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 Business News | April 2006 
Mexican Congress Approves Overhaul of Antitrust Law
 Elisabeth Malkin - NYTimes
| | President Carter addresses the Mexican Congress during a state visit to Mexico in 1979. During this trip, Carter spoke of maintaining good trade relations with Mexico in order to expand foreign markets for U.S. goods. |
Mexico City — The Mexican Congress approved an overhaul of antitrust law this week, giving the government new authority to rein in the giant companies that control many parts of the country’s economy.
The measure passed despite strong lobbying against the bill by Carlos Slim Helú, whose control of Teléfonos de México, the country’s dominant telecommunications company, has helped him become one of the world’s richest men.
The passage of the bill came as a surprise to many who feared that legislators would bend before the power of Mexico’s largest companies. At the beginning of the month, Congress passed a media law that critics said gave the country’s two television companies additional privileges.
But Eduardo Perez Motta, Mexico’s top antitrust enforcer, said that political parties had an eye on the July 2 general election when they passed the new competition law.
The lower house, the Chamber of Deputies, passed the law unanimously on Tuesday, and the Senate did the same in the final hours of the legislative session on Thursday night.
Before the Senate vote, Telmex sent out a news release in the name of another company controlled by Mr. Slim, calling for changes in the law.
“To touch one comma of the legislation is to kill it,” said Mr. Perez Motta, the president of the Federal Competition Commission.
Many of Mexico’s leading industries are dominated by one or two companies that use their market power to block new competitors. Telmex, for example, controls 95 percent of all local lines. Mexico’s two brewers have a lock on almost all distribution channels. Two companies control almost everything viewers can watch on broadcast television.
Foreign competitors like MCI and the brewer SABMiller have complained about the difficulties they have encountered in trying to break into the market.
But the Federal Competition Commission’s effort to force open many markets has been hamstrung by weak laws. Companies have paid only 15 percent of the fines that have been imposed and have tied up many of the commission’s actions in legal actions.
The new law quadruples fines, to as much as $5.5 million. In the case of repeated violations, the competition commission could fine the company as much as 10 percent of its sales and ultimately even move to break it up.
It will also make the commission’s opinions binding on other regulators. In particular, many critics argue that Mexico’s telecommunications regulator has done little to check Telmex’s power. Now, the competition commission will have a say in writing regulations as new technology enhances the possibility of competition.
The new law also creates protection for whistle-blowers and allows the commission to conduct searches as part of its investigations. Language in the law will also eliminate ambiguities that companies have used to win repeated injunctions against the commission.
The law will do little, however, to affect two of the country’s most important monopolies, the state-owned oil and electricity companies, which are protected under the Constitution. |
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