REGULATORY COMPLIANCE. Obligations for transparency, prevention and fighting undue practices in the contracting of advertising August 26, 2021
On September 1st, 2021, will enter into force the Law for Transparency, Prevention and Fighting Undue Practices in Advertising contracting matters (Advertising Law), whose purpose is to promote transparency in the advertising market, as well as the prevention and fighting commercial practices that generate an undue advantage to the detriment of Advertisers and Consumers.
The Advertising Law will be applicable to the acts, contracts, agreements, procedures, etc., that Media Agencies, Advertisers and Communication Media entered into by and between themselves, as long as the Advertiser has his residence in Mexico and the advertisement is disseminated in national territory.
A Media Agency may only acquire advertising spaces in the Communication Media on behalf of an Advertiser through a mandate contract, and the Media Agency be unable to acquire advertising spaces on its own for subsequent resale to an Advertiser.
When the sale of advertising spaces is made, the Communication Media will issue and send the corresponding invoice to the Advertiser along with several additional information, notwithstanding, the Media Agency will make the payment on their behalf.
In the event of the acquisition of digital advertising through automated mechanisms on behalf of an Advertiser, the Media Agency must inform the Communication Media that sold the advertising spaces, the identity of the Advertiser and provide diverse information during the month following the dissemination of said advertising spaces.
The Media Agencies or the Economic Group to which they belong have the obligation to inform Advertisers about their financial relationships with the Communication Media that they intend to contract.
Not complying with the different obligations set forth by the Advertising Law may be sanctioned with fines equivalent to 2% or 4% of the income depending on the infraction committed, without prejudice to the civil and criminal liabilities that may apply.
Although the Advertising Law finds its justification given the lack of transparency that currently exists in the advertising market, as well as the multiple conflicts of interest that exist, we consider it questionable, since it violates several human rights and fundamental principles, such as the free trade and the free and fair competition, among others.
Regardless of the constitutional violations that we consider that the Advertising Law will cause, it will be necessary to ensure the different formalities of the acts, contracts and/or agreements that entered into in advertising matter and the commercial practices that they entail, in order to prevent and mitigate the commission of infractions and possible tax contingencies by any of the three economic agents involved.
If you have any questions regarding the foregoing, please do not hesitate to contact us.
Mexico City, August 26, 2021