Mexico City, October 15th, 2020.
On October 13th, 2020, the Federal Economic Competition Commission (“COFECE”) issued a document entitled “Economic Competition Proposals to Contribute to the Reactivation of the Mexican Economy” (the “Proposals”) which contains 12 steps to encourage competition in various relevant markets in the national economy.
The Proposals seek to deal with the economic crisis created since the health emergency caused by the COVID-19 virus which in Mexico resulted in the closure of companies and the loss of employment, and arising from this, it is estimated that the Gross Domestic Product of Mexico will contract by 9.9% in 2020. In accordance with an analysis by the COFECE, small and medium sized companies have been the most economically affected, while larger companies with greater resources have a greater possibility of maintaining themselves in the market, something which may cause a greater concentration in markets. In this situation, it is appropriate to put in place policies which ensure the participation of the greatest number of companies and an equality of opportunity to compete. This is fundamental for economic recovery in Mexico. The Proposals suggest implementing the following measures:
- Create a credit bureau to evaluate the credit worthiness of the population which does not use banks and facilitate the credit evaluation of a larger section of the population by means of a flow of information from the government to the traditional banking sector and fintech companies.
- Increase options for purchasing medicines at lower prices by taking various steps: speeding up the entry of generic medicines into the market; improving patent duration transparency; weighing the inclusion of regulatory restrictions on the granting of patents likely to be abusively used to block new competitors; and requiring doctors to write the name of generic medicines in prescriptions.
- Ensure the economical delivery of electricity and non-discriminatory access to transmission and distribution systems so that the cost of electricity is more competitive.
- Encourage the lowest possible gasoline prices by means of the non-discriminatory issuing of import and sale permits for it, eliminating requirements which limit the issuing of import permits and delays in processing and granting permits by the Energy Regulatory Commission, as well as extending the term of import permits which are near expiry, while the Energy Department renews its legal time periods.
- Amend the General Public Sector Acquisitions, Leases, and Services Act in order to ensure that the government contracts goods and services on the best conditions of price and quality. Specifically, it is proposed to: limit the reasons for exceptions to public tenders so that direct awards would be an exception; facilitate holding international public tenders in markets with few competitors; establish collusion as a reason for disqualification and make the opinion of the COFECE binding with respect to the bases for “large scale” public tender contracting.
- Modify the regulation of external passenger transportation in order to prompt a reduction in ticket prices, requiring open and non-discriminatory access to bus terminals and allowing more points at which these services are offered, as well as renewing concessions for bus stations which are at the point of expiring.
- Achieving the entry of more companies at a state level in the gasoline, liquid propane, and cargo transportation markets by the expedited issuing of guidelines by the National Regulatory Improvement Council so that state and municipal governments eliminate the restrictions on competition which exist in these markets.
- Amend the Foreign Trade Act to: implement measures which establish and make transparent methodologies and technical criteria for the calculation of dumping margins and the analysis of damages and causality; ensure that anti-dumping duties are imposed only in the percentage necessary to correct the damage; encourage the Department of the Economy to more actively initiate proceedings for the review of anti-dumping duties; avoid different commercial measures being simultaneously imposed on the same sector; and review the operation of the Foreign Trade Commission to ensure that, prior to making final decisions about anti-dumping duties, the affected parties will be heard, the matter will be transparent, and versions of its meetings will be published, among other things.
- Recover public property whose concessions are on the point of expiry and grant new concessions by public tender so that the winners are those which really offer the best conditions to users of passenger, port, and rail transportation services.
- Amend the Ports Act to: incorporate competition principles and facilitate the regulation of tariffs when there is a single provider of port maneuvering services in order to increase efficiency in the entry of merchandise by ship; establish penalties in the event that port administrators do not comply with COFECE decisions and make its favorable opinion a requirement prior to any modification of a concession contract; and incorporate in that Act an obligation to implement the regulation of tariffs when there is a declaration of the absence of competition by the COFECE under Article 96 of the Federal Economic Competition Act.
- Amend the Rail Service Regulation Act in order to incorporate competition principles and thereby encourage network organization so that products arrive at the point of use at the lowest cost.
- Amend Article 105 of the Constitution in order to give to the COFECE the authority to file actions alleging the unconstitutionality of federal and state laws contrary to the constitutional guarantee of free competition.
The Competition and Antitrust Practice of the firm will be pleased to provide any additional information on the topic.
S I N C E R E L Y,
Amílcar Peredo
Fernanda Garza
León Jiménez
Carmina Paredes
cparedes@basham.com.mx
