Mexico: Lack of competition in LPG, cause of price increases, says COFECE

In a document prepared by the Mexican competition authority, the Federal Commission of Economic Competition (COFECE), it was revealed that the price of Liquefied Petroleum Gas (LP gas) has increased by 8% over 2017 due to the lack of competition in the sector.

In 2015, five economic groups concentrated approximately 48% of the LPG market at the national level. The following year that level was maintained and in 2017 it increased to 53%. These market concentrations are deepened regionally in the distribution of fuel, and include those of Yucatan, Baja California and the Pacific region.

Part of this is due to the fact that there is a small number of groups that participate simultaneously in all activities of the chain, from the import to the sale of LP gas to the end user. “Although such vertical integration can be beneficial because of the efficiencies that these companies generate in their operation, it is also a condition that inhibits the entry of new participants,” said COFECE.

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