By Brendan O’Boyle and Diego Oré

MEXICO CITY (Reuters) -Mexico’s antitrust watchdog Cofece ruled that the local unit of U.S.-based retail giant Walmart, known as Walmex, engaged in monopolistic behavior related to its suppliers, the company said in a statement on Friday.

Walmex said it has been ordered to pay a fine of just over 93 million pesos, or about $4.6 million, while stressing it believes the regulator’s analysis is incorrect and that it will appeal its ruling.

“Walmex is disappointed by this decision but will comply with Cofece’s resolution while challenging the decision,” the company said, adding that the ruling by Cofece’s governing body was not unanimous.

The company said it believes Cofece’s analysis, delivered in a 900-page ruling, “committed errors in the application of the law.”

Markets reacted positively with Walmex shares on Mexico’s main stock exchange climbing over 5% on Friday, as analysts noted the penalty could have been worse for the company.

“Our initial reaction is that the determination takes off the table the more concerning scenarios of mandating divestments or levying large fines,” said Rodolfo Ramos, analyst at Banco Bradesco.

Actinver equity research said the fine is less than 0.2% of the net profit it has forecasted Walmex will record in the 2024 financial year.

“The low scale of the fine and no potential divestments needed, lead to a neutral-to-positive view,” Actinver analyst Antonio Hernandez said.

Cofece did not immediately respond to a request for comment.

The Cofece resolution follows an investigation into Mexico’s top retailer, which also operates stores in Central America, that lasted just over four years.

Cofece had accused Walmex of imposing prices and terms on its suppliers or distributors, in a case that centered on a lack of competition in the retail sector in many parts of Mexico.

Walmex has maintained that it and its subsidiaries acted lawfully.

The investigation followed a Reuters exclusive report in 2019 that found that Walmex penalized food companies supplying groceries to rival Amazon, pressure that forced some to pull their products from the world’s largest online retailer.

In its statement on Friday, Walmex said the regulator acknowledged that the retailer can continue negotiating payments to its suppliers, except for two specific cases among four originally investigated.

Walmex, which is Mexico’s largest private employer, added that it does not believe the ruling will ultimately impact its operations.

Since the investigation became public late last year, Walmex’s stock has tumbled. Valued at 66.77 pesos at the end of September 2023, it closed at 57.10 pesos on Dec. 11.

Cofece is one of several autonomous government watchdogs that Congress voted last month to abolish while giving its competition policing powers to other government agencies under the president’s direct control.

($1 = 20.2422 Mexican pesos)

(Reporting by Brendan O’Boyle and Diego Ore; Editing by David Alire Garcia, Bill Berkrot and Nick Zieminski)

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