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Mexico Probes Freight Rail Market Amid Infrastructure Expansion

 |  January 10, 2024

Mexico’s antitrust authority, the Federal Economic Competition Commission (Cofece), announced on Wednesday a formal investigation into the nation’s freight rail transportation sector. This move comes as the government pursues ambitious plans to expand its railway infrastructure.

While refraining from explicitly naming the companies under scrutiny, Cofece revealed concerns about the “absence of competitive conditions” in the industry, which handles a substantial 25% of all land-transported goods. The primary players implicated in the investigation are believed to be Canadian Pacific Kansas City (CPKC) and Grupo Mexico’s transport unit.

In an official statement, the commission underscored the significance of addressing competitive dynamics, particularly in light of the nearshoring trend. With manufacturing increasingly shifting from Asia to Mexico to be closer to the U.S., Cofece stressed the need to ensure competitive pricing conditions in the rail transportation market.

Neither Canadian Pacific Kansas City nor Grupo Mexico Transportes immediately responded to requests for comments from Reuters.

Cofece’s 2021 study highlighted the concentrated control over Mexico’s railroads, with three main entities dominating the sector. Grupo Mexico, including its Ferromex and Ferrosur units, commanded a 56% share, while Kansas City Southern (now CPKC) held 24%. The state-owned Ferrocarril del Istmo accounted for the remaining 12%.

The investigation, expected to span between 30 and 120 business days, with the possibility of extensions, aims to scrutinize the competitive landscape and potentially address any anti-competitive practices in the sector.

Notably, in November, the Mexican government issued a decree prioritizing trains transporting passengers over those handling freight on railways under concession.

Source: Finance Yahoo