News

Legislative proposal to create INMECOB

By: Mauricio Arciniega

Last Wednesday, June 10th of this year, Senator Ricardo Monreal, member and leader of the Morena Parliamentary Group, presented before the Permanent Commission of the Congress of the Union a legislative proposal to amend articles 27 and 28 of the Political Constitution of the United Mexican States. With this proposal it is envisaged to create the National Institute of Markets and Competition for Well-Being “INMECOB” by its initials in Spanish, as an autonomous constitutional body with legal personality, technical, operational and management autonomy. The legislative proposal aims to reduce public expenditure.

With the creation of the INMECOB, the Federal Telecommunications Institute (“IFT”), the Federal Anti-Trust Commission (“COFECE”) and the Energy Regulatory Commission (“CRE”) would become extinct, with the aspiration of integrating these regulatory bodies and thus establishing the only one in the area of Anti-Trust and in the Telecommunications, Broadcasting and Energy sectors, without the CRE’s hydrocarbon faculties becoming part of the INMECOB.

However, Senator Monreal announced last Sunday on social media that he will postpone the legislative process of this proposal in order to start a process of evaluation and discussion of it. It is important to point out that, if the Legislative proposal is approved in the current terms, there would be a budget and personnel reduction, affecting the technical and specialized functions developed by the IFT, the COFECE and the CRE, natural monopolies indispensable to the economy. Furthermore, it would not be in line with the Chapter 18 requirement of the USMCA, which is to have an independent telecommunications regulatory body, so, among other reasons, the Legislative proposal could be expected to have a direct impact on investment in our country.

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The General Health Council is Formally Installed

As a result of the ongoing pandemic caused by COVID-19, as noted by the World Health Organization on March 11, in Mexico there was not a formal declaration of a health emergency, until yesterday, despite the fact that the Mexican Constitution expressly states that in the event of serious epidemics the General Health Council (the “Council”), as the health authority, will have the obligation to dictate immediately the indispensable preventive measures for epidemics. The foregoing has led to a lack of coordination in recent weeks between the three levels of government and natural or legal persons in the social and private sectors, that provide health services and, therefore, the purpose of the National Health System results ineffective and it is not possible to act congruently with respect to COVID-19.

The Council is a collegiate body under the Mexican President in terms of Article 73, section XVI, base 1st. of the Mexican Constitution, and has the character of a health authority, with regulatory, consultative and executive functions. The provisions issued by the Council shall be of a general nature and obligatory in the whole country.

The Constituent Assembly, when incorporating the bases that created the Council and to the then called Health Department, took into consideration, among other issues: (i) the need to have bodies capable of reacting promptly and effectively to various health contingencies; (ii) that these bodies have the necessary means to react; and (iii) have the faculties to issue provisions of a binding nature for the whole nation without the intervention of any administrative authorities.

Yesterday, March 19th, the Council met in an extraordinary session, with the aim of adopting measures and plans for the protection of health against COVID-19, and with the purpose of ensuring that the objectives of the creation of the Council are met, since it must be understood that it has the constitutional power to regulate, within the scope of its constitutional faculties, the areas defined by the General Health Law as matters of general health so that the Mexican State, in a coordinated manner, can effectively and promptly meet the needs of the population through a highly specialized technical and scientific body.

Among the resolutions adopted yesterday in the extraordinary session of the Council, the following stand out: (i) The plenary session of the Council recognized the epidemic caused by COVID-19 in Mexico as a serious disease of priority attention; (ii) the Ministry of Health will establish the necessary measures for the prevention and control of the COVID-19 epidemic, in consensus with the members of the National Health System; and (ii) it was urged to define hospital reconversion plans and immediate expansion of capacity to guarantee timely attention to the cases of COVID-19.

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The National Infrastructure Information System is created.

On October 28, 2019 were published in the Official Gazette of the Federation the Guidelines for the delivery, registration and consultation of information for the formation of the National Infrastructure Information System (the “SNII“, by its initials in Spanish), which were previously approved by the Plenary of the Federal Institute of Telecommunications (the “Guidelines”).

The Federal Institute of Telecommunications, in addition to being in charge of regulating, promoting and controlling the use and exploitation of the radioelectric spectrum, orbital resources, satellite services, networks and the provision of broadcasting and telecommunications services, also has responsibility for access to active and passive infrastructure and other essential machinery. By virtue of the foregoing, since the issuance of the Federal Law of Telecommunications and Broadcasting the SNII was already provided for in Article 181, as a national geo-referenced database that would contain information from the registers of active infrastructure and means of transmission, passive infrastructure and rights of way and public and private sites.

