There is an international crusade against directors who sit on the boards of competing companies and the companies in which they collaborate. Will we see actions in Mexico in this regard?

The concept of crossed directors refers to one or more members of the board of directors of a company who are in turn directors of another. In some advanced jurisdictions, company board members are expressly prohibited by law from being directors of competing companies, due to the risk of coordination and collusion that could result in less competition between the companies in question. In Mexico, although there are general duties of loyalty and diligence of directors, there are no express competition provisions, although the risk of incurring in monopolistic practices is real.

In some countries, competition agencies are sending renewed messages about what they consider to be a possible competition violation, and are taking action on the matter. In the United States, for example, the Department of Justice has opened cases for so-called “interlocking directorates”, and a few months ago several directors had to resign their functions due to this increased scrutiny.

Although in Mexico the issue has not yet been investigated or addressed, I would not doubt that financial sector regulators such as the National Banking and Securities Commission or competition regulators such as the Federal Economic Competition Commission and the Federal Telecommunications Institute will soon take action. in the matter to avoid latent risks.

The reality is that in most cases there is no competition issue in having board members who in turn serve on other boards. Rather, the director in question may benefit from knowledge of various industries and contexts to help him or her do a better job of serving on the governing body of those companies. The competition problem could be generated in the cases in which these directors, who by definition have access to strategic and sectoral information, use that information to generate an exchange of information or a coordination agreement that can be considered as an absolute monopolistic practice in Mexican law. Let’s remember that the fundamental principle of competition is that competitors make individual decisions, and when there is a way to synchronize or coordinate actions between competitors, the free market is broken.

But it is not only a problem between current competitors. A very sensitive gray area also arises with potential competitors, that is, companies that could enter a market or that are in related markets and where directors may have significant weight in deciding whether they should participate in the markets of other companies. what they advise Again, this could be a case of sanctionable competition if proven by the authority, so it would still be worth avoiding the risk preemptively.

Historically in Mexico, company councils have been made up of members of the controlling families and other recognized businessmen who, due to their prestige, also sit on the boards of other companies. Derived from certain regulatory changes and due to market practices imported from other countries, a new class of professional company directors has begun to exist, made up of young people and women who, little by little, have begun to form part of company councils. especially in those that list their shares in public markets. Along with this sophistication and professionalization that is taking place in the boards of companies, it is to be expected that regulators will also begin to analyze the possible competition issues that could arise from the existence of crossed directors, so it would be recommendable that companies preventively review their risk in this area.

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Deborah Acker

I write epic fantasy; self-published via KDP. Devoted dog mom to my 10 yr old GSD, Shadow! DM not a priority; slow response at best #amwriting #author.

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