Mexico’s Proposed Reform of Competition Law: A Critique from Europe

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Assimakis Komninos, Anne Perrot, Mar 26, 2014

Legislative innovations in the competition law area may be based on good intentions but it is always a good idea to run a sanity check and refer back to fundamental principles of sound competition policy. On February 19, 2014, the Secretaría de Economía within the Federal Executive Branch proposed rather sweeping amendments to the Mexican Competition Act, which include a number of problematic elements. Most alarmingly, the Law Proposal refers to a newly introduced concept of “barriers to competition” and would make it a violation of competition law to create a “barrier to competition.”

In our short article, we draw on our academic and professional expertise in the area of competition law, economics, and policy and on our experience as former enforcers. We also draw on experience from our participation in international forums of competition law enforcement agencies, such as the Competition Committee of the Organisation for Economic Cooperation and Development, the International Competition Network, and the United Nations Conference on Trade and Development.

We believe that merger control and standard antitrust rules give competition authorities a set of efficient and secure tools to guarantee the well-functioning of markets for which competition is the normal way to operate. The implementation of these policy interventions relies on a set of definitions, methods, and tools shared by most competition authorities around the world. This framework allows, on the one hand, for a full understanding by firms of the risks associated with anticompetitive behavior and, on the other hand, limits both the risks of “false negatives” and “false positives” by competition authorities. It also ensures that firms understand the level-playing field in which they operate and guarantees that their investments will not be confiscated.

A legal framework that would introduce a new and vague additional source of intervention by competition authorities would destroy this legal framework and lead to a high degree of uncertainty. In particular, the risk of divestiture of assets resulting from so-called “barriers to competition” would place a high burden on firms and would hamper their willingness to innovate and invest, leading finally to a less competitive economy.