we established priorities in eight sectors: public procurement, health, financial services, food and beverages, energy, transportation and logistics, digital markets, and construction and real estate services.

They were determined based on seven criteria: Contribution to economic growth; their widespread consumption; their cross-cutting nature; their impact on the lower-income population; they are regulated sectors; their percent of prevalence of anticompetitive conduct; and international competition trends. Those are the sectors that we are going to continue with or place more attention to in the upcoming four years.

The public interested in taking a look can find it on our website. Before this, we released it in a public consultation to receive some of the reactions from our main stakeholders.

Antitrust Magazine Online: I’d like to ask you about market studies. What are your priorities regarding market studies? You have undertaken in the past some very interesting market studies such as transport, retail, etc. What do you think will be the priorities for market studies specifically?

Brenda Hernández: As you said, we have developed different kinds of market studies. Let me explain them in a nutshell.

On the one hand, some of the market studies are conducted by the General Directorate of Economic Studies. I would say they have more exhaustive analyses, and at the end we make some recommendations, mostly for other authorities, or even the Congress if we are sure that something must be changed in the law.

On the other hand, we have advocacy studies. Advocacy studies are also useful. Those are less comprehensive, but they are also important because they react to situations that are developing. For example, we are planning to do something in the health sector, perhaps a market study related to insurance. The other sector that we will be doing—maybe both in market studies and advocacy studies, we haven’t decided yet—is regarding fintech because the financial sector has changed. I think that our previous study is seven years old now, so we are going to consider new issues in financial services. I will not talk about it in specific detail because we are still planning it, but it will take into consideration these other sectors we have had before. Also, we foresee launching soon a market study in market of beef, which is widely consumed in Mexico.

With respect to advocacy studies, I think these are different because these are a more reactive tool to emerging issues that are happening. For example, that is the reason why we are using them in the energy sector where this is an issue, and maybe we will do more of that. We will also be listening to what is happening around the tech sector.

Antitrust Magazine Online: I also want to ask you about market investigations, the very specific tool you have under Article 94. How do you evaluate to date what has been going on with this market investigations tool, and what happens now that you don’t have enough Commissioners to decide on these cases?

Brenda Hernández: We have had eight investigations. Three of them were closed because we didn’t find any elements to continue or to confirm that there was a cause according to Article 94. The others included takeoff and landing services at the international airport of Mexico City, local freight transportation in Sinaloa, and distribution and transportation of unprocessed milk in Chihuahua. For example, in the Sinaloa and the Chihuahua cases, it was determined that the competitive process was flawed by the existence of regulatory barriers. For these we issued non-binding recommendations to local authorities to remove these barriers. And from these we learned that it does not make sense to devote too much enforcement resources to this type of cases, when we can instead use our advocacy powers to issue non-binding opinions with such recommendations.

On the other hand, in the airport case, the court decided that our authority to regulate could not overcome that of our regulator in that sector. So we had to take that into account for other cases.

Moreover, in the Investigative Authority’s investigation of card payment systems, barriers to competition and essential facilities were identified. However, for now, the resolution of this case is suspended because the Board of COFECE is not complete. The Federal Government and the Mexican Senate have not completed the appointment processes, so we can’t decide one of those, specifically the case about payment systems. Even when people from government have said that it is an important issue for them, we can’t resolve it because we need at least five Commissioners to vote in the same way to decide. As we are four, we decided to suspend the period that we have to resolve this case. All the procedures are done and now the only thing awaiting is the resolution. But we can’t go forward, so we have to stop the period and wait for the new appointments.

On the other hand, the last one that was announced last week is aircraft fuel. We have just finished the investigation and we will continue with the second part of the procedure. I hope that when it is finished we will have more than four Commissioners.

Antitrust Magazine Online: Another topic of interest for international practitioners is the jurisdiction of COFECE. The segmentation of powers between COFECE and the Federal Institute of Telecommunications (IFT) has brought about a number of jurisdictional conflicts, especially in connection with digital markets, which we understand both agencies are interested in pursuing. This conflict has resulted in delays in cases and other problems for companies.

How do you see this in the future and what has been going on with jurisdictional conflicts?

Brenda Hernández: Since 2013, we have two authorities in charge of competition, access, and in general, of antitrust law. IFT is responsible for competition law enforcement and ex ante regulation in the telecommunications and broadcasting sectors, and COFECE is in charge of enforcing competition law in all sectors other than those covered by IFT. We knew that some of these conflicts would arise. We have had five of these conflicts and three, as you said, are involved with digital markets.

Digital markets are growing continually, not only in Mexico but in many parts of the world. Things have changed, and it is the courts that are going to have to determine each authorities’ competence.

I take that point that you said, that it is important for the companies, and we know and understand that. I think that not just that these two authorities have to act quickly—in accordance with times set to comply with due process - but so does the judicial power. Sometimes when the Commission claims that it has jurisdiction over a new case and the IFT says the same, we go to the specialized courts and they are supposed to resolve the issue in ten days. But that has never happened.

