Mexico City, August 27th, 2021.
On June 3rd, 2021, the Law for Transparency, Prevention and Elimination of Inappropriate Advertising Practices («Law») was published in the Federal Official Gazette and will enter into force on September 1st, 2021.
This law will drastically change the advertising market in Mexico across every medium (print, digital, TV & radio broadcasting, etc.) and will have an impact on advertisers, agencies and advertising media.
This law restricts trade and competition rights, imposes additional contractual, tax and administrative burdens, and could violate trade secrets.
Upon its entry into force, the following changes, among others, will take place:
- All advertisers must purchase advertising space directly, or through a third party under a transaction-specific agency agreement identified in Mexican law as “mandato”.
- Advertising agencies will be barred from making bulk purchases of advertising space for subsequent resale. This will result in loss of sale discounts to advertisers. Additionally, in addition to restricting the freedom of trade, from a competition perspective, this prohibition condemns per se any resale of advertising space purchased by an agency, without analyzing possible efficiencies which may stem from such transactions.
- Advertising media will have to invoice the advertiser directly, even if an agent was involved in the purchase through the corresponding agreement. This will result in an increased administrative burden for the advertiser and its supplier selection systems.
- In case of programmatic digital advertising, an agency must deliver certain information to the media company which may be considered to be trade secret, such as agreed-upon quantitative performance indicators, general objectives, audience segmentation, optimization methods, the effectiveness of the medium used and the cost/benefit ratio.
The lawyers of our antitrust and administrative law practices areas are at your disposal to advise you on the implications of the Law and possible means of defense.
S I N C E R E L Y,