ARTICLE 21.18
Modifications and Rectifications to Coverage
1. The European Union may modify or rectify Annex 21-A (Covered Procurement of the European Union) and Mexico may modify or rectify Annex 21-B (Covered Procurement of Mexico).
Modifications
2. If a Party intends to modify Annex 21-A (Covered Procurement of the European Union) or 21-B (Covered Procurement of Mexico) respectively, that Party shall:
(a) notify the other Party in writing; and
(b) include in the notification a proposal for appropriate compensatory adjustments to the other Party to maintain a level of coverage comparable to that existing prior to the modification.
3. Notwithstanding subparagraph 2(b), a Party does not need to provide compensatory adjustments if the modification covers a procuring entity over which the Party has effectively eliminated its control or influence. Government control or influence over the covered procurement of procuring entities covered under Section C of Annexes 21-A (Covered Procurement of the European Union), or under Sub-list 2 of each State of Section B or Section C of Annex 21-B (Covered Procurement of Mexico) is presumed to be effectively eliminated if the procuring entity is exposed to competition on markets to which access is not restricted.
4. The other Party may object to the proposed modification, notified pursuant to paragraph 2, if it disputes that:
(a) an adjustment proposed in accordance with subparagraph 2(b) is adequate to maintain a comparable level to the existing coverage provided for in this Chapter;
(b) the modification covers a procuring entity over which the Party has effectively eliminated its control or influence in accordance with paragraph 3.
The objection shall be made in writing within 45 days of receipt of the notification referred to in subparagraph 2(a) or that Party shall be deemed to have accepted the adjustment or modification, including for the purposes of Chapter 31 (Dispute Settlement).
Rectifications
5. The following changes to Annexes 21-A (Covered Procurement of the European Union) or 21-B (Covered Procurement of Mexico) shall be considered a rectification of a purely formal nature, provided that they do not affect the existing coverage provided for in this Chapter:
(a) a change in the name of a procuring entity;
(b) a merger of two or more entities covered under Section A to C of Annexes 21-A (Covered Procurement of the European Union) or 21-B (Covered Procurement of Mexico); and
(c) the separation of an entity covered under Section A to C of Annexes 21-A (Covered Procurement of the European Union) or 21-B (Covered Procurement of Mexico) into two or more entities that are all added to the procuring entities covered under the same Section of Annexes 21-A (Covered Procurement of the European Union) or 21-B (Covered Procurement of Mexico).
6. Each Party shall notify the other Party every three years following the entry into force of this Agreement of proposed rectifications to Annexes 21-A (Covered Procurement of the European Union) or 21-B (Covered Procurement of Mexico).
7. A Party may notify the other Party of an objection to a proposed rectification within 45 days from having received the notification. If a Party submits an objection, it shall explain why it considers the proposed rectification is not a change provided for in paragraph 5, and describe the effect of the proposed rectification on the coverage provided for in this Chapter. If no objection is submitted in writing within 45 days after the date of receipt of the notification, the other Party shall be deemed to have accepted the proposed rectification.
Consultations and Dispute resolution.
8. If the other Party objects to the proposed modification or rectification, the Parties shall seek to resolve the issue through consultations. If no agreement is found within 60 days after the date of receipt of the objection, the Party seeking to modify or rectify Annex 21-A (Covered Procurement of the European Union) or Annex 21-B (Covered Procurement of Mexico) may refer the matter to dispute settlement under Chapter 31 (Dispute Settlement). The proposed modification or rectification shall take effect only when both Parties have agreed or if so provided for in the ruling of a panel in a final report in accordance with Article 31.13 (Final Report).
ARTICLE 21.19
Sub-Committee on Public Procurement
The Sub-Committee on Public Procurement established pursuant to Article 1.10 (Sub-Committees and other Bodies of Part III of this agreement) shall address matters related to the implementation and operation of this Chapter, such as:
(a) the modification of Annexes 21-A (Covered Procurement of the European Union) and 21-B (Covered Procurement of Mexico);
(b) the preparation for the Joint Council of the decisions modifying Annexes 21-A (Covered Procurement of the European Union) and 21-B (Covered Procurement of Mexico;
(c) matters regarding government procurement related to this Chapter that are referred to it by a Party; and
(d) any other matter related to the operation of this Chapter.
