Mexico‘s Federal Economic Competition Commission (Cofece) initiated an investigation to identify and, if applicable, determine the probable existence of barriers to competition and free concurrence, as well as possible essential inputs in the public railroad freight transportation market and its related services and rights.
Created in 2013, Cofece is an autonomous agency in charge of promoting and guaranteeing competition and free concurrence in the markets, as well as preventing, investigating and combating anti-competitive practices.
What are barriers to competition? They are any fact, act or regulation that prevents access to a certain market or limits the ability to compete in it.
Of the total merchandise transported by land, 25.3% is transported by rail and the rest by truck.
In 2022 alone, 128.46 million tons of cargo were transported on the Mexican Railway System, and from 2016 to 2022, the number of tons of cargo transported increased 5.3 percent.
Railroad transportation
Among the main products transported are industrial products (46.7%), agricultural products (26.4%), oil and its derivatives (11.5%), fundamental products for the development of the economy.
Rail freight transportation represents a mode of transportation with potential for companies that are relocating to our country (nearshoring), since it is highlighted that in 2022 73.2% of foreign trade cargo was moved across borders, and the remaining 26.8% through ports.
Therefore, for Cofece, guaranteeing competitive conditions in the rail freight service is essential for users to be able to move their products at lower prices and under better conditions.
Investigation
The excerpt of the agreement to initiate investigation IEBC-003-2023 states that there are elements that suggest the absence of effective competition conditions in this market. However, the initiation of this investigation does not imply any prejudgment on the part of Cofece’s Investigating Authority.
Once the procedures foreseen for this type of investigation are concluded, and if the existence of barriers to competition or essential inputs is found, the Plenary of Cofece may decide to initiate an investigation:
For the development of this inquiry, the Investigating Authority has a period of between 30 to 120 business days, counted from the publication of the extract, which may be extended up to two times.