Walmart’s Mexico subsidiary faces regulatory scrutiny

Walmart’s (NYSE:WMT) Mexico subsidiary said it plans to appeal a $4.6 million fine for alleged anti-competitive practices involving suppliers. The fine was issued by Mexico’s Federal Competition Commission, which is the nation’s major anti-monopoly regulator.

A statement from Walmart de Mexico indicated that it had talked to suppliers to see if there were any concerns. The issue was brought to the attention of regulators after at least one rival store chain accused Walmart de Mexico of using its substantial purchasing power to gain discounts that put other sellers disadvantaged.

The company said it would abide by the agency’s ruling Thursday, but would appeal the decision.

On Monday, the regulator threatened to fine Walmex, up to 8% of its income, if it does not comply with a resolution prohibiting the retailer from engaging in certain conduct deemed illegal.

Walmart de México y Centroamérica, also known as Walmex, began its journey in 1986 when Jerónimo Arango founded Cifra. In 1991, Cifra entered into a joint venture with Walmart (WMT), allowing the opening of Walmart stores and Sam’s Clubs in Mexico. Walmart then increased its stake in Cifra to 51% in 1997, renaming it Walmart de Mexico.

The company’s expansion continued, and by 2009, it acquired Walmart’s (WMT) operations in Central America.