Chapter 22. STATE-OWNED ENTERPRISES, ENTERPRISES GRANTED SPECIAL RIGHTS ORPRIVILEGES AND DESIGNATED MONOPOLIES
ARTICLE 22.1
Definitions
For the purposes of this Chapter:
(a) "Arrangement" means the Arrangement on Officially Supported Export Credits, developed within the framework of the OECD or a successor undertaking, whether developed within or outside of the OECD framework, that has been adopted by at least 12 original WTO Members that were Participants to the Arrangement as of 1 January 1979;
(b) "commercial activities" means activities the end result of which is the production of a good or supply of a service, which will be sold in the relevant market in quantities and at prices determined by an enterprise through the conditions of supply and demand, and are undertaken with an orientation towards profit-making 14 ;
(c) "commercial considerations" means price, quality, availability, marketability, transportation and other terms and conditions of purchase or sale; or other factors that would normally be taken into account in the commercial decisions of a private enterprise operating according to market economy principles in the relevant business or industry;
(d) "designate" means to establish or authorise a monopoly, or to expand the scope of a monopoly to cover an additional good or service;
(e) "designated monopoly" means an entity, public or private, including a consortium or a government agency, that in any relevant market in the territory of a Party is designated as the sole supplier or purchaser of a good or service, but does not include an entity that has been granted an exclusive intellectual property right solely by reason of the grant; 15
(f) "enterprise granted special rights or privileges" means an enterprise, public or private, including a subsidiary, to which a Party has granted special rights or privileges, in law or in fact; special rights or privileges arise if a Party designates, or limits the number of, enterprises authorised to supply a good or a service according to criteria that are not objective, proportional and non-discriminatory, thereby substantially affecting the ability of any other enterprise to supply the same good or service in the same geographical area under substantially equivalent conditions;
(g) "financial institution" and "financial service", have the same meaning as in Article 18.1 (Definitions);
(h) "service supplied in the exercise of governmental authority" means a service supplied in the exercise of governmental authority as defined in GATS and, if applicable, the Annex on Financial Services to GATS; 16
(i) "state-owned enterprise" means an enterprise owned or controlled by a Party 17 .
ARTICLE 22.2
Delegated Authority
Unless otherwise specified in this Agreement, each Party shall ensure that any person, including a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly that has been delegated regulatory, administrative or other governmental authority by a Party, acts in accordance with the Party's obligations as set out under this Agreement in the exercise of that authority.
ARTICLE 22.3
Scope
1. This Chapter applies to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies engaged in commercial activities. If a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly combines commercial and non-commercial activities 18 , only the commercial activities are covered by this Chapter.
2. This Chapter does not apply to:
(a) state-owned enterprises, enterprises granted special rights or privileges and designated monopolies when acting as procuring entities conducting covered procurement as defined in Article 21.1(c) (Definitions);
(b) any service supplied in the exercise of governmental authority;
(c) activities carried out by:
(i) a financial institution or other legal entity, owned or controlled by a Party, that is established or operated temporarily and solely for resolution purposes 19 ;
(ii) a public entity, including a public trust that, pursuant solely to a public service mandate which aims to contribute to the balanced and steady development of the Party concerned, supplies financial services for the account or with the guarantee or using the financial resources of that Party; and
(iii) a public entity pursuant to a public service mandate relating to a statutory system of social security or public retirement plans; and
(d) state-owned enterprises, enterprises granted special rights or privileges and designated monopolies if, at the time the determination of the amount of the threshold is made, in any one of the three previous consecutive fiscal years the annual revenue derived from its commercial activities was less than 200 million special drawing rights.
3. Article 22.6 does not apply to the supply of financial services by a state-owned enterprise, enterprise granted special rights or privileges and designated monopoly pursuant to a government mandate, if that supply of financial services:
(a) supports exports or imports, provided that those services are:
(i) not intended to displace commercial financing; or
(ii) offered on terms no more favourable than those that could be obtained for comparable financial services in the commercial market 20 ;
(b) supports private investment outside the territory of the Party, provided that those services are:
(i) not intended to displace commercial financing; or
(ii) offered on terms no more favourable than those that could be obtained for comparable financial services in the commercial market; or
(c) is offered on terms consistent with the Arrangement, provided that it falls within the scope of the Arrangement.
