Derecho Empresarial: Repaso Primer Parcial

Derecho empresarial: Repaso Primer Parcial

1. Economic Policies and Authorities

• The Mexican State has the faculty granted by the Constitution, to intervene in the economy by creating policies on the matter of Economic Competence.
• These policies have the purpose of protecting the competitive process by preventing and eliminating monopolies, monopolistic practices and other restrictions to the efficient functioning of markets of goods and services.
• According to the article 28 of the Mexican Constitution in Mexico monopolies and monopolistic Practices are forbidden. As a consequence, the following actions shall be severely punished by the law:

1. Any concentration or hoarding of necessary consumer goods in one or in few ‘hands’ with the purpose of obtaining a raise in prices;
2. Any agreement, procedure or combination between producers, industrials, merchants or businessmen that, in any way, oblige the consumers to pay exaggerate prices, and;
3. In general, anything that constitutes an undue exclusive advantage in favor of one or more determined people in detriment of the general public or a social class.

• Strategic areas for exclusive exercise by the State:

1. Mail, Telegraph, Radiotelegraphy;
2. Radioactive Minerals and Nuclear Energy generation;
3. Planning and control of the national Electric System, and;
4. Public service of transmission and distribution of Electric Energy and exploration and extraction of Oil and the other Hydrocarbons.

• These functions shall be executed on each strategic area by entities and companies owned by the State.
• Shall not be considered monopolies:

1. Central Bank

• The functions exercised by the State exclusively through the Central Bank, such as: issuing money (coins and bills) shall not be considered a Monopoly. E.g Banco de México

1. Energy

• The National Hydrocarbons Commission and the Energy Regulatory Commission are the regulatory entities on matters of Energy. E.g CFE and PEMEX

1. Workers Associations

• Associations formed to protect the workers interests as well as the Cooperative Associations of Producers with the purpose of selling national or industrial products of a certain region of Mexico, directly in foreign markets. E.g SNTE

1. Authors, Artists and Inventors

• Privileges granted to authors and artists for a determined time for the production of their artistic works, or privileges granted to inventors for the exclusive use of their inventions. E.g INDAUTOR

1. Concessions

• The State may concession certain public services or the exploitation and use of the Federation. E.g Mining concessions, and Water concessions

• Economic Authorities:

1. Economic Competence Federal Commission

• The Economic Competence Federal Commission has the purpose of guaranteeing the free competence and concurrence and to prevent, investigate and combat the Monopolies, Monopolistic Practices, and Concentrations and any restrictions to the efficient functioning of the markets. COFECE

1. Telecommunications Federal Institute

• Is the Economic Competence authority for the industry of radio broadcasting and telecommunications and has the same faculties as the COFECE, but limited to this sector. IFT

• Both the Economic Competence Federal Commission and Telecommunications Federal Institute shall be independent entities on their decisions and functioning, and must be impartial in their decisions, also both have an autonomous patrimony and budget.

1. Competition Law

• Monopolies, monopolistic practices, illicit concentrations and barriers which, in terms of the Economic Competence Law, decrease, damage, impair or influence in any way the free competition or economic competition in the production, processing, distribution or marketing of goods or services, shall be forbidden.
• This Law regulates - Article 28 of the Political Constitution of the Mexican United States - free competition, antitrust, monopoly, monopolistic practices and concentrations is of public order and social interest, applicable to all areas of economic activity and generally observed throughout the Republic.
• Every Economic Agent is subject to this law.

1. Economic Agent:

• Any physical or moral person weather commercial of nonprofit, or the agencies of the federal, state or local governments, associations, chambers, associations of professionals, trusts, or any other form of participation in economic activity

• Barriers to competition and free concurrency:

• Any structural feature of the market, fact or act of Economic Agents that has the purpose or effect of preventing access of competitors or limiting their ability to compete in markets; that impede or distort the process of free competition, as well as legal provisions issued by any level of government that unduly impede or distort the process of free competition;

• Monopolistic Practices:

1. Absolute

• Are essentially anticompetitive acts performed by economic agents that compete between each other. (Horizontal)
• Manipulating the prices of goods and services, restricting the production of goods, dividing the market, etc.
• The object or effect of which is any of the following:

1. To fix, raise, or manipulate the price of sale or purchase of goods or services that are offered or demanded in the markets;
2. Establish an obligation to produce, process, distribute, market or acquire only a restricted or limited quantity of goods or the provision of or dealing with a number, volume or frequency of restricted or limited services;
3. Divide, distribute, assign or impose portions or segments of a current or potential market of goods and services by customers, suppliers, time or spaces determined or determinable;
4. Establish, arrange or coordinate positions or abstention in tenders, competitions, or auctions, and
5. Exchange information with any of the objects or purposes referred to in the preceding sections.

