The Antitrust Review of the Americas 2009

Mexico Takes Important Steps Forward

01 January 2009

More than 10 years have elapsed since the enactment of the Federal Economic Competition Law (FECL) which represents the first institutionalised competition legal framework in Mexico. The prohibition of monopolies does, however, date back to the enactment of Mexico's political constitution of 1857, which even predates the competition regimes of the US, Canada and the European Union by which the FECL was inspired. The FECL rules article 28 of the 1917 Mexican Constitution on economic competition, monopolies and free market access. It is binding to all sectors of economic activity in Mexico and all economic agents are subject to its provisions, whether individuals or corporations, agencies or entities of the federal, state or local administration, associations, professional groups, trusts or any other form of participation in economic activities. The strategic sectors indicated in the fourth paragraph of article 28 of said Constitution are exempted and do not constitute monopolies - although from an economic standpoint they are. The enactment of the FECL was part of the deep modernisation commitments that the Mexican government undertook when negotiating the North American Free Trade Agreement (NAFTA), needed to open up and further liberalise the Mexican economy, which seemed heavily concentrated in several government-owned and recently privatised monopolies and oligopolies controlled by family groups and prevented effective and open access for both domestic and foreign investors. The FECL developed an effective and enforceable regime to punish cartels and monopolistic practices and control mergers, which affords protection to the competition process and free market access by also preventing other restrictions that deter the efficient operation of the goods and services market and might have a negative impact on the relevant market. Monopolistic practices are divided into two categories: absolute and relative. Absolute monopolistic practices are contracts, agreements, arrangements, or combinations among competitive economic agents, whose aims or effects are any of the following: to fix, raise, to agree upon or manipulate the purchase or sale price of the goods or services supplied or demanded in the markets, or to exchange information with the same aim or effect; to establish the obligation to produce, process, distribute or market only a restricted or limited amount of goods, or to render a specific volume, number, or frequency of restricted or limited services; to divide, distribute, assign or impose portions or segments of the current or potential market of goods and services, by means of a determinable group of customers, suppliers, time or spaces; or to establish, agree upon or coordinate bids or to abstain from bids, tenders, public auctions or bidding.

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