Mexico: COFECE efforts turn to agriculture, food costs

Mexico’s Federal Economic Competition Commission, known as COFECE, announced the launch of its latest investigation, aimed the agri-food industry.

The watchdog said the probe began Monday as authorities examine whether there is sufficient competition in the market.

The investigation was a mandate of COFECE’s Board of Commissioners, the regulator said, due to “the importance of the sector to the Mexican economy and its impact on consumer welfare.” COFECE says the agri-food sector accounted for 7.2 of the nation’s GDP in 2013.

The regulator also stated that families can direct between 34 and 52 percent of their monthly spending on food.

COFECE says it plans to close the investigation and publish its recommendations for the industry in August of next year.

The full text of COFECE’s announcement can be read below.

COFECE begins market study on the Agri-Food Sector.

• Mexican low income households spend as much as 52% of their income on food purchases
• Due to its significance to GDP contribution and economic growth, this is the second market study undertaken by COFECE, after the corresponding study regarding the financial sector

Mexico City on November 10th 2014. – The Mexican Federal Economic Competition Commission (COFECE) has begun a study of the Agri-food sector. The purpose of the study is to analyze if effective competition in the markets for agricultural products is taking place. It will examine fairness and openness in agricultural markets; will seek to answer the question of whether there is adequate competition in the Agri-food industry and whether the system is fair to all participants.

Considering the importance of the sector to the Mexican economy and its impact on consumer welfare, COFECE’s Board of Commissioners has mandated the initiation of the study.

During 2013, the Agri-food sector (which is to say, primary activities in agriculture, livestock, among others and activities related to the food industry and agro industrial transformation) represented 7.2% of the Gross National Product (GDP). Specifically, primary activities represented 2.9% of GDP during the same year, and the foods industry contributed with over 4% of GDP during said period.

According to the National Survey for Household Income and Spending for 2012, performed by the National Institute for Statistics and Geography, Mexican households allocate 34% of their monthly spending on buying food. For families in rural communities it represents as much as 42% and for the lowest income families it represents as much as 52% of their spending.

Activities in the Agri-food sector and industry are closely interrelated. Hence, it is important to use an integrated perspective when performing the study.

The recommendations derived from this market study, shall seek to correct potential inefficiencies, market failures and/or anticompetitive practices and are intended to be directed primarily for sector specific regulators, with the main objective of promoting policies that favor competition and efficiency in the sector.

Pursuant to the FECL, COFECE may perform market studies regarding competition conditions and free market access on specific sectors. To determine which sector will be analyzed, COFECE uses the following criteria: contribution to GDP and economic growth, the generalized use of the products involved, the impact on the country’s economy, its importance thereto and the potential risks of anticompetitive practices.

The recommendations shall be available in August 2015.

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