News

The Mexican Federal Judicial Power confirmed both the legality and constitutionality of the public bid process known as “Red Compartida”

Authors: Rafael Tena y Alfonso Pagaza

As a result of a constitutional amendment, published on June 2013, the Ministry of Communications and Transports of the Mexican Government had the obligation to ensure the implementation of a Public Shared Network (“Red Compartida”) that uses the spectrum released by the transition to digital television.

Acedo Santamarina, S.C., was hired to provide its advice on the public bid process that awarded the Public Private Partnership contract to operate this network. The bid process ended with the signature of the Public Private Partnership contract on January 2017.

After more than three years of litigation, on June 28th, 2020, the Second Collegiate Court on Administrative Matters, Specialized in Antitrust, Broadcasting and Telecommunications, with residence in Mexico City and jurisdiction throughout the Republic, confirmed both the legality and constitutionality of the public bid process.

The judges decided unanimously that the Ministry of Communications and Transports of the Mexican Government acted in a legal and constitutional way during the public bid process that awarded the Public Private Partnership contract to operate this network to Altán Redes.

It is worth noting that in the case at hand the First Chamber of the Mexican Supreme Court of Justice denied the constitutional protection (“juicio de amparo”) against Articles 51, 52 y 53 of the Law of Public Private Partnership, as well as Article 84, Section I of its Regulations.

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COFECE files constitutional controversy

On June 22, 2020, the Federal Economic Competition Commission (“COFECE” as per initials in Spanish) issued a statement informing that COFECE filed before the Supreme Court of Justice of the Nation (“SCJN” as per initials in Spanish), a constitutional controversy against the Agreement the Policy of Reliability, Security, Continuity and Quality in the National Electric System, issued by the Ministry of Energy, which was published in the Federal Official Gazette on May 15, 2020 (“SENER Agreement“).

The foregoing, for considering that it undermines the fundamental principles of competition and free market access ordered in the Political Constitution of the United Mexican States, affecting its constitutional mandate and braching its sphere of competence.

COFECE considers that the aforementioned policy is contrary to the content of articles 16, 28 and 133 of the Constitution, as well as to the applicable laws on electricity, which together establish a competition regime in the generation and supply of electricity. Likewise, COFECE expressly states:

The instrument published in the DOF seriously affects the economic structure of the electricity sector, as it eliminates any possibility of its operating in conditions of competition and efficiency, as well as under the terms set forth in the current national regulatory framework for this sector. Hence, the contested Policy compromises both the open and non-discriminatory access to transmission and distribution networks (an essential input in this industry), as well as the economic dispatch criterion that governs the operation of the wholesale electricity market; furthermore, it grants advantages in favor of certain participants while reducing the ability of others to compete, forefits efficiency and establishes barriers to entry in electricity generation.”

It remains to wait for the SCJN to rule on the constitutional controversy filed by COFECE. Particularly, regarding the scope of the SENER AGREEMENT, issued by such government agency, apparently in excess of its powers and invading the powers of COFECE itself, to the detriment of consumers.

It should be clarified that, from the legal point of view, a constitutional dispute is a constitutional control mechanism, in the form of a trial, to settle disputes. In this case, between an autonomous constitutional body and the Executive Branch, having effects the resolution issued by the SCJN only between SENER and COFECE.

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Required notice to RFC of partners and shareholders

According to Article 27 of the Federal Tax Code (Código Fiscal de la Federación, “FTC”), legal entities with a tax address in Mexico are required to file a notice in the Federal Taxpayer Registry (Registro Federal de Contribuyentes, “RFC”) providing the name and RFC code of the partners or shareholders every time any modification is made in the capital stock of the company.

The foregoing seeks that the Mexican Tax Administration (Servicio de Administración Tributaria, “SAT”) obtains information to know in real time the shareholding structure of legal entities, with the data of their partners or shareholders.  Mainly, if they are registered in the RFC and, subsequently, to know the modifications and additions of those, so that it has updated such information.

In accordance with Miscellaneous Tax Resolution 2.4.19, in force for fiscal year 2020, the notice must be presented within 30 business days of the capital stock being modified and be made through the electronic portal of the SAT, in accordance with procedure 295/CFF.