Also, the resolutions that have been issued by the specialized courts have to give us some consistent guidance.

I have already talked with the new head of IFT, the acting Chair Commissioner, and we are trying to communicate more so we do not affect the economic agents, and we will try to decide who is going to resolve one case or another. But, it is not the powers of each authority what we are negotiating. It is the welfare of the consumer that we are seeking, by giving certainty to economic agents that their matters are being deliberated by the competent authority.

Antitrust Magazine Online: Talking about digital markets specifically, in 2020, COFECE created a new unit to deal with digital markets. Can you explain a bit about this unit and how it works?

Brenda Hernández: Yes. COFECE’s digital strategy was published in 2020. As part of this strategy, the Digital Markets Unit was established. This unit doesn’t have cases of its own, but its objective is to provide specialized support and information to the other units.

For example, when we are talking about the jurisdictional conflicts with IFT, even when there are real legal issues related to the Litigation Unit, the Litigation Unit works really closely with the Digital Unit, and that can also be the case in some mergers.

This unit develops experience and gets information from other Authorities. We have some internal forums so that all the staff of the Commission get the same information around digital markets, and we listen to expertise from around the world.

Antitrust Magazine Online: Apart from merger analysis or investigations, do you think there is a more active role for COFECE as a regulatory body regarding digital markets? For example, are you considering issues of privacy or consumer protection? Are you collaborating with those agencies?

Brenda Hernández: We are collaborating with these agencies, in fact for one of these internal forums organized by COFECE’s digital markets unit in the weeks to come, we have plans to invite the data privacy agency. So, yes, we are taking information around privacy because I think this is related to these kinds of markets, and it is something that we would like to work more on.

Antitrust Magazine Online: For years there has been a consensus on the goals of antitrust law, mainly consumer welfare. However, some have questioned whether antitrust authorities should embrace a bolder set of political and social goals, including, for example, income inequality and things like that. What are your views on this change that we are seeing in some jurisdictions?

Brenda Hernández: Our law of 1992 and now the law of 2014 are very clear. They established that the objective is efficiency and consumer benefit, not something else. But let me clarify a bit.

In a 2016 South African case, at the beginning, the authorities said that in general it was difficult to consider other policy issues, but as you have said, these things have been changing, and some jurisdictions take now those income issues for example, and protect labor rights in some of them.

I think that we wouldn’t directly resolve taking them into account because it wouldn’t be aligned with what our law and our constitutional framework said.

However, some of our resolutions and studies may positively impact in other public policy areas. For example, in some of our studies or resolutions, some other public interests can result indirectly in positive benefits. For example, in sustainability and the concerns about the electricity sector, we talk about clean energy certificates. That is something that is not only necessary just in antitrust or in competition, but it also is related with efficiency and the cleanest energy.

Another example is our cartel soccer resolution where a gender equality issue arose even when it wasn’t the main issue of the investigation that had been initiated.

Antitrust Magazine Online: In that case, the women soccer players were affected more than men from the cartel?

Brenda Hernández: Yes, and it was found that their wages were notoriously low. We didn’t say that it was right or wrong, or that it was just or not, but our resolution was covered in the national media. So indirectly we can help to push social topics, even though they are not the main issue involved in the cases.

Antitrust Magazine Online: Do you think there is more convergence or divergence between authorities in the world? And can you talk a bit more about international cooperation in general?

Brenda Hernández: There are several multilateral competition bodies, and they assure that all jurisdictions follow the main principles of competition policy. They try to converge on what is possible in the law. At COFECE we think that is okay, but it wouldn’t be the only way to see competition. Every jurisdiction has its own legal framework and different structures. We wouldn’t converge all the time, but it is very productive and useful that we have a common basis for all.

The most important are the International Competition Network (ICN) and the Organisation for Economic Cooperation and Development (OECD). ICN products serve as a guide for many jurisdictions.

For example, in immunity, the leniency program serves many jurisdictions and maybe some of it should be the same. If they are not, when the economic agents have to decide if they go for the leniency program, I think it is not easy to decide if the rules are not the same in all the countries. There must be general principles and they should decide.

Also, it is important for confidentiality and the possibility to present waivers if these rules are the same for all the authorities and the other economic agents. It is easier to get information.

For example, in OECD discussions regarding the International Cooperation Project, exchange of information is a topic we are currently discussing and thinking about, assessing if it could be possible or not for our international cooperation initiatives, because if the trend is towards that we might not be aligned, for example, in investigations. That could raise some legal discussions in Mexico since our investigations are closed. We are not allowed to give information to third parties unless there are waivers provided by the owners of the information to allow this.

These are very useful tools in various jurisdictions, and we could analyze the possibility and the terms under which these agreements could be established. Indeed these could be really useful. Those are some of the challenges we have, but normally we follow these two international bodies.

Antitrust Magazine Online: Regarding specific international cooperation with specific agencies, how do you see that trend of international cooperation happening? Do you have best partners or jurisdictions with whom you cooperate more?

