Wal-mart De Mexico Sab De Cv · BMV:WALMEX
Wal-mart De Mexico Sab De Cv — Investor Presentation (September 2024)
16 slides from Wal-mart De Mexico Sab De Cv's investor presentation, Sep 30, 2024
Slide 1: Oral hearing
Case IO-002-2020, DE-026-2020, REC-001-2019 and Market Study Oral hearing In defense of: Nueva Wal Mart de México, S. de R.L. de C.V. [“Walmart”] September 30, 2024
Slide 2: Index
2 1. The IA failed to meet its burden of proof Index 2. No imposition, “veiled” or not 3. The IA erred in defining the market 4. Walmart does not possess market power 5. The IA fail to demonstrate the existence of the waterbed effect 6. The IA did not prove its Theory of Harm 7. Conclusion: Dismissa
Slide 3: 1. The IA failed to meet its burden of proof
3 1. The IA failed to meet its burden of proof Walmart has a fundamental right to be presumed innocent. The IA has the burden of proof, which it has not met. The IA did not allow Walmart an adequate defense. 201 of the 562 pages of the DPR and its annexes have been redacted.
Slide 4: Objective Impartiality
4 Objective Impartiality The Market Study makes express referrals against Walmart. The Market Study was expressly invoked by the IA in the SO. There is material identity between the Market Study’s harm hypothesis and the Theory of Harm in the SO. Large supermarket chains possess significant purchasi
Slide 5: 2. No imposition, “veiled” or not
5 2. No imposition, “veiled” or not Accusation: Walmart has “imposed in a veiled manner” the purchase price on its Suppliers due to their economic dependence on Walmart. Conduct is legal: ―Competition Law articles 10-II and 56-II sanctions “imposition” not “veiled imposition” ―The IA recognized that
Slide 6: Is there a “veiled imposition” due to economic dependence?
6 Is there a “veiled imposition” due to economic dependence? The Suppliers are not economically “dependent” on Walmart. ―E.g. HERDEZ pointed out to the Public Investor: “The Company does not consider that there is dependence on its largest customers despite Walmart de México y Centroamérica represen
Slide 7: 2. No imposition, “veiled” or not
7 2. No imposition, “veiled” or not The IA confuses Negotiation with Imposition: ―Negotiation between Walmart and its suppliers is not an imposition ―In both cases prices go down, but only in the negotiation does the quantity increase for consumers, as is the case with Walmart: Conditions Imposition
Slide 8: 3. The IA erred in defining the market
8 3. The IA erred in defining the market Although the alleged conduct is an upstream imposition where negotiation with suppliers Intermediation model Logistics Model takes place, the analysis focused on the ’downstream” retail market. The IA did not correctly evaluate the role of the Supermarkets as
Slide 9: 3. The IA erred in defining the market
9 3. The IA erred in defining the market Upstream. Failure to analyze the supplier’s possibilities to distribute their products across different channels and the degree of substitution between them: Supplier Intermediate Own logistic Electronic Modern Wholesalers network Channel Channel Channel dist
Slide 10: 4. Walmart does not possess market power
10 4. Walmart does not possess market power • Marginal contribution of the four main suppliers by category 80% of Walmart’s annual sales derive from just 5% of its suppliers. Walmart’s purchasing structure is dominated by two suppliers in most categories. ―The two main suppliers (C2 in gray) concent
Slide 11: 5. The IA fail to demonstrate the existence of the waterbed effect
11 5. The IA fail to demonstrate the existence of the waterbed effect Annual Return vs. Beta Coefficients (Risk) of major suppliers and Supplier supermarkets listed on the Mexican Stock Exchange Competing Walmart Supermarkets Vertical Direct Effect: ―There is no empirical evidence of harm to supplie
Slide 12: 5. The IA failed to demonstrate the existence of the waterbed effect
12 5. The IA failed to demonstrate the existence of the waterbed effect Supplier Operating Margins of Supermarkets Mexico (2015-2022) Competing Walmart Supermarkets Horizontal Indirect Effect: ―Requires that suppliers can price discriminate between competing supermarkets. ―No evidence was provided o
Slide 13: 5. The IA failed to demonstrate the existence of the waterbed effect
13 5. The IA failed to demonstrate the existence of the waterbed effect Specifically, the Complainant CHEDRAUI in Mexico: a) Had a gross margin of at least 22.9%, similar to that of other supermarkets. b) Has maintained both organic and inorganic growth: - Opened 66 stores (30 new and acquired 36 ad
Slide 14: 6. The IA did not prove its Theory of Harm
14 6. The IA did not prove its Theory of Harm •In 13 years, the Theory of Harm has not materialized. 1. The AI did not meet its burden to evidence the waterbed effect. • Other retailers, including the complainant, receive similar if not better prices than Walmart: (i) have continued to grow, (ii) ha
Slide 15: 7. Conclusion: Dismissal of the case
15 7. Conclusion 1. Lack of elements to impute liability to Walmart. 2. The IA did not prove its accusation beyond a Dismissal reasonable doubt, so Walmart’s presumption of innocence must prevail. of the case 3. If the Plenary decides to unduly sanction Walmart, it must apply the 2006 Law in accorda
Slide 16: Hogan Lovells
hoganlovells.com gamesecon.com “Hogan Lovells” or the “firm” is an international legal practice that includes Hogan Lovells International LLP, Hogan Lovells US LLP and their affiliated businesses. The word “partner” is used to describe a partner or member of Hogan Lovells International LLP, Hogan Lo
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