Introduction
Since 2018, narratives and institutional destruction have overshadowed technical aspects of regulation and economics, relegating them to the inner pages of newspapers. However, behind this saturation lie initiatives that continue to harm Mexico’s reputation, prestige, and commercial openness.
Recent Initiatives: A Step Backwards
We recently learned about the President Sheinbaum’s initiative to reform the federal telecommunications law and Senator Chavira from Morena’s proposal to enact a new competition economic law. Both initiatives represent a significant setback from decades of advancements in economic regulation for our country and violate free trade agreements like the T-MEC.
Economic Competition Reform: A Concerning Proposal
The economic competition reform proposal opens the door to disproportionate sanctions and a superagency with unprecedented power. It doubles the fines for anti-competitive practices from a maximum of 10% to 20% of the annual income of the entire corporate group. With such severe penalties and unclear rules on how many practices are calculated, many companies might opt to reduce investment or even leave the Mexican market to avoid administrative errors.
The most significant change, however, is institutional. The proposal dismantles the Federal Competition Commission (Cofece) and the Federal Telecommunications Institute (IFT) to create the National Competition and Economic Well-being Agency, which would no longer be under the Executive Power’s jurisdiction. International experiences show that a competition authority without independence becomes captive to short-term interests, and capital, which detests uncertainty, takes note quickly.
The “excessive profits” article is the controversial heart of the project. Any company deemed to earn “more than reasonable” by the authority could be sanctioned without proving market power or hindering competitor entry. This transforms the agency into a price “fairness” arbiter rather than a competition guardian. The message is dangerous: penalizing profitability could ultimately harm efficiency, innovation, and, ultimately, consumers’ wallets.
Telecommunications Reform: A Concerning Proposal
The second reform follows the telecommunications track. It replaces the IFT with the Digital Transformation and Telecommunications Agency (ATDT), also under the Executive’s command with a single Director’s discretion, and grants it the power to block digital platforms when deemed “in the public interest.” In other words, the same office that distributes spectrum and regulates its competitors will decide which applications can function on your phone.
The issue isn’t just internal; it also clashes with the T-MEC. The treaty obliges each country to maintain impartial competition authorities with clear powers and transparent sanction criteria (Chapter 21). By dissolving the Cofece and subordinating the new agency to the Economy Secretariat, Mexico signals that the government reserves the final say on who competes and who doesn’t, precisely what the agreement aimed to eliminate following NAFTA disputes.
The telecommunications rift is even more visible. Chapter 18 requires the regulator to be “separate and independent” from operators and capable of making impartial decisions on licenses, spectrum, and tariffs. Replacing the IFT with an Executive-dependent office directly violates this clause and resurrects the specter of a state-as-arbiter-competitor that the 2013 reform attempted to overcome.
The consequences? Any affected operator or investor could activate the T-MEC dispute resolution mechanism and claim millions in damages; Washington and Ottawa would have arguments to impose countervailing duties or halt certifications in strategic sectors.
This is the price of improvising in economic regulation; the question is whether consumers, entrepreneurs, and investors are willing to pay it.
Key Questions and Answers
- What are the recent initiatives mentioned? The President Sheinbaum’s initiative to reform the federal telecommunications law and Senator Chavira from Morena’s proposal to enact a new competition economic law.
- How do these initiatives affect Mexico’s reputation and openness? These proposals threaten Mexico’s reputation, prestige, and commercial openness by violating free trade agreements like the T-MEC and creating a superagency with unprecedented power.
- What are the concerns regarding the economic competition reform? The proposal opens the door to disproportionate sanctions, risks reducing investment, and transforms the competition agency into a price arbiter rather than a guardian of competition.
- How does the telecommunications reform pose a problem? The replacement of the IFT with an Executive-dependent office violates the T-MEC’s requirement for a separate and independent regulator, potentially leading to disputes and consequences.