Brenda Hernández: We cooperate a lot with the United States and Chile, mostly in mergers. As you know, if waivers are presented, it’s very easy. If not, we have to omit the confidential information. In merger cases, where there are waivers present, generally there is a two-way communications where both jurisdictions exchange relevant information.

It is important for mergers mostly. I think before we collaborated more in cartel investigations, through waivers, given in a leniency application context. But international cartels and leniency applications are not what they used to be. If we have a case that is similar to another jurisdiction, discussing it with them, even in general terms, benefits COFECE greatly.

Finally, the Commission has several institutional agreements with jurisdictions around the world. In Latin America, these allow, in part, for internships of officials of the authorities from the region at COFECE.

Antitrust Magazine Online: I will turn to other challenges. Can you tell us a bit more about challenges to autonomous agencies, and what you are doing about it?

Brenda Hernández: The President has not decided who is going to be appointed as our next Commissioners. In this process, he already has three different lists of people that are proved to be competent and he just has to choose who from each list is going to go to the Senate to be ratified, and then the Board would be complete. This hasn’t happened for months.

This has affected some of our powers, especially those where we need at least five votes to resolve a case. But, as I said, we are deploying every legal, technical and advocacy resource to defend economic competition. Among other actions, we presented a constitutional controversy at the Supreme Court to require the Executive to appoint Commissioners, according to his legal obligations. So we have to wait until the Supreme Court decides. It would be desirable for it to be resolved soon.

Antitrust Magazine Online: COFECE has gone to the courts to advocate proposed regulatory changes from government. For example, in the energy industry where there was a government proposal to suspend the requirement that electricity be bought from the lowest cost producer. Why do you think these efforts of litigation or advocating against changes to the regulation in the energy sector by the government are important? Is it worth it? How do you see it?

Brenda Hernández: All the opinions that have been issued are useful for the defense of competition, which must continue in the energy sector in generation of supply. That is the way our constitution is constructed.

That has also helped arguments in Amparo cases. I think that our position is relevant because it is technical only, without regard to political issues or trends, and it helps to defend these issues. In line with this, the Commission has been asked to participate as amicus curiae in 21 cases related to energy sector Amparo cases filed by private parties.

Antitrust Magazine Online: Let me turn to issues about collaborations among competitors. Can you tell us what you think about these possible collaborations among competitors especially in sustainability goals, and maybe in general what you think COFECE has done for these collaborations during the pandemic?

Brenda Hernández: It is a case-by-case response. In fact, at the beginning of Covid-19, we published an announcement—understanding the emergency context—that if some competitors should decide to do something together, we recommended they go to COFECE and ask if it would be legal or not. I think just one came in when the pandemic was beginning, because our law doesn’t have exceptions for collaboration between competitors and they were concerned that they would be sanctioned for their collaboration to collude.

Sometimes they come to us when there is a joint venture, and we analyze whether it is really a merger or if it can be analyzed as a merger, and in those cases and in those resolutions we will usually say that there is no problem. But we have to analyze case by case to decide if it is or is not a problem. Sometimes it would be possible that they involve monopolistic practices and we have to deter the collusion. So it is case by case, but we wouldn’t stay still, for example, if some of these doubts arise. We would invite them to come first to talk with us.

Antitrust Magazine Online: Consult with the agency, if that’s possible, in Mexico?

Brenda Hernández: Yes. The merger guide, for example, talks about joint ventures and gives some elements they will have to follow, but it is case by case.

Antitrust Magazine Online: Do you believe that COFECE has all the powers that it needs or if there should be a change to the law in any way as to how the institution works.

Brenda Hernández: We have more powers than before. For example, the possibility to file constitutional controversies has been very useful but it is still limited since it can be initiated only against federal acts, laws or bylaws that imply invasion of constitutional rights. It could be a more effective tool to build better competitive conditions if it could be used against regional or local acts or general dispositions that do the same thing.

There is an initiative that tried to give us the possibility to go to the Supreme Court, not just for a constitutional controversy, but in actions in the constitutional area. The difference between these two is that when the Commission becomes aware of acts or general provisions issued by Congress, or the President of Mexico, which contravene the exercise of the Commission’s powers, it may file a constitutional controversy before the Supreme Court. Meanwhile, when the Commission becomes aware of acts or general regulations contrary to competition and free market access issued by a state or a municipality, it will notify such circumstance to the President of Mexico (or a competent authority), and if that authority deems it pertinent, it will initiate a constitutional action. For example, the Human Rights Commission has the power to file a constitutional action, and it would be better if we have that possibility in our competition issues.

Antitrust Magazine Online: We’ve covered a lot. Is there anything else that think is important to share?

Brenda Hernández: We are sure that the best way for Mexico to grow is with efficiency, and that we have to work and not to just protect private or public enterprises.

It’s an important message because sometimes public and private actors think that we are against them, but in the end we have the same objectives: better goods and service, with more inclusive economic growth.

Antitrust Magazine Online: Thank you very much for your time, Brenda.