4. Article 22.6 does not apply to the sectors set out in subparagraphs 2(c) to (e) of Article 10.5 (Scope).
5. Article 22.6 does not apply to the extent that a Party's state-owned enterprises, enterprises granted special rights or privileges and designated monopolies make purchases and sales of goods or services pursuant to:
(a) any existing non-conforming measure that the Party maintains, continues, renews or amends in accordance with Articles 10.12 (Non-Conforming Measures and Exceptions), 11.8 (Non‑Conforming Measures and Exceptions) or Article 18.12 (Reservations and Non‑Conforming Measures) as set out in Annex I (Existing Measures), and Section B of Annex VI (Financial Services); or
(b) any non-conforming measure that the Party adopts or maintains with respect to sectors, subsectors, or activities in accordance with Articles 10.12 (Non-Conforming Measures and Exceptions), 11.8 (Non-Conforming Measures and Exceptions) or 18.12 (Reservations and Non-Conforming Measures) as set out in Annex II (Future Measures), and Section B (Future Measures) of Annex VI (Financial Services).
6. The Parties share the understanding that a measure adopted or maintained under Annex 22-A (Non-Conforming Activities of Mexico), or excluded from the scope of this Chapter, may be maintained, provided that such measure, to the extent that it falls within the scope of the WTO Agreement, is applied in accordance with the rights and obligations of the Party taking such measure under the WTO Agreement. 21
ARTICLE 22.4
Non-Conforming Activities
Article 22.6 does not apply with respect to the non-conforming activities of state-owned enterprises or designated monopolies listed in Annex 22-A (Non-Conforming Activities of Mexico) in accordance with the terms of that Annex.
ARTICLE 22.5
General Provisions
1. Without prejudice to the rights and obligations of each Party under this Chapter, nothing in this Chapter shall be construed as preventing a Party from establishing or maintaining a state-owned enterprise, granting an enterprise special rights or privileges or designating or maintaining a monopoly.
2. A Party shall not require or encourage a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly to act in a manner inconsistent with this Chapter.
ARTICLE 22.6
Non-Discriminatory Treatment and Commercial Considerations
1. Each Party shall ensure that each of its state-owned enterprises, enterprises granted special rights or privileges and designated monopolies, when engaging in commercial activities:
(a) acts in accordance with commercial considerations in its purchase or sale of a good or a service, except to fulfil the terms of a public service mandate that is not inconsistent with subparagraphs (b) or (c);
(b) in its purchase of a good or service:
(i) accords to a good or service supplied by an enterprise of the other Party treatment no less favourable than it accords to a like good or a like service supplied by enterprises of the Party; and
(ii) accords to a good or service supplied by an enterprise that is a covered investment within the meaning of Article 10.1.1(c) (Definitions) in the Party's territory treatment no less favourable than it accords to a like good or a like service supplied by enterprises of the Party in the relevant market in the Party's territory; and
(c) in its sale of a good or service:
(i) accords to an enterprise of the other Party treatment no less favourable than it accords to enterprises of the Party; and
(ii) accords to an enterprise that is a covered investment within the meaning of Article 10.1.1(c) (Definitions) in the Party's territory treatment no less favourable than it accords to enterprises of the Party in the relevant market in the Party's territory. 22
2. Provided that such different terms or conditions or refusal are in accordance with commercial considerations, paragraph 1 does not preclude state-owned enterprises, enterprises granted special rights or privileges or designated monopolies from:
(a) purchasing or supplying goods or services on different terms or conditions, including those relating to price; or
(b) refusing to purchase or supply goods or services.
ARTICLE 22.7
Regulatory Framework
1. The Parties shall endeavour to respect and make best use of relevant international standards, including the OECD Guidelines on Corporate Governance of State-Owned Enterprises.
