On June 10, President Peña signed the Constitutional decree on the reform of telecommunications, radio broadcasting and economic competition. The rich debate that ensued during the legislative process related with the impact of these reforms in a complex industry such as telecommunications overshadowed the discussion on the implications of these legal changes regarding the prosecution of anti-competitive practices in the non-regulated economic sectors. It’s worth to take a look on what’s next for over-concentrated markets such as ground transport, health, bakery or the soda industry. The situation is frequently worse in regional markets and specific industrial sectors that experience similar practices. Are the alleged monopolies that silently affect millions of consumers (maybe even more at local level) shaking on the inside?
Regardless of the efforts made since the enactment of the 1996 Federal Competition Act, our government faces enormous challenges to establish favorable conditions that boost the efficient development of markets and the entry of new competitors. In Mexico, the negative impact of monopoly powers grows as homes are becoming poorer. However, in spite of this sore reality, during the last 6 years, only 5% of the total of the Federal Competition Commission matters corresponded to ex officio ballots, focusing their efforts and resources in responding to concentration authorizations, legal complaints, inquiries and permits, which are essential activities for law enforcement but not enough for monopoly-dominated markets.
The new rules will provide the new Federal Commission of Economic Competition (CFCE) with Constitutional autonomy. The new legislation proposes, against experience, to avoid the politicization of the appointment of new commissioners, for which procedures have been designed through exams and a committee formed by the Bank of Mexico, the National Institute of Geography and Statistics (INEGI) and the National Institute for Educational Evaluation (INEE). Likewise, the new organization may also regulate access to essential inputs and to call for, at the final judicial authority, the asset stripping of dominating and abusive companies: a risky and seldom used practice throughout the world. Giving the business sector more judicial certainties, enabling agreements and elevating costs from unlawful conduct through fines, criminal sanctions, verification visits and restraining orders are also mentioned as main objectives of the reform.
All these changes will undoubtedly represent an important effort for the development of the regulatory organization. Thus, it is essential that secondary legislation will support the actions of CFCE within the framework of effective judicial counterbalance and that it will promote essential tools, through possible changes in the Consumer Protection Law, in order to revamp the legal framework that provides more certainty and defense tools for consumers, the main balance of all competition systems. In general terms, the enactment of the reform deserves recognition by reflecting the concerns that have existed for years regarding the serious issue that the country is facing. An effective implementation of competition policies plays a major role in the development of advanced economies; even though its judicial framework is essential, its actual performance will depend on the true engagement and interest of everyone involved.
CIDAC
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