Mexico: COFECE looks into concentration in fledgeling gasoline market

Mexico’s competition authority COFECE has announced it will analyze the consolidation strategy being rolled out by G500, one of the country’s largest Service-Station operators. The agency will seek to determine whether the company’s expansion along the entire production and distribution chain following the gradual opening of the country’s oil sector may pose risks to competition in the market.

Businesses in the sector have complained about COFECE’s approach to its various probes on the industry, saying the regulator lacks clarity on which economic agencies should provide which information, causing several conflicts between businesses and the agency. COFECE has imposed several fines and restrictions on companies accused of presenting incomplete information. These fines, with a combined total so far of $350,000 pesos ($18,000 USD approximately), have been repeatedly challenged in court.

G500 was established as a gasoline distributor after the 2013-2014 oil market reforms pried open Mexico’s closed energy markets. The group has grown slowly as several operators joined to allow for economies of scale and eventually allow them to import fuel directly.

Alejandra Palacios, COFECE’s sitting president, recommended all gasoline distributors in the process of merging with other rivals to notify the authority, even though this is not legally required. This, she said, would help prevent such problems in the future.

Full Content: El Economista

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