Walmart’s Mexico unit to face anti-trust panel after three-year investigation

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Walmart's Mexico unit to face anti-trust panel after three-year investigation © Reuters. FILE PHOTO: Walmart’s logo is seen outside one of the stores ahead of the Thanksgiving holiday in Chicago, Illinois, U.S. November 27, 2019. REUTERS/Kamil Krzaczynski//File Photo

By Daina Beth Solomon

MEXICO CITY (Reuters) -Walmart’s Mexico unit said on Friday it will face an anti-trust panel for alleged relative monopolistic practices related to the supply, wholesale distribution and marketing of consumer goods.

The allegations follow a three-year investigation by Mexico’s antitrust regulator, Cofece, and the company now has 45 days to provide arguments and evidence in its defense.

Walmart (NYSE:) de Mexico, known as Walmex, was first told in 2020 that it was under review for possible antitrust behavior.

“Walmex is confident that it has always acted in accordance with applicable law to ensure the best prices, quality and assortment to its clients,” the company said in a statement, adding it could not yet predict any impact to its finances and operations.

Cofece declined to comment.

Specifics of the allegations were not immediately clear. In 2020, Cofece flagged concern about large retail chains imposing terms on their suppliers, saying such practices created risk for the smaller companies and could hit their finances.

The agency’s commissioners will oversee a trial-like process, weighing the findings of its investigative unit against Walmex’s defense.

If it determines Walmex has violated competition law, Cofece can impose a fine of up to 8% of the company’s annual income in Mexico.

The retailer last year posted revenue of more than 819 billion pesos ($45 billion) from its operations in Mexico and Central America. It is due to report third-quarter results on Oct. 25.

Walmex is the biggest supermarket chain in Mexico with 2,890 locations and regularly outperforms local rivals.

The company is also in fierce competition with Amazon.com (NASDAQ:) as both retail giants scale up e-commerce operations in the country.

The research division of Mexican bank Banorte said Walmex shares could see some short-term volatility following the announcement due to uncertainty over the potential impact on its operations.

($1 = 18.1638 Mexican pesos)

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