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New Legislation will Lead to Important Changes in Procurement Practices in Mexico’s Advertising Industry

The aim of this note is to inform our clients about the recently approved  “Law Of Transparency, Prevention And Combat Of Improper Practices In the Procurement of Advertising, and help them understand and anticipate some of the effects this will have on the procurement practices in Mexico’s advertising industry.

Background

Digital media have an important impact on the Mexican economy, generating approximately 0.92% of GPD, yet there are no specific provisions that regulate the practice and requirements for contracting advertising.

On November 11, 2020, Senator Ricardo Monreal Ávila, member of the Parliamentary Group of Morena, submitted an initiative with a draft decree enacting the Law of Transparency, Prevention and Combat of Improper Practices in the Procurement of Advertising (hereinafter referred to as the “Law”).

On April 30, 2021, the chamber of deputies approved the decree of the Law with 339 votes in favor, 92 against, and 9 abstentions.

The main objective of the law is to:

  1. Regulate the hiring of the advertising agencies by advertisers, which will need to be carried out through a mandate agreement.
  2. Regulate the compensation of advertising agencies (they will only be able to receive the compensation established in the mandate agreement).
  3. Prohibit advertising agencies to acquire advertising spaces for themselves and any subsequent resale. Agencies will only be allowed to acquire advertising spaces on behalf of advertisers.
  4. Establish the obligation for any advertising agencies that acquire programmatic digital advertising on behalf of advertisers, to provide relevant information to any retained communication media, including the technological tools used for their service, and any quantitative results obtained from the digital campaign.
  5. Impose penalties to economic agents that fail to comply with the provisions established in the Law, with penalties up to 4% of the revenues of the offender, and in case of repeat offense up to 8% of their revenues.

CONTACT

Gerardo Gallego Díaz de León | Partner | [email protected]

Jorge Cobos Franco | Associate | [email protected]

T. 52+(55) 5202-0717

This alert does not constitute legal advice and is protected under copyright law.

For more information about Ibarra, del Paso y Gallego, S.C. and its Labor & Employment Practice, log onto www.ibarrapg.com.

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