In accordance with transitory article Forty-Six of the Miscellaneous Tax Resolution, in force for the fiscal year 2020, legal entities that currently have out-of-date information on partners or shareholders in the RFC must file the aforementioned notice on or prior to June 30, 2020, providing current information as of that date.

In accordance to the FTC, failure to file the notice of capital update or to file it late, unless it is filed spontaneously, is sanctioned with a fine.  It could also lead to other negative tax consequences.

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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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Measures announced by the SCJN for its activities from june 1 to 30

In accordance with General Agreements 3/2020, 6/2020 and 7/2020 issued during March and April 2020, the Plenary of the Supreme Court of Justice (“SCJN”), decided to announce certain measures for mitigating risks related to the COVID-19 disease, including the declaration as non-working days from March 18 to May 31, 2020.

On May 26, 2020, the Plenary of the SCJN issued General Agreement 10/2020, which extends the suspension of jurisdictional activities until June 30, 2020, in the understanding that during such period terms will not elapse, however, the days and hours that may be necessary for the development of the activities with the purposes mentioned below, will be enabled electronically or remotely:

a) Provide on the suspensions requested in urgent constitutional controversies and the judicial actions necessary for the effectiveness of such measures.

b) To present the initial writs within the competence of the SCJN only electronically, using the FIREL or e.firma, and to generate the corresponding electronic files.

c) Continue with the electronic processing of matters regulated in the Amparo Act, constitutional controversies, unconstitutional actions in which laws of annual validity or, electoral regulations, have been challenged, and the appeals filed in those means of constitutional control settled before the SCJN, or the appeals filed against urgent constitutional controversies presented since March 18, 2020, that go beyond the matter of suspension, through the use of FIREL or e.firma.

d) To digitize the documentation and to integrate the electronic files for the matters mentioned in subsection c) above, to continue its processing electronically.

e) Provide through electronic means the matters mentioned in sub-sections b) to d), and for notifications to be effected by writing or electronic list, as appropriate, as well as electronically.

f) To effect the service of process ordered in the proceedings initiated electronically since June 1st, 2020, and by writing to the respective authorities the orders that admit “amparo under review” remedies filed before or after the date herein mentioned.

g) To hold remote hearings and appearances.

h) To provide on the matters listed or that may be listed for the sessions the Plenary or Chambers of the SCJN may hold remotely; to announce the decisions taken in those sessions by writing or electronic means; to sign electronically the relevant additions and votes; and to make available the drafts of the resolutions through electronic means.

i) To notify the legislative bodies, the judgments issued by the Plenary of the SCJN, in unconstitutional actions or constitutional controversies, should the effects of the declaration of invalidity are subject to such notification.

j) To conclude the completion of the matters decided before March 18, 2020, by the Plenary and Chambers of the SCJN, to sign them electronically and to notify them by writing or through electronic sign.

The deadlines for submission of requirements ordered during the month of June 2020, and for filling appeals electronically against such requirements, will restart or begin only for the party that files his submission electronically. In the case of orders admitting “amparo under review” remedies, the period for its challenge will start from the date of the effectiveness of the notification made by writing or electronic list.

The measures above mentioned intend that the SCJN carry out its activities during June with the necessary precautions to face the SARS CoV-2 (COVID-19) pandemic.

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Senes publishes the agreement to guarantee the efficiency, quality, reliability, continuity and security of the national electric system

On April 29, 2020, the National Energy Control Center (for its initials in Spanish “CENACE”), issued the Agreement to guarantee the Efficiency, Quality, Reliability, Continuity and Security of the National Electric System (“Agreement”), on the occasion of the recognition of the epidemic of disease due to the SARS-COv2 virus (COVID-19).

As a consequence of the foregoing, the Plenum of the Federal Commission on Economic Competition (for its initials in Spanish “COFECE”), through a session dated May 6, 2020, issued Opinion No. OPN-006-2020, from whose analysis and recommendations were made known through this media.

