Competition Buzz: Mexico’s competition authority, version 2.0

By: Alejandra Palacios, COFECE

Along with other Latin American success stories, Mexico has achieved an unprecedented transformation in making market competition a central element in its development. Based on constitutional reforms approved in 2013 and 2014, today we have not only vast opportunities for competition within strategic sectors such as hydrocarbons and telecommunications, but also an advanced set of norms, a strengthened competition agency, and special tribunals for competition matters which guarantee free competition and association for economic agents.

Out of this reform process was born the Federal Commission for Economic Competition (Comisión Federal de Competencia Económica, COFECE), an autonomous institution with greater jurisdiction. The telecommunications sector is removed from under COFECE’s watch, and will now be the responsibility of the Federal Telecommunications Institute (Instituto Federal de las Telecomunicaciones, IFT).

Regarding its new judicial instruments, COFECE has been given incremental powers to achieve its goals. The Commission will now be capable of ordering measures to remove barriers to competition, regulate access to essential resources, and demand the divestment of assets, rights, social divisions and shares in the proportion needed to eliminate negative effects on competition. The new Federal Law on Economic Competition also covers new monopolistic practices and enhanced sanctions- such as the banning of directives and sanctions to Notary Publics that register mergers without COFECE’s authorization. However, a stronger set of norms does not automatically translate into a more effective competition agency. To achieve this, it’s indispensable to create the appropriate institutional capabilities.

During its first year-and-a-half, COFECE has been plunged into a vigorous effort to adapt its institutional capabilities within a new regulatory framework, parallel to the execution of daily tasks. We are aware that the connection between the social benefits of our labor and the recent constitutional reform must be built out of the quality of our instruments and processes, and the effective use of all our resources.

Thus, the agency’s first act was the drafting of a Strategic Plan, with the aim of creating a guiding document for the operation of our institution within the short and medium term. The plan establishes our institution’s Mission, Outlook and Values, as well as courses of action to enhance our impact within the market sectors which most affect economic growth and social welfare.

Based on this framework, the Commission identified several projects which by their nature and potential impact on COFECE’s long-term goals should be undertaken immediately. Each of these projects were intended to help create an effective, results-oriented institutional design directed towards continuous improvement and performance evaluation.

A first priority was the drafting of several technical guidelines meant to reinforce and clarify the Commission’s procedures, reassuring economic agents. An Intelligence Unit was also created to aid in market analysis, proactive detection of threats to competition and anticompetitive behaviour, as well as for developing investigations. This strategic placement has allowed us to develop market studies within key sectors such as agriculture, as well as to elaborate educated opinions about regulation within the energy, transport and infrastructure sectors.

COFECE has also done work on new standards for critical procedures, establishing an institutional performance and talent-building evaluation system , as well as enacting a full transparency and accountability policy, considered the best in Mexico. These actions seek to increase predictability within and outside the Commission regarding its processes. We also recognise that results require a mechanism that will allow us to measure success and follow up on COFECE’s various projects and investigations.

In order to measure the Commissions economic impact, we have worked on developing internal criteria for ex ante and ex post evaluations of public policy developed by COFECE. We also established a Competition Policy Evaluation Committee, responsible for the selection of representative cases in order to carry out full evaluations and identify the impact of COFECE’s resolution on consumer welfare.

Finally, several weeks ago we launched a call to create a Grand Alliance in favor of economic competition. COFECE reached out to the public and private sectors and social actors in order to promote new regulations and policies. “Together for a culture of competition” is the guiding document, establishing specific actions intended to influence a cultural transformation as ever more sectors of society become aware of the benefits and relevance of competition. As part of this effort to promote competition COFECE also launched the National Competition Award, consisting of two modalities: i) Undergraduate level research papers to support the education of qualified professionals, and ii) works of journalism promoting the competition policy agenda and a greater public consciousness of COFECE’s work.

Over one year on, all these projects are up and running. We are about to reap the harvest of our work strengthening COFECE’s institutional capabilities. The next challenge is to make our work have a palpable effect on Mexican’s pockets through effective investigations, opinions and resolutions. On this process of building better institutional capabilities, COFECE remains open to exchanging experiences and sharing Best Practices with others in the region, hoping to make competition the Key to a sustainable prosperity in our societies.

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