Walmart’s Mexican subsidiary under federal scrutiny

Walmart de Mexico, a wholly-owned subsidiary of Walmart Inc., is under investigation for alleged price-fixing. Mexico’s Economic Competition Commission said the retailer was accused of price collusion with a supplier or distributor and as a result, could be distorting the process of free competition.

Walmart issued a statement saying it is confident that it has “always obeyed the applicable law in order to guarantee best practices, quality and assortment to customers.” The retailer added that it was not able to predict any impact this investigation and its findings may have on the company’s finances.

The investigation comes following a three-year probe by Mexican antitrust regulator, Cofece. Walmart Mexico was first told of the investigation in 2020 and now has 45 days to provide arguments and evidence in its defense. The commission’s seven-member board will review the findings of agency investigators and Walmart’s defense and render a ruling within 90 days.

Regulators said large retail chains imposing terms on their suppliers create risks for the smaller companies that simply can not compete.

If Walmex is found to have violated competition law, regulators could impose a fine of up to 8% of the company’s annual income in Mexico. Walmex reported annual revenue of $45 billion from operations in Mexico and Central America. The company will report fiscal third-quarter earnings on Oct. 25.

Walmart operates 2,804 retail stores in Mexico and it’s one of the fastest growing and best-performing markets in the retailer’s international portfolio.