Mexico’s president tries to loosen country’s monopolies

USA Today, 4/11/13

Jesús Briseño is a Mexican entrepreneur, brewing craft beers like pale ale, stout and a pilsner named for Jesús Malverde, the patron saint of smugglers and drug dealers. But often it’s not Mexico bars that sell his beer but U.S.-based outlets here like Wal-Mart and 7-Eleven.

The reason has to do with Mexico’s system of monopolies that are allowed to secure exclusive rights to major industries and products such as telecommunications, broadcasting, cement, even beer. Mexico’s two largest brewers use exclusivity contracts to prevent all products but their own from being sold in nearly all of Mexico’s bars and restaurants.

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As he takes office, Mexico’s president pledges to expand prosperity-Mexico Institute in the news

Dallas Morning News, 12/03/2012

Enrique Peña Nieto

Enrique Peña Nieto became the president of Mexico on Saturday and outlined an ambitious plan to transform it into a middle-class society by taking on powerful monopolies and unions and reducing poverty, hunger and violence. “We are a nation that grows at two speeds,” Peña Nieto said.

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Mexico regulator dumps $1 billion fine: America Movil

Reuters, 5/3/12

Mexico’s competition watchdog has revoked a nearly 12 billion peso ($925 million) fine against the domestic unit of billionaire Carlos Slim’s telecommunications firm America Movil, the company said on Wednesday.

America Movil, the cash cow of Slim’s business empire, said in a statement that it “was notified with a resolution issued by the Federal Competition Commission (Cofeco) that revoked and left without effect a 11.989 billion peso fine for alleged relative monopolistic practices.” The revocation of the fine could strengthen the view that regulators in Mexico lack enough muscle to reign in the massive influence of a businessmen like Slim, the world’s richest person, according to Forbes.

The market already bet America Movil would skirt the fine, with its shares closing on Wednesday at their highest since February 2011, before the first mention of the fine and concerns of a regulatory crackdown spurred a slump in the stock. Federal competition commission Cofeco had slapped America Movil’s Telcel with the record sanction in April 2011 after ruling the company charged excessive prices to wireless and wireline competitors to connect to its network.

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Carlos Slim Criticism of Mexico Competition Study Off the Mark, OECD Says

Bloomberg, 2/2/12

Billionaire Carlos Slim was out of context and off the mark in his criticism of a study finding a lack of competition in Mexico’s phone industry, the Organization for Economic Cooperation and Development said.

Slim told reporters yesterday that the group’s report, released earlier this week, seemed to use data “pulled out of thin air.” The 72-year-old, who controls Mexico’s largest wireless and landline-phone companies, denied the study’s claims that Mexican carriers overcharged consumers $13.4 billion a year for phone and Internet services from 2005 to 2009.

Mexico’s government, which commissioned the study, is using it to validate efforts to create more competition in telecommunications. The findings support the government’s plan to auction off fiber-optic lines owned by the state power company and contracts to push high-speed Internet into communities where it’s not available, Communications and Transportation Minister Dionisio Perez-Jacome said this week.

“The OECD stands by its report in full,” the group said today in an e-mailed statement.

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Mexico’s watchdog blocks Televisa-Iusacell mobile deal

Reuters, 2/2/2012

Mexican regulators have blocked broadcaster Televisa’s $1.6 billion bid for a 50 percent stake of cellphone company Iusacell, cementing tycoon Carlos Slim’s dominance of Mexico’s mobile market.

Televisa and Iusacell had hoped to combine forces to challenge Slim in the cellphone market, which has made him one of the world’s richest men. The 72-year-old Slim’s control of roughly 80 percent of Mexico’s cell and fixed-line phones has sparked criticism of monopolistic practices and claims that his companies abuse their power.

But Televisa and Iusacell said on Wednesday their tie-up had been rejected by Mexico’s competition watchdog, which has yet to publicly announce its decision or the reasons behind it.

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The Cartel Problem

The Economist, 8/25/11

A COUPLE of decades ago, when businesspeople and investors first got excited about the growth prospects of large emerging markets, Mexico was at the top of their lists. Nowadays it is the BRIC countries—Brazil, Russia, India and China—that have all the swagger, while Mexico commands attention for a sad reason: the surge of drug-fuelled violence that assails some of its cities. Mexican envy at the hoop-la surrounding Brazil, its Latin American rival, has reached a pitch to which only a psychoanalyst could do full justice.

Look more closely, however, and Mexico has hidden strengths. Its people are richer than those of any of the BRICs except Russia. They are better educated than Brazilians. The economy is more industrialised, better managed and more business-friendly than Brazil’s. And although growth has not been spectacular over the past 15 years, it has been significant.

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Slim Near Victory as Mexico’s Record $1 Billion Antitrust Case Loses Steam

Bloomberg, 8/15/11

Billionaire Carlos Slim’s Mexican wireless carrier is close to prevailing in the country’s biggest antitrust case, a victory over a government seeking to crack down on monopolistic behavior.

Only a reversal by one of the nation’s five antitrust commissioners, an unprecedented last-minute political maneuver or a judge’s intervention can salvage the government’s record $1 billion fine against America Movil SAB. Otherwise, the fine under review by the antitrust commission will be overturned or cut when the decision comes around at the end of September.

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MÉXICO – Calderon and his Anti-Monopoly Law

Poder, 4/8/2010

President Felipe Calderon sent the House of Representatives a reform proposal against monopolies, oligopolies, and anti-competitive practices in which violaters can receive sentences of up to 10 years in jail for impeding free competition; as well as fines as high as 10% of the revenues of businesses convicted of absolute monopoly, and 8% in the case of related monopolistic practices. The new regulations aim to bring Mexico up to date in this area, and to promote job creation and economic growth, the president added. Representatives of the majority PRI Party said they will not allow the reform become a form of “economic persecution” against business groups.

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Milenio article on the proposal (in Spanish)

PRD backs the initiative, El Universal (in Spahish)

Senators upset with lack of time to discuss the initiative, La Jornada (in Spanish)

Mexico Calderon eyes higher fines, jail for monopolies

Reuters, 4/5/2010

Mexican President Felipe Calderon wants to impose fines of up to 10 percent of annual sales on companies found to be acting as monopolies under a plan he submitted on Monday to overhaul competition laws.

The proposal would toughen controls on companies in a country often criticized for a lack of competition.

Calderon’s plan also includes up to 10 years of jail time for those found guilty of promoting these practices, Perez Motta added.

The president submitted his 10-point proposal to the lower house of Congress on Monday afternoon. It seeks to simplify the way investigations are conducted and would force companies to openly hand over information when they are the subject of a probe.

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Op-Ed: The Financial Storm Hits Mexico

Op-Ed, Wall Street Journal, 3/9/2009

The crisis is captured in the plummeting peso, which has fallen more than 30% against the dollar in the past six months. Yet the feeble peso is only the most visible symptom of what ails the country. The real problem is that in the current global recession, Mexico as a destination for capital has lost most of the limited appeal it once had. And while public dismay offers an opportunity to reform longstanding inhibitions about foreign investment, the political class appears apathetic toward that possibility.

These are some of the reasons Mexico may be considered an innocent victim of circumstances. But there are also homegrown rigidities in the economy that are exacerbating the problem. Monopoly privileges in key sectors like energy and telecom have made Mexico a far less competitive producer than other emerging markets. Moreover, the tax code is burdensome and labor laws are inflexible. The drag applied by this pernicious tax and regulatory environment helps explain, in part, the 32% drop in foreign direct investment from 2007.

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