In follow-up to the foregoing, it was made known the Agreement by which the Policy of Reliability, Safety, Continuity and Quality in the National Electric System, issued by the Ministry of Energy, which was published in the Official Gazette of the Federation on May 15, 2020 (“SENER Agreement”). Of the recitals, the following is highlighted:

“That this policy contemplates in a more orderly manner the penetration of Power Plants with Intermittent Clean Energy, photovoltaic and wind power, anticipating that the Alert and Emergency Operating States will be reduced to a minimum according to international experiences, reducing as far as possible the forced exits associated with generation are particularly dangerous on the ramps of sunrise and sunset, as well as at critical hours of the National Electric System and that expose financial damage to the National Electric System, as well as to End Users. Said strengthening will be carried out through the optimization of the elements that make up the National Electric System as a whole, and

The Third Transitory Article of the SENER Agreement, for its part, establishes:

Third.- In accordance with this policy of Reliability, Safety, Continuity and Quality in the National Electric System, the Energy Regulatory Commission and the National Center for Energy Control, within the scope of their powers and competences, shall carry out the corresponding adjustments to the Market Rules and the “General Administrative Provisions that contain the Criteria of efficiency, Quality, Continuity, security and sustainability in the National Electric System; Network Code, as provided in article 12, section XXXVII of the Electricity Industry Law ”and those that may be necessary in terms of efficiency, quality, reliability, safety and sustainability in the National Electric System.

As long as the adaptations indicated in the previous paragraph for the application of the Reliability, Safety, Continuity and Quality Policy in the National Electric System are not carried out, those in force before the entry into force of this Agreement will apply, as long as it is not oppose the provisions of this Policy, being in charge of the Ministry of Energy to resolve any questions regarding the applicable provision that arises in the event of conflict. “

For its part, Chapter V of General Provisions of the SENER Agreement, in item 2. Scope, point 2.2., establishes the following:

“2.2 The Bases of the Electricity Market and General Administrative Provisions (DACG) and other regulations issued by CRE; the Market Operational Provisions that govern the MEM issued by CENACE; as well as the regulation for the incorporation of the Distributed Generation to the SEN and the other operations carried out by the Carriers or Distributors; that are related to activities derived from this Policy, must comply with the principles, guidelines and provisions of this instrument. ”

Chapter VI of Dimensions of the Policy of Reliability, Safety, Continuity and Quality in the National Electric System, in item 6 of Sufficiency, point 6.2 Primary Regulation, point 6.2.3, indicates:

6.2.3. All the Power Plant units connected and delivering active power to the SEN must operate participating in the Primary Regulation (in free mode). The Power Plant units, participating in the primary Regulation, must adjust their production following the changes in the frequency of the System and in the action times established by CENACE. For those Wind, Photovoltaic and Efficient Cogeneration Power Plants with a date of entry into operation, that have an Interconnection contract without being in operation and with a study of Installations delivered prior to the publication of the Network Code of April 08, 2016 in the DOF, they will apply after 18 months of publication of this Policy. ”

In the same Chapter VI., Item 7 of Dispatch Security, point 7.1.2, the SENER Agreement indicates that CENACE will determine the necessary actions to maintain Dispatch Security in compliance with the objectives of Security, Quality and Continuity of the Policy and the provisions that the CRE issues in the matter, pointing out some of them to that effect.

On the other hand, point 8 of the SENER Agreement, related to New Related Services, establishes new services linked to the operation of the SEN, such as the Coverage of the Variability of Power Plants with Intermittent Clean Energy, photovoltaic and wind power and Load Centers Specials. Likewise, it indicates that CRE will issue the regulation and rates applicable to Related Services.

Point 10 of the SENER Agreement, regarding the Incorporation of Intermittent Clean Energies, states:

“10.1 The integration of Installed Capacity of Power Plants with Intermittent Clean Energy in the SEN will be maintained for all Power Plants that have reached the Interconnection Contract one day before the publication of this Policy in the DOF. If for any Power Plant with Intermittent Clean Energy, wind or photovoltaic, it is canceled if the Interconnection Contract or Generation Permit, CENACE will evaluate the requests so that, depending on the position of entry and advancement in its platform called “SIASIC”, from the Interconnection point of the Request and the capacity of intermittent Clean Generation regional accommodation considering the Reliability of the System, the viability of accepting the Study request and continuing the process of it will be determined.

10.8 Regarding the Market in the Balance of Power, the Power Plants with intermittent Clean Energy sources do not provide a firm amount of Power, therefore, they do not contribute to the Reliability of the Electric System.”

