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Mexico’s Congress to Vote on Reform Dismantling Energy and Telecom Watchdogs

By  |  November 6, 2024
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Next week, Mexico’s Congress is poised to vote on a constitutional reform that could significantly alter the landscape of the nation’s regulatory framework in the energy and telecom sectors. The proposal, expected to be approved between November 11 and November 14, seeks to eliminate the independence of key regulatory bodies, including the Hydrocarbons Regulator (CNH) and the Electricity Regulatory Commission (CRE), and integrate them into the Ministry of Energy (Sener).

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    According to BNA, Ricardo Monreal Ávila, a prominent member of the ruling Morena party and political coordinator in the lower house, confirmed that the reform is on track for approval. Morena, which holds a dominant majority in Congress, has passed several sweeping constitutional amendments over the past month, setting the stage for this latest measure.

    The reform’s broad scope extends beyond energy regulators. Along with CNH and CRE, other agencies losing their autonomy would include the Federal Competition Commission (Cofece) and the Federal Telecommunications Institute (IFT). These shifts are part of the administration’s efforts to centralize regulatory control, but they have sparked significant concern among business groups.

    Related: Mexico’s First-Ever Class Action Targets Pharma Giants for Price Fixing

    Industry representatives argue that removing the independence of these regulators could undermine fair competition in vital sectors. The employers’ association Coparmex has voiced strong opposition to the reform, stressing that the loss of these regulatory bodies would “seriously compromise democratic stability and the balance of powers.” The group also highlighted the critical role these agencies play in ensuring market fairness and protecting consumer interests.

    “Their work is essential to guarantee fair economic competition and protect consumer welfare,” Coparmex stated following the constitutional committee’s approval of the proposal.

    There are also fears that the reform may strain Mexico’s obligations under the United States-Mexico-Canada Agreement (USMCA), particularly regarding commitments related to competitive market practices. Critics worry that the centralization of power could create a less predictable environment for private businesses, complicating cross-border trade and investment.

    Source: BNA