Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

On Mexico’s controversial antitrust innovations

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 As I mentioned some posts ago, over the past few months I’ve been paying increased attention to competition law issues arising in Latin America. Until now I hadn’t shared here any views about what’s going on there, but this time the issue merits a comment, not the least because it calls into question the much talked about process of international substantive (or at least legislative) convergence in our field.

As you may know, Mexico is currently considering a reform to its competition law system. This is a move that many considered necessary; respected publications such as The Economist or even the influential book How Nations Fail had insisted in recommending Mexico to boost its competition law system and target market concentration as a way to increase growth and reduce inequality. But whereas few would challenge Mexico’s need for vigorous competition policy, many in the antitrust community are voicing out concerns in relation to some of the envisaged reforms.

For the most part, Mexico’s contemplated Competition Act is in line with other competition regimes around the world, including the EU’s. The proposed reform, however, includes some novel and unusual provisions, concepts and remedies that have given rise to concern, namely:

(i)                 several provisions (arts. 52, 55 and 57) that would turn the erection of “barriers to competition” (a term not defined in the draft Law) into a new self-standing violation of competition law (one that would seemingly be added to the prohibition on restrictive agreements and abuse of dominance); and

(ii)               a provision (art. 94) that would grant the authority powers to “determine the existence of barriers for free competition” and order “corrective measures deemed necessary” for the purpose of eliminating them (“the measures may include the elimination of barriers to free competition, regulation of essential inputs or divesture of assets, rights, partnership interests or shares in Economic Agents in the proportion required (…) The measures concerning the existence of an essential input shall include modes of access to it, price or tariff controls, technical and quality conditions and time schedules”. This last provision reportedly attempts to mirror (although with some diferencies) the UK’s market investigation system.

Unsurprisingly, strong varied opinions have been published in various forums.

One of the best pieces written so far on the subject (and one that has the virtues –for us- of departing from the EU system and of being written in English) has been co-authored by our friend Assimakis Komninos (who has contributed to this blog in the past) and Anne Perrot (with whom I had the pleasure of sharing a panel last year). The Komninos-Perrot piece has been echoed not only in Spanish language press, but also in places like the Financial Times. It’s worth a read, and it’s available here: MexicoEurope(Komninos&Perrot)

For those of you who are interested in more and can read Spanish, I would recommend this document, featuring opinions from various experts.

P.S. Unrelated to the reform, but nevertheless interesting: a former member of the Mexican competition authority recently told me about a Mexican case that perfectly illustrates both the need for competition advocay in the country as well as how strictly the concept of “policing” a cartel has been interpreted. This 2010 COFECO decision refers to an official agreement subscribed by the municipal authorities of a given city with “tortilla producers”; the municipality divided the city into various areas, each one of which was exclusively assigned to a particular producer (delivery motorcycles all were painted in a color corresponding to the area in which they could operate). The task of ensuring compliance with this market sharing arrangement was entrusted to the municipality’s police. No kidding. And if you think this would not happen in Europe, read again our previous post on Monsieur Arnaud Montebourg.

 

Written by Alfonso Lamadrid

8 April 2014 at 8:51 am

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