In Chapter VII, Final Provisions of the SENER Agreement, point 13.1, establishes the following:

“13. The interpretation that CENACE and CRE make, within the scope of their powers and competences, must be carried out in accordance with the present Policy of Reliability, Safety, Continuity and Quality in the National Electric System, so that, in the event of conflict due to the Market Rules and this Policy, must be interpreted in accordance with the latter.”

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First resolution of amendments to the 2020 miscellaneous tax resolutions

On May 12th, 2020, it was published on the Federal Official Gazette the First Resolution of Amendments to the 2020 Miscellaneous Tax Resolutions

Most of the rules remain unchanged from those released by the Mexican Tax Administration (SAT for its Spanish acronym) on its website. We highlight the following rules:

Individuals annual tax return

As anticipated in previous newsletters, rule 13.2. allows individuals to file their 2019 annual tax return no later than June 30th, 2020.

From taxpayers whom must file their 2019 annual income tax return and must pay any tax, rule 3.17.4 allows to pay them up to a maximum of six biases, monthly and successive, as long as their 2019 annual income tax return is presented no later than June 30th, 2020, and the payment of the first biases is made within that period.

Taxes on services provided from digital platforms

Rule 12.2.6. provides taxpayers obliged to withhold and pay income tax of taxpayers who sell goods or provide services through websites or apps may choose to calculate the income tax withholdings of each taxpayers based on daily periods.

Furthermore, rule 12.2.9. spells the detailed ways of fulfilling with formal obligations regarding taxpayers who provide digital intermediary services between third parties. They will make the payment of value added tax withholdings through the “Value Added Tax payments withholdings tax return for digital platforms”, until the 17th day of the month immediately following the month in which the withholding was made.

Suspend certain due dates

As anticipated un previous newsletters, rule 13.3. suspends certain due dates of procedures and filings before the SAT that cannot be done electronically. We refer the reader to the newsletter published on that matter.

The full text published on the Federal Official Gazette is available online at: https://www.dof.gob.mx/nota_detalle.php?codigo=5593149&fecha=12/05/2020.

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Jurisdiction of the courts of Mexico City, over commercial disputes, according to the value of the claim

Authors: Roberto Altamirano y Eduardo Reyes

Articles 59, 104 and 105 of the Organic Act of the Judicial Power of Mexico City provide that the courts of that entity with jurisdiction in civil and commercial matters are (i) Civil Courts of Written Process, (ii) Civil Courts of Oral Process and (iii) Civil Courts of Low Amount. In this regard, the Plenary of the Council of the Judiciary of Mexico City released at the ordinary session held on February 18th, 2020, the Agreement 40-09/2020, which specifies that starting January 26th, 2020, jurisdiction over commercial disputes shall be governed in accordance with the following:

1. The Civil Courts of Written Process may rule on (i) commercial executive proceedings concerning amounts over the sum of $4,000,000.00 (Four million pesos 00/100 M.N.), without considering interests and/or other accessories claimed at the filing date of the lawsuit, and (ii) matters under concurrent jurisdiction that cannot be economically quantified at the time the lawsuit is filed neither afterward, whose jurisdiction is not expressly allocated to the Civil Courts of Oral Process.

2. The Civil Courts of Oral Process may rule on (i) commercial executive proceedings that involve amounts under the sum of $4,000,00.00 (Four million pesos 00/100 MN), and equal or over the sum of $682,546,89 (Six hundred eighty-two thousand five hundred and forty-six pesos 89/100 MN), without taking into account the accessories claimed at the filing date of the lawsuit, and (ii) matters under concurrent jurisdiction that should be processed through a commercial oral proceeding, without limitation on the amount.

3. The Civil Courts of Minor Amounts may decide commercial executive proceedings in which the principal amount claimed is less than the sum of $682,546.89 (Six hundred eighty-two thousand five hundred and forty-six pesos 89/100 MN), as provided in Articles 1339 and 1340 of the Commercial Code -amount updated in accordance with the Agreement of the Ministry of Economy published in the Official Gazette of the Federation on December 30th, 2019, and the Agreement 36-47/2019 of the Council of the Judiciary of the Judicial Power of Mexico City-, without considering the accessories claimed at the filling date of the lawsuit.

In this manner, the Judicial Council of Mexico City clarified the jurisdiction of the judicial bodies for deciding commercial matters according to the amount involved.

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