Walmex Subject of Probe

May 29, 2002

The Wall Street Journal reports that Mexico’s antitrust agency will scrutinize pricing practices at Wal-Mart de Mexico SA (Walmex), the country’s leading mass merchandiser.

The Federal Competition Commission will look into charges that Walmex demands lower prices from its suppliers than those they would charge at other retail chains, reports Reforma, a Mexico City newspaper. The CFC will study the case and decide by Wednesday whether there are grounds for a formal investigation into possible monopolistic practices, according to the anonymous CFC source.

Obtaining the lowest prices to pass on to consumers is part of the company’s way of doing business, according to Walmex Vice President for Public Relations Mercedes Aragones. Walmex provides mechanisms that allow suppliers to lower their costs, including one-stop distribution, and information systems through which suppliers know how much of their products have been sold and at what stores, says Ms. Aragones.

Moderator Comment: Does Wal-Mart engage in unfair
practices with its suppliers?

This is not the first time we’ve told this story but
here goes.

An old friend of ours who used to work in the industry
explained doing business with Wal-Mart like this (paraphrased). You walk into
a small room with no windows. Across from you sits a buyer. In one hand, the
buyer is holding a Bible and reciting verses of scripture. In the other hand
the buyer has a gun pointed at you to make sure that you empty all your pockets
onto the table.

We should note that our friend never accused the folks
in Arkansas of doing anything illegal. He just wished he didn’t need their business
so much. [George
Anderson – Moderator

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