The SNII was conceived in view of the fact that there are economic, administrative and operational barriers on the part of the concessionaires or authorized in their intentions for the deployment of telecommunications or broadcasting infrastructure; the costs of infrastructure installation, availability of spaces, processing of permits and rights of way, among other causes, hinders the deployment and efficient progress of telecommunications and broadcasting services.

As a result, the SNII is created as a tool containing a national geo-referenced database that allows the visualization of records of active infrastructure and means of transmission, passive infrastructure and rights of way and public places, as well as their identification and information, location, characteristics, use and capacity. With a correct implementation and management of the SNII, it will create circumstances for a greater promotion of infrastructure sharing, which allows industry operators to reduce costs for the deployment and development of their networks through the sharing of infrastructure, resulting in the efficient use of them and unleashing better conditions for competition. This type of tools have been developed and implemented by regulatory bodies in other countries such as Portugal, Sweden and Germany, each with its own particularities but in reality with the same objective.

The Guidelines define the information that will make up the SNII, as well as the formalities in which it must be delivered, the terms and deadlines for its delivery, registration and consultation, which must be observed by concessionaires, authorized, security and justice authorities, public institutions, universities, public and private research centers.  The Guidelines came into force on October 29, 2019 and from the notice by the Federal Institute of Telecommunications regarding the commencement of operations of the SNII, which will be published in the Official Gazette of the Federation, will have a period of no more than 120 calendar days for the delivery of information.

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Deadline for Financial Technology Institutions (the “FTIs”) to file their application with the National Banking and Securities Commission (“CNBV” by its initials in Spanish) is over.

In 2013, the Mexican authorities were questioned about the domestic regulatory process of the FTIs, which prompted them, hand in hand with the industry itself, to study, explore and work on the creation of regulations that would take into account the national and international context in this matter. In 2018, the Law To Regulate Financial Technology Institutions, better known as the “Fintech Law”, finally came into force, and later, different regulations applicable to the subject matter that complemented said law.

Based on data provided by the CNBV, there are currently approximately 500 platforms in the country offering different financial services provided by the FTIs. Of these, 201 carry out crowdfunding and electronic payment funds.

In accordance with the third transitory of the Fintech Law, as well as with the Resolution that modifies the general provisions applicable to the FTIs, a deadline was established that expired last Wednesday, September 25th for such platforms to request an authorization to operate in the country. If they did not do so, they would have to cease their operations, since administrative and criminal penalties are provided for those who act in contravention of those provisions.

At the expiration of the term, the CNBV head announced that 85 platforms that were within the regulatory framework had submitted their request for authorization, and the remaining 116 must conclude their existing operations.

The CNBV has a term of 180 days to provide resolution to the authorization requests that during the established term, were presented by the different platforms that currently operate in Mexico.

The regulation and authorization of these platforms envisages increasing financial inclusion, modernizing the financial system, improving the competitive environment, providing certainty and professionalism to users of financial services, as well as a more attractive horizon for investors.

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Possible reforms to the Pemex law

On January 9, 2019, deputies of the Parliamentary Group of Morena filed before the Permanent Commission of the Congress of the Union an initiative that reforms, adds and revokes various provisions of the Petróleos Mexicanos Law (the “Initiative“).

The purpose of the Initiative is to “establish a legal framework that guarantees the Federal Executive, through the General Director of Petróleos Mexicanos (the “Director“), to operate in an integral manner when executing and fulfilling the purposes of exploration, exploitation and refining.” (Parliamentary Gazette, 2019)

The deputies proposed, mainly, to limit the powers of the Board of Directors of Petróleos Mexicanos (the “Board“), since they mention that the regulation with which they operate today promotes the disintegration of responsibility at the time of making decisions, since the Law of Petróleos Mexicanos recognizes to the Board the making of executive decisions that, arguing the position that in any company of corporate structure, such decisions would correspond to the Director. By the above, they proposed to expand and grant greater powers to the Director for the management and strategic direction of Petróleos Mexicanos (“Pemex“) according to the national energy policy instructed by the federal Executive.

The deputies proposed that the following premises, among others, should be taken into account:

  • Establish a legal framework that guarantees and allows the Director to operate Pemex and the affiliated companies in an integral manner to execute and comply with the exploration, exploitation and refining purposes;
  • Limit the powers of the Board and grant greater powers to the Director to lead and establish the strategic direction of the company;
  • Incorporate the Director to the Board as a permanent guest with voice, but without vote, foreseeing that said governing body may not meet without his presence;
  • A reduction in the number of committees, in order to concentrate attention on matters in two committees supporting the functions of the Board. Subsisting the Audit Committee and merging two to create the Investment, Procurement, Works and Services Committee, the latter would include the investment functions, as well as the analysis and recommendations of the Business Plan; and
  • Transfer to the Director the business plan, the central and strategic management of Pemex, its productive subsidiaries and affiliated companies, as well as any company in which Pemex has direct or indirect share capital, likewise, appoint and remove the directors of Pemex who occupy positions in two hierarchies below the Director, as well as functions related to tabulators and human resources, functions that currently correspond to the Board.