1. Relative

• Can be anticompetitive or not acts performed by economic agents that do not compete between each other. (Vertical)
• Unduly displace other economic agents from the market, preventing them from entering to it or setting exclusive advantages to an agent with a significative power in a relevant market.
• Article 54. Relative monopolistic practices hereby consist of any act, contract, agreement, procedure or combination, which: 

1. Correspond to the factual predicates under article 56 of this Law;
2. Are carried out by one or more Economic Agents that individually or jointly exert market dominance in the same relevant market in which the practice is executed, and
3. Have or may have as its purpose or effect, in the relevant market or a related market thereof (?), unduly displacing other Economic Agents, substantially impeding their access or establishing exclusive advantages in favor of one or several Economic Agents.

• Relative Monopolistic Practices are not always illegal. This practices are usual among smaller economic agents and highly contested markets. It is only when the concerned economic agent(s) has market dominance that the relative monopolistic practices are forbidden.

1. Foreign investment in México

• The aim of Foreign Direct Investment (FDI) is to create lasting and long-term interests of foreign entrepreneurs in the recipient country, for economic purposes.
• The importance of FDI resides in the fact that it functions as an important catalyst for development. In this sense, FDI produces important beneficial effects in the productivity and competitiveness of a country by creating jobs, increasing savings and foreign currency reserves, fostering competition and boosting transfer of new technologies and exports.
• Foreign investment:

1. Participation by foreign investors, in any percentage, in the capital stock of Mexican companies;
2. Investments by Mexican companies in which foreign capital has majority interest; and
3. Participation by foreign investors in activities and acts contemplated in the Law of Foreign Investment.

• Foreign investor:

1. An individual or entity of any nationality other than Mexican, and foreign entities with no legal standing;

• Restricted zone:

1. A strip of the national territory:

• 100 kilometers wide along the borders and 50 kilometers wide along the coast.

• Foreigners exclusion clause:

1. An express agreement or covenant forming an integral part of the corporate by-laws and setting forth that such corporations shall not admit, directly or indirectly, foreign investors or corporations with foreigners admission clause, as partners or stockholders.

• Calvo clause:

1. The agreement to be considered as Mexican nationals with respect to any resources acquired and to decline, therefore, any right to be legally protected by their national governments in case of being involved in a controversy about such resources.

• Considerations:

1. Investments made in Mexico by foreigners with the ‘stay status’ of permanent residents shall be considered a Mexican Investment and not a Foreign Investment.
2. Participate in any proportion in the capital of Mexican companies;
3. Acquire fixed assets;
4. Enter new fields of economic activity or manufacture new product lines;
5. Open and operate establishments, and;
6. Expand or relocate existing establishments, except as otherwise provided on the law.  

• The activities determined by the relevant laws in the following strategic areas are reserved exclusively for the State:

1. Exploration and extraction of oil and other hydrocarbons,
2. Planning and control of the national electric system, as well as the public services of transmission and distribution of electricity,
3. Generation of nuclear energy;
4. Radioactive minerals;
5. Telegraph;
6. Radiotelegraphy;
7. Postal service;
8. Bank note issuing;
9. Minting of coins;
10. Control, supervision and surveillance of ports, airports and heliports; and others as expressly provided by applicable legal provisions.

• The economic activities and companies mentioned hereunder are reserved exclusively to Mexicans or to Mexican companies with foreigners exclusion clause:

1. Domestic land transportation for passengers, tourism and freight, not including messenger or courier services;
2. Development banking institutions, under the terms of the law governing the matter; and
3. Rendering of professional and technical services set forth expressly by applicable legal provisions.

• In the economic activities and corporations mentioned hereafter, foreign investment may participate in the following percentages:

1. Up to 10% in:

• Cooperative companies for production;

1. Up to 25% in:

• Domestic air transportation;
• Air taxi transportation; and
• Specialized air transportation;

1. Up to 49% in:

• Manufacture and commercialization of explosives, firearms, cartridges, ammunitions and fireworks, not including acquisition and use of explosives for industrial and extraction activities nor the preparation of explosive compounds for use in said activities;
• Printing and publication of newspapers for circulation solely throughout Mexico;
• Series “T” shares in companies owning agricultural, ranching, and forestry lands;
• Fresh water, coastal, and exclusive economic zone fishing not including fisheries;
• Integral port administration;
• Port pilot services for inland navigation under the terms of the law governing the matter;
• Shipping companies engaged in commercial exploitation of ships for inland and coastal navigation, excluding tourism cruises and exploitation of marine dredges and devices for port construction, conservation and operation;
• Supply of fuel and lubricants for ships, airplanes, and railway equipment; and
• Broadcasting. This maximum foreign investment will be subject to the reciprocity that exists in the country of constitution of the investor or economic agent who exercise control, in the last instance, directly or indirectly.

• With certain exceptions, foreign investment participation limits in the activities and companies mentioned in this article may not be surpassed directly nor through trusts, contracts, partnerships or by-law agreements, pyramiding schemes or other mechanisms granting any control or a higher participation than the one established.
• A favorable resolution by the Commission is required for foreign investment to participate in a percentage higher than 49% in the economic activities and companies referred to hereafter:

1. Port services in order to allow ships to conduct inland navigation operation, such as towing, mooring and barging.
2. Shipping companies engaged in the exploitation of ships solely for highseas traffic;
3. Concessionaire or permissionaire companies of air fields for public service;
4. Private education services of pre-school, elementary, middle school, high school, college or any combination;
5. Legal services;
6. Construction, operation and exploitation of general railways, and public services of railway transportation.

