Issuance of Law of Transparency, Prevention and Combat of Improper Practices in Advertising Hiring

On June 3, 2021, the Law of Transparency, Prevention and Combat of Improper Practices in Advertising Hiring was published on the Federal Official Gazette. Its main purpose is to promote the transparency in the advertising market, as well as to prevent and eliminate the commercial practices that have an improper benefit in favor of certain individuals by detriment of advertisers and consumers, in order to avoid that prices hugely increase.

In this regard, the mentioned Law identifies and defines three main subjects: i) the agencies or media agencies as the individuals or entities whose main purpose is the creation, design, planification and execution of advertising campaigns, as well as the hiring of advertising spaces on behalf of the advertisers; ii) the advertisers as the individuals or entities whose intention is to carry out the advertising in order to publish the characteristics or benefits of their products and/or services; and lastly, defines as iii) media the individuals or entities that, by means of printed copies, telecommunications, broadcasting, radio, satellite signals, internet, optical fiber, cable or any other transmission media, spreads the advertising spaces.

This Law will be applicable if the advertiser has a residence in México and the advertising is published in Mexican territory, regardless of the physical location of the agency. The referred Law regulates the following items:

• Contracts and agreements. The acts, contracts, agreements or procedures, whatever name or denomination that is given to them, that are executed between two or more media agencies, advertisers and/or media.
• Advertising spaces. The agencies are not permitted to purchase them at their own risk for re-sale to an advertiser. Also, the agencies on its own or by a third party are not permitted to receive any remuneration, commission or benefit by the media.
• Established remuneration. The agencies shall only collect the amount that is expressly established on the corresponding agreement and any discount that the media applies, must be transferred directly to the advertiser.
• Tax requirements. The media shall send the corresponding invoice with the applicable tax requirements by means of the sale of the advertising spaces directly to the advertisers, even if the payment is carried out by the agency or media agency on behalf of the advertiser.
• Government entity. In the event that the hiring is carried out by a government entity, apart from the mentioned Law, the provision of the General Law of Social Media shall also be applicable, as well as any other relevant legislation.
• Penalties. Administrative penalties are also established in the referred Law, specifically consisting of monetary fines in the event of breach, as well as civil and criminal liabilities that would apply.
• Allegations. The allegations shall be substantiated and processed by the Federal Economic Competition Commission in accordance to the procedures established by the Federal Law of Economic Competition.

The new Law will enter into force on September 1, 2021. In this regard, we consider relevant to carry out a detailed multidisciplinary analysis of the possible effect(s) that the referred initiative may have in the operation of your business.

Carina Barrera

Manuel González López

Bárbara Fernández