MEXICO: An introduction to Competition/Antitrust

An Uncertain Future for Economic Competition in Mexico

The future of competition law in Mexico faces significant uncertainty as the second half of 2024 approaches. Just months before leaving office on September 30, 2024, President Andrés Manuel López Obrador proposed constitutional changes that, if enacted, would dismantle the Federal Economic Competition Commission (COFECE) and the Federal Institute of Telecommunications (IFT). These two constitutionally autonomous bodies are currently responsible for overseeing competition and ensuring free market access in Mexico. This move is López Obrador’s final legislative effort and could mark the beginning of a new era in competition regulation with far-reaching implications not only for the country’s legal and economic framework, but also jeopardizes Mexico’s trade relations in the USMCA. These changes, plus the constitutional overhaul on the “independence” of the judicial branch, will surely be highlighted in the USMCA’s review that will start next year.

While the proposed changes in the antitrust legal framework bring uncertainty, they may also present an opportunity for businesses to reimagine their strategies. In this evolving landscape, expert antitrust and competition counsel will be crucial for companies across all sectors, guiding them through the new regulatory terrain and helping them to stay competitive.

A Look Back

In 2013, the Mexican Congress passed a landmark constitutional reform that established COFECE and IFT as fully autonomous and independent constitutional bodies. COFECE was tasked with promoting and defending economic competition across all sectors except telecommunications and broadcasting, which fell under the jurisdiction of the IFT. Unlike COFECE, the IFT also served as a regulatory authority in its specific areas, in addition to its role as a competition watchdog.

Between 2014 and 2018, antitrust law in Mexico experienced a golden era. However, the election of President López Obrador marked the beginning of an unprecedented campaign against constitutionally autonomous bodies that resisted alignment with the presidential agenda. Multiple attempts were made to weaken these institutions—ranging from efforts to abolish them outright, to more subtle strategies such as leaving key positions unfilled, thereby crippling their ability to function. Fortunately, many of these efforts were thwarted, with autonomous bodies successfully defending their independence before the Supreme Court. Moreover, during his presidential term, Mr. López Obrador’s party, MORENA, and its allies lacked the qualified majority in Congress necessary to amend the Constitution, preventing the most drastic changes from being realized.

After the 2024 General Election, and with just three Senators short of a qualified majority in Congress, President López Obrador has seen his proposal to dismantle most constitutionally autonomous bodies, including COFECE and IFT, advance significantly. The Chamber of Deputies’ Constitutional Points Commission reviewed and approved the bill and it is now poised for discussion and a vote by the full Lower Chamber. The proposal suggests transferring COFECE and IFT’s functions and responsibilities to the Ministry of Economy and the Ministry of Infrastructure, Telecommunications, and Transport, respectively. The rationale behind this move is the claim that COFECE, IFT and other constitutionally autonomous bodies are too costly, and that integrating their functions into the centralized administration would result in significant cost savings.

Looking Ahead

On the one hand, if the bill does not secure the necessary majority in the Senate, COFECE and IFT will retain their autonomy. However, they may continue to face budget cuts and staffing shortages, potentially leading to delays in decision-making and extended waiting periods under the new administration of President Claudia Sheinbaum.

Should the bill pass and the Constitution be amended, COFECE and IFT will be dissolved, necessitating the issuance of a new Federal Law on Economic Competition. This transition would require a complete overhaul of existing regulations, guidelines, and resources, raising questions about how antitrust processes such as merger reviews, cartel investigations, and abuse of dominance cases will be handled within the new structure.

Finally, one must not ignore that this overhaul may clash with Mexico’s antitrust obligation established in international treaties. If Mexico does not maintain functioning antitrust authorities, the Mexico’s partners may request consultations, and they will probably do so since trade representatives from different countries and other industry associations have already expressed their concerns.

Strategic Sectors

Amid these challenges, if Mexico’s Antitrust Bodies continue to exist, they have been vocal when determining that the several strategic sectors for 2025 will be in their top list of priorities as they are crucial for promoting economic competition and consumer welfare in Mexico. These sectors include food and beverages, transportation and logistics, financial services, energy, digital markets, and healthcare.