2. Each Party shall ensure that any regulatory body or competent authority exercising a regulatory function that the Party establishes or maintains:
(a) is independent from and not accountable to any of the enterprises that that regulatory body or competent authority regulates in order to ensure the effectiveness of the regulatory function; and
(b) acts impartially 23 in like circumstances with respect to all enterprises that that regulatory body or competent authority regulates, including state-owned enterprises, enterprises granted special rights or privileges and designated monopolies. 24
3. Each Party shall ensure the enforcement of laws and regulations in a consistent and non-discriminatory manner, including with respect to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies.
ARTICLE 22.8
Transparency
1. A Party shall, on written request of the other Party, promptly provide the following information concerning a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly, provided that the request includes an explanation of how the activities of that state-owned enterprise, enterprise granted special rights or privileges or designated monopoly may be affecting the requesting Party's interests under this Chapter:
(a) the percentage of shares that the requested Party, its state-owned enterprises, enterprises granted special rights or privileges or designated monopolies cumulatively own, and the percentage of voting rights that they cumulatively hold, in the state-owned enterprise, enterprise granted special rights or privileges or designated monopoly;
(b) a description of any special shares or special voting or other rights that the requested Party, its state-owned enterprises, enterprises granted special rights or privileges or designated monopolies hold, to the extent that those rights are different from the rights attached to the general common shares of such state-owned enterprise, enterprise granted special rights or privileges or designated monopoly;
(c) the organisational structure of the state-owned enterprise, enterprise granted special rights or privileges or designated monopoly, the composition of its board of directors or of an equivalent body, the official titles of any public official serving as an officer or member of the board of directors or that equivalent body;
(d) a description of the government departments or public bodies which regulate or monitor the state-owned enterprises, the enterprises granted special rights or privileges or the designated monopolies, a description of the reporting requirements imposed on them by those departments or public bodies if practicable, and the rights and practices 25 of the government departments or any public bodies with respect to the appointment, dismissal or remuneration of senior executives and members of the board of directors or any other equivalent body;
(e) annual revenue and total assets of the state-owned enterprise, enterprise granted special rights or privileges or designated monopoly over the most recent three-year period for which information is available;
(f) any exemptions and immunities from which the state-owned enterprise, enterprise granted special rights or privileges or designated monopoly benefits under the law of the requested Party; and
(g) any additional information regarding the state-owned enterprise, enterprise granted special rights or privileges or designated monopoly that is publicly available, including annual financial reports and third-party audits.
2. If the requested information is not available, the requested Party shall provide the reasons for this in writing to the requesting Party.
3. If a Party provides written information pursuant to a request in accordance with this Article and informs the requesting Party that it considers that information to be confidential, the requesting Party shall not disclose that information without the prior consent of the Party providing the information.
Chapter 23. COMPETITION POLICY
ARTICLE 23.1
General Principles
The Parties recognise the importance of free and undistorted competition in their trade and investment relations. The Parties acknowledge that anticompetitive business practices and State interventions have the potential to distort the proper functioning of markets and undermine the benefits of the liberalisation of trade and investment. The Parties share the view that proscribing such conduct, implementing competition policy, promoting advocacy actions and cooperating on matters covered by this Chapter will help secure the benefits of this Agreement.
ARTICLE 23.2
Competition Law and Anticompetitive Business Practices
1. Each Party shall maintain or adopt in its territory comprehensive competition law which applies to all sectors of the economy 26 and addresses the following business practices in an effective manner:
(a) agreements between enterprises, decisions by associations of enterprises and concerted practices which have as their object or effect the prevention, restriction or distortion of competition;
(b) abuses by one or more enterprises, which individually or jointly have substantial power in the relevant market, and which abuses have or may have as object or effect the prevention, restriction or distortion of competition in that relevant market or any related market; and
(c) concentrations between enterprises which result or may result in a substantial lessening of competition or which significantly impede or may significantly impede effective competition, in particular as a result of the creation or strengthening of a dominant position.
2. All enterprises, private or public, shall be subject to the competition law referred to in this Article.
3. Each Party shall take appropriate action with respect to anticompetitive business practices, with the objective of promoting competition policy.
