Background on the Issue
Mexico’s proposed reform to the Federal Economic Competition Law (LFCE) has raised concerns among experts regarding potential special treatment for state-owned enterprises, which could undermine the implementation of the USMCA (United States-Mexico-Canada Agreement).
Experts’ Perspectives
Alejandra Palacios, former president of Mexico’s Federal Economic Competition Commission (Cofece), expressed her worries during a forum titled “Competencia en transición: análisis de la iniciativa de reforma a la Ley de Competencia” at the Instituto de Investigaciones Jurídicas of UNAM. She emphasized that the ambiguity in the proposed reform could extend special treatment to other state-owned enterprises beyond Pemex and CFE, contradicting the USMCA’s principles.
Miguel Flores Bernés, president of the International Chamber of Commerce México’s Competition Commission, echoed similar concerns. He pointed out that the current draft of Article 6 in the reform proposal lacks clarity, potentially allowing other state-owned enterprises to benefit from exemptions.
USMCA and State-Owned Enterprises
The USMCA mandates equal treatment for businesses and regulatory neutrality among its signatory states. The potential special treatment for state-owned enterprises in Mexico’s antitrust reform could create a conflict with these USMCA principles.
Alejandro Faya Rodríguez, a Cofece commissioner, strongly criticized the proposed reform for its blatant violation of USMCA’s national treatment discipline.
LFCE Reform and Constitutional Changes
The LFCE reform aims to comply with the constitutional changes from December 2024, which reorganize state functions and replace various state organs with sectoral agencies within the federal public administration (APF).
Key entities like Cofece and the Federal Telecommunications Institute (IFT) will transfer their functions to these sectoral agencies, maintaining technical, operational, and budgetary independence.
Cofece’s Replacement and Future Structure
Under the executive’s proposal, Cofece would be replaced by the National Monopoly Commission, situated as a decentralized organ under the Secretariat of Economy. Despite this change, participants in the forum expressed optimism about preserving the core principles and enhancing procedures while significantly increasing penalties.
Key Questions and Answers
- What is the main concern regarding Mexico’s LFCE reform? Experts worry that the proposed special treatment for state-owned enterprises could contradict the USMCA’s principles of equal business treatment and regulatory neutrality.
- Which state-owned enterprises are primarily affected by this reform? The primary concern is the potential exemption of Pemex, CFE, and other state-owned enterprises from antitrust regulations.
- How does the LFCE reform align with constitutional changes? The reform aims to comply with the 2024 constitutional changes that reorganize state functions and replace existing organs with sectoral agencies within the federal public administration.
- What is the future structure of Cofece under the proposed reform? Cofece would be replaced by the National Monopoly Commission, situated as a decentralized organ under the Secretariat of Economy while maintaining technical, operational, and budgetary independence.
