After a three year wait, Walmart Inc.'s Mexican operation has a chance to defend itself in a government antitrust investigation into the company's supply chain and retail marketing practices.
The company said on Friday that it had just received notice that Mexico's Federal Economic Competition Commission's investigating authority recommended a trial-like process "for alleged relative monopolistic practices ... regarding the supply and wholesale distribution of consumer goods, retail marketing of such goods and related services."
Walmex has 45 days to give the commission its defense arguments and evidence.
"Walmex is confident that it has always acted in accordance with applicable law to ensure the best practices, quality and assortment to its clients and will exercise all rights and remedies available under applicable law," the company said.
The commission said on Nov. 23, 2020, that it opened an investigation on July 24 into possible monopolistic practices. Walmex told its shareholders of the probe on Nov. 26, 2020.
The commission's November news release defined relative monopolistic practices as "actions, contracts, agreements or procedures carried out by one or several economic agents with substantial market power and who have or may have as purpose or effect unduly displacing other market agents, substantially impeding their access or establishing exclusive advantages in favor of one or more economic agents."
Walmart de Mexico y Centroamerica, generally referred to as Walmex, is one of Walmart's most profitable international markets as well as Mexico's largest retailer. It posted net sales of $10.7 billion in this year's second quarter, largely on the strength of its popular Bodega format, Sam's Club and e-commerce.
The commission's seven-member board will review the findings of agency investigators as well as Walmex's defense before deciding how to resolve the case, according to Bloomberg Law. Walmex could be fined billions of dollars if commissioners decide the company abused its market power.
Previously, Walmex was at the center of a bribery investigation that came to light in a 2012 article published by The New York Times. Walmart executives in Mexico were said to have bribed officials to expedite permits for new stores.
In addition to paying close to $1 billion on its own investigation and to build up its global compliance initiatives, Walmart agreed in June 2019 to pay the Securities and Exchange Commission $282.7 million to settle all investigations into its compliance with the U.S. Foreign Corrupt Practices Act.
Walmart said at the time that it had set aside about $283 million for the settlement in November 2017.