The advertising market in Mexico has been subject to recent inquiries from the Federal Chamber of Deputies, due to the possible existence of several practices that could be considered unfair.

Preventing double charging by agencies, resale of advertising spaces, and the celebration of contracts with "overpaid" prices -among others- are the reasoning behind by the Legislature to issue the New Law against Improper Advertising Practices.

With the recent issuance of the Law for Transparency, Prevention and Defense Against the Improper Practices on the Contracting of Advertising Services, the legislative branch has taken a strong step to inhibit what it has described as “improper commercial practices towards advertisers and consumers”.

Transparency - or the absence of it - within the advertising field is not a new issue, and for said reason, it has been decided that the Federal Economic Competition Commission (COFECE, by its achronyme in Spanish) will be in entitled to of investigating these cases.

It is argued that in the past, it was common for agencies to purchase advertising spaces from the marketing channels (newspaper, radio, television, etc.) to later "resell" them to advertisers.

Beyond the objections that arise towards this new law and its legal aproaches, representatives of the Alliance for the Strategic Value of Brands (AVE, by its initials in Spanish), supported by other federal associations (IAB México, AIMX, CIM), confirm that this Law may come to affect their competitive capacity and the generation of employment since within in its legislative process, the complaints of advertisers and more than 3,500 low-profile and low-income marketing channels were not heard.

As of the entry into force of this law (90 days after its publication in the DOF), agencies will only be able to receive payment from the advertiser and not receive any payment from the marketing channel. Any discount that the agency receives from the marketing channel will have to be fully returned to the advertiser.

Marketing channels will have to issue their invoices directly to the advertiser and not to the agency; being transparent regarding the service contracted by the advertiser, and not only to the agency, while they must inform the marketing channel about the identity of the advertiser, and must inform the advertiser about any financial relationship they may have with the marketing channel.

Changing the work processes of an industry of such magnitude, without listening to those affected by it, is a legislative imposition that has already received a public disapproval from the advertising representatives, and it only remains to wait for the ruling of the Superior Courts regarding the claims that will surely be placed on their table.

For more information, do not hesitate to contact our team specialized in the matter.

Article by: 

Arturo Mondragon

arturo.mondragon@vila.com.mx

Translate:

Isla Garcia

Isla.garcia@vila.com.mx

Edition:

Elias Rios

rios.elias@vila.com.mx