With respect to the proposed Initiative, several media have pronounced on the matter, pointing out risks if the text were approved as it was presented, since it promotes the centralization of the takeover of the General Director of Pemex, a situation that is contrary to the best corporate practices in the market, and that slows down the efforts that have been made in the last 12 years by the institutionalization of this productive enterprise of the State. (Mexico Evalúa, 2019)

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Publication of the preliminary draft of the Technical Criteria of the Federal Commission of Economic Competition for the handling of information derived from legal advice provided to economic agents.

On December 11th, 2018, an extract of the preliminary draft of the Technical Criteria of the Federal Commission of Economic Competition for the handling of information derived from legal advice provided to economic agents (“Technical Criteria”) was published in the Official Gazette of the Federation.

The origin and motive of the aforementioned Technical Criteria arises from the importance of professional secrecy, which is a requirement that exists in certain professional activities, such as the legal profession, which demand total trust on the part of the individual with the service provider.

The Declaration of Perugia on deontological principles of the Advocacy of the European Community of the year 1977 emphasizes the importance of the respect and confidentiality that must maintain attorneys with their clients, likewise, it indicates that the professional secret is in such a way, a right and elemental duty of the profession, forming part of the pure essence of the profession of attorney, based on the unavoidable confidentiality between the client and this one . Although it is recommended that attorneys get into the habit of inserting a confidentiality clause in their communications, such clause is not necessary, the warning of “confidentiality” of the communication is understood per se.

In Mexico, the regulation of professional secrecy, as it is in the rest of the field concerning professional practice, is scarce and deficient. The most relevant regulations are scattered in civil and criminal legislation. It is an imperfect norm that lacks sanction.

The objective of these Technical Criteria is that the information obtained by the Federal Economic Competition Commission (“the Commission”) will not be considered nor will it obtain evidentiary value, when this information is contained in communications whose purpose is to obtain legal advice.

The foregoing, between any person and his attorney, in which, in a writ and in order with the Technical Criteria, it is stated that the information that has been provided or obtained by the Commission in a visit or investigation procedure is susceptible of being protected (the “Request for Qualification”). In the event that the attorney or the economic agent does not know these Technical Criteria, the public servant processing the investigation shall proceed ex officio in accordance with their application, informing its General Director so that he may conduct himself in accordance with the procedure for processing the Request for Qualification.

Once the Request for Qualification has been entered, the relevant safeguard and protection measures will be taken, until the nature of the protected information is resolved. The procedure for processing the Request for Qualification is as follows:

I. Five days after the Request for Qualification has been received, the General Director in charge of the procedure will send it to the Head of the Unit;

II. Subsequently, within the following five days, the Holder of the Investigating Authority will issue an agreement designating the members of the Qualifying Committee, said committee is the only one empowered to analyze the referred information.

In addition, the Request for Qualification will be ordered in turn and the applicant will be personally notified;

III. The instructor, member of the Qualifying Committee will analyze the Request for Qualification and within the following ten days will dictate an agreement in which: i) admits the Request for Qualification and convokes the Qualifying Committee so that, in agreed hour, the corresponding session is carried out, or ii) prevents by only occasion, when the writ omits some form requirement, a maximum term of five days will be granted to correct;

IV. Once the Request for Qualification has been analyzed, the Qualifying Committee, in a collegiate manner, will deliberate and decide whether the request is founded or unfounded.

In case it is declared founded, the necessary measures of safeguard will be ordered, if the information is physical, its return will be ordered, if it is an electronic file, the exclusion will be ordered, and it will be stated in a record. Otherwise, it will be ordered to be forwarded to the Directorate-General for information to be made available; and

V. Finally, the determination issued by the Qualifying Committee will be personally notified to the applicant.

It is important to mention that these Technical Criteria have the character of a preliminary draft, therefore, a period of public consultation is opened for thirty working days counted from the publication of the present, in order for any interested party to present opinions to the Commission. If approved, these Technical Criteria shall enter into force on the day of their publication in the Official Journal of the Federation.

Sources consulted:

● Official Journal of the Federation. (2018, December 11). EXTRACT of the preliminary draft of the Technical Criteria of the Federal Commission of Economic Competition for the management of information derived from legal advice provided to economic agents. From the website: http://www.dof.gob.mx/nota_detalle.php?codigo=5546197&date=11/12/2018

● Barney, O. C. (2018). El secreto profesional del abogado en México (1st ed.). México: Universidad Nacional Autónoma de México, Instituto de Investigaciones Jurídicas, Ilustre y Nacional Colegio de Abogados de México.

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