4. To the extent provided for in the law of a Party, the application of the competition law should not obstruct the performance, in law or in fact, of the particular tasks of public interest that may be assigned to enterprises. Exemptions from the competition law of a Party should be limited to tasks of public interest, proportionate to the desired public policy objective and transparent.
ARTICLE 23.3
Implementation
1. Each Party shall maintain its autonomy in amending and enforcing its competition law.
2. Each Party shall establish or maintain a functionally independent authority or authorities responsible for, and appropriately equipped with the powers and resources necessary for the full application and the effective enforcement of their respective competition law.
3. Each Party shall apply its competition law in a transparent and non-discriminatory manner, respecting the principles of procedural fairness and right of defence of the enterprises concerned, including the right to be heard prior to a final decision or resolution.
4. In their enforcement policy the competition authority or authorities of a Party shall not discriminate on the basis of the nationality of the respondent in an enforcement procedure 27 or of the third persons granted a right to participate in such enforcement procedure.
5. Each Party shall ensure that a respondent in an enforcement procedure, carried out to determine whether that respondent's conduct violates its competition law or what administrative sanctions or remedies should be ordered for violation of that law, is afforded the opportunity to be heard and provide evidence in its defence. In particular, each Party shall ensure that the respondent has a reasonable opportunity to review and contest the evidence on which the determination may be based.
6. Each Party shall guarantee that the addressee of a decision or resolution imposing an administrative sanction or a remedy for violation of its competition law is given the opportunity to seek judicial review of that decision or resolution.
ARTICLE 23.4
Transparency
1. The Parties recognise the value of transparency in their competition enforcement policies.
2. Each Party shall publish its administrative or procedural rules contained in legal acts pursuant to which its competition law investigations and enforcement procedures are conducted. Those administrative or procedural rules may, to the extent provided in each Party's competition law, include procedures with reasonable timeframes for providing evidence in those procedures.
3. Each Party shall ensure that a non-confidential version of any final decision or resolution determining a violation of its competition law and, as the case may be, any order implementing a resolution, is published in order to enable interested persons to become acquainted with them.
4. Each Party shall ensure that all final decisions or resolutions determining a violation of its competition law are in writing and set out the findings of fact and the reasoning, including the legal and, if applicable, economic analysis, on which the decision or resolution is based.
ARTICLE 23.5
Cooperation and Coordination
1. The Parties recognise the importance of cooperation and coordination between their respective competition authorities on matters related to their competition law and policies in the free trade area. Accordingly, the competition authorities of the Parties shall endeavour to cooperate on matters related to their respective competition law, including through assistance, notification, consultation, and exchange of information.
2. The Parties shall strengthen cooperation in the enforcement of their competition law to the extent compatible with their respective laws and important interests, and within the limits of their reasonably available resources. For that purpose, the competition authorities of the Parties shall endeavour to exchange non-confidential information, experiences and views with regard to:
(a) their respective competition law, policies and practices, including information about exemptions granted under their competition law;
(b) the enforcement of their respective competition law; and
(c) their respective advocacy actions.
3. The Parties shall endeavour to strengthen coordination between their respective competition authorities in areas of mutual concern and to the extent compatible with their respective laws and important interests, and within the limits of their reasonably available resources. For that purpose, the Parties shall endeavour to coordinate, to the extent possible, their enforcement activities relating to the same or related cases.
4. The Parties affirm that their competition authorities recognise the use of confidentiality waivers in their areas of enforcement and acknowledge that the decision of an enterprise to waive its right for the protection of confidential information is voluntary.
5. Nothing in this Article shall limit the discretion of the competition authorities of a Party to decide whether to take action on particular requests by the other Party's competition authorities.
6. Nothing in this Article shall preclude the competition authorities of either Party from taking action with respect to particular cases.
7. The Parties' competition authorities may consider entering into a separate cooperation arrangement that sets out mutually agreed terms for implementing cooperation.
ARTICLE 23.6
Technical Cooperation
The Parties consider that it is in their common interest to support the objectives of this Agreement with technical cooperation for the purposes of sharing experiences in developing and implementing competition policy and in enforcing their respective competition law, subject to the resources reasonably available to each Party.
ARTICLE 23.7