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Trust busted! Mexico’s anti-monopoly body fines WeWork and SoftBank US$138,000

Don't worry, we speak : Español (Spanish), too!

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Contxto – Like a crummy telenovela, Cofece—Mexico’s anti-trust institution—walked in to find that San Francisco-based, WeWork, and Japanese investor, SoftBank, were sharing a deeper relationship than it at first seemed—and for longer than it seemed.

Turns out that, both declared that an undisclosed amount of stock had been purchased by the investor in the co-working company in January of this year, only for Cofece to find out that the transaction had gone through by June of 2019.

They have been fined MXN$3.3 million (just under US$138,000).

Worse to ask for forgiveness than for permission 

Of course, in a continued spirit of soap opera melodrama, the evidence of SoftBank and WeWork’s shenanigans came to light well after the two partners had fallen out.

As of April 7, WeWork announced that it was actually suing SoftBank for having withdrawn its offer to repurchase shares.

The Japanese investors rebutted that this was due to the fact that WeWork had not complied with the contractual obligations it had signed with its minority shareholders.  

The newly tense relationship has probably soured what should have been a sigh of relief. This is because, after having recovered from the initial shock, Cofece retrospectively allowed for the transaction, given that it “does not consider the transaction put the competitiveness of the office space and coworking market at risk.”

Moreover, for these giants, US$138,000 is more of a slap on the wrist than a real threat to solvency. Overall, given all their own in-house drama, Cofece seems to be the least of this pair’s worries. 

So, no harm no foul, right? I’m afraid not. We must remember that the investor and the co-working scaleup were breaking the law and that will have ramifications for all of us. 

Please don’t help us, SoftBank and WeWork

Whether this was an accidental or a deliberate slip of information, the consequences are as untimely as they are expensive. 

Expensive not in terms of the cash these companies will now have to cough up (though the likes of WeWork can scarcely afford much at the moment), but rather because it will cost the ecosystem more broadly in terms of trust.

No doubt the authorities at these anti-monopoly institutions will feel emboldened by their discovery. Indeed, they’ll now be asking, why should they trust any of these upstart scaleups? “Better safe than sorry”, they’ll say as they take years to carry out even the simplest of investigations. 

Rebuilding good faith between government institutions and scaleups looking to carry out their own mergers and acquisitions (M&A) will now be paramount. 

The Association of Mexican Entrepreneurs’ now has its work cut out for it as it tries to push a streamlining of M&A oversight legislation.

And, of course, this is all happening right as Mexican-Chilean last-mile delivery startup, Cornershop, is hemorrhaging money in its wait to get the official green light to sell a majority stake to Uber. 

Or, hey, maybe this whole Cofece vs WeWork and SoftBank affair will completely blow over. But still, for goodness sake, don’t give the authorities any excuses to keep on cornershopping us!

Wanna hear more? We recommend you listen to the following podcast episode: El aprendizaje del emprendimiento es transferible. You can find the time stamp available in the description.


Alejandro González Ormerod
Historian, writer, and editor from Mexico City. He was a book publisher, academic, and cheesemonger before joining Contxto. Still deciding on which Latin American country to visit next; food and fun are the main criteria.


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