• Mexican companies with Foreigners Exclusion Clause can acquire Real Estate, Exploit Mines and National Territorial Waters.
• For companies whose by-laws include the Calvo Clause, the following shall apply:

1. They may acquire title to real estate located in the restricted zone, intended for non-residential purposes, and must give notice of such acquisition to the Ministry of Foreign Affairs, within 60 business days following the acquisition date;  
2. They may acquire rights to real estate inside the restricted zone, intended for residential purposes in accordance with the provisions of Chapter II of the Foreign Investment Law.

• A permit from the Ministry of Foreign Affairs is required for credit institutions to acquire, as trustees, rights to real estate located within the restricted zone, when the purpose of the trust is to allow the use and development of such property without constituting ownership rights in respect thereof, and the trust beneficiaries are:

1. Mexican companies without foreigners exclusion clause; and
2. Foreign individuals or foreign entities.

1. Banking Law

• Branch of public law that regulates professional brokering of money and credit, and the organization, structure and functioning of the banking system and the way in which the State exercises control of that system.
• Still considered within the Commercial Law (which is part of private law), Banking Law is autonomous because it has: its own object of knowledge, independent systematization on its structure, own development and knowledge, and specific standards. Law of Credit Institutions.
• Notion of Public Service.- Technical activity, designed to meet collective, basic or fundamental needs through individualized services, subject to principles of public law.
• It can be provided by the State or by individuals through an authorization (concession) granted by the State.
• Characteristics of Banking Law as a branch of public law:

1. It is a supervised activity involving the State.
2. Comprises technical activities.
3. Provided through concessions or non-transferable "authorizations".
4. Its fundamental legal regime is within Public Law.

• The banking and credit service is a public service provided by the State directly (Development Banks) or by individuals (Commercial Banks), in which there is an intermediation, because the bank provides loans and borrowings professionally, and because it is carried out by highly specialized entities subject to supervision and monitoring by the Banking Authorities.
• The Banking Law consists of rules of public law (concerning the provision, organization, supervision, investment reserves, balances publication, etc.); and rules of private law (concerning Rules of contracts and credit operations).
• Mexican banking system:

1. Article 3 of the Law of Credit Institutions (LIC), establishes that the Mexican Banking System consists of:

• Banco de México (Central Bank)
• Commercial Banks
• Development banking institutions
• Public trusts set up by the Federal government to foster economic development that have financial activities
• Self-regulatory banking agencies

• Credit

1. Etimologic Notion.- Credit is Latin creditum, meaning: "trust, believe, have faith".

• Professional brokering of money and credit, also called banking and credit service, comprising three activities:

1. Fundraising from general public.
2. Placement of these resources within the general public, through acts causing direct or contingent liabilities.
3. Recovery of resources to the investing public, plus interest and fees. 

• PRINCIPLES TO BE OBSERVED WHEN GRANTING OF CREDIT:

1. It should estimate the economic viability of the respective investment projects;
2. The recovery terms;
3. The relationship between the various concepts of financial statements or financial situation of the borrowers;
4. The administrative and moral qualification of the accredited;
5. The warranties that might be necessary.

• The amounts, terms, repayment schemes and, where appropriate, grace periods of financing shall be adequate to the nature of the investment projects and the present and foreseeable situation of borrowers.
• The development banking institutions are entities of the Federal Public Administration, with legal personality and patrimony of their own, constituted as national credit entities, which are part of the Mexican Banking System.
• Development Banks improve the productive activities that Congress determined as the specialties of each one, according to their respective organic laws.
• Their main objective is to provide access to savings and financing for individuals and corporations as well as to provide technical assistance and training. 
• Development Banks:

1. Nacional Financiera, S.N.C. (NAFIN)
2. National Bank of Public Works and Services, SNC (BANOBRAS)
3. National Foreign Trade Bank, S.N.C. (BANCOMEXT)
4. Federal Mortgage Society, S.N.C. (SHF)
5. National Savings and Financial Services Bank, SNC (BANSEFI)
6. National Bank of the Army, Air Force and Navy, SNC (BANJERCITO)

• Multiple banking institutions:

1. Commercial Banking is one of the two ways of providing service of banking and credit, by corporations authorized by the Federal Government through the National Banking Commission requiring the favorable opinion of Banco de Mexico.
2. The concept of commercial banks is used as opposed to specialized banking (Deposits, Financial, Mortgage and Capitalization).
3. Also called commercial banks are “Corporations, with a Fixed Capital to which the Federal Government has granted a “concession” (authorization) to engage in regular and professional performance of banking and credit in the fields of deposit, savings, financial, mortgage, trust and related services”.[pic 1]