Antitrust Enforcement in Mexico 1993-1995 and Its Prospects
Gabriel C. Gallardo, Antitrust Enforcement in Mexico
Antitrust Enforcement in Mexico 1993-1995 and Its Prospects
Gabriel Castaneda Gallardo 0
0 Part of the International Law Commons, International Trade Law Commons , and the
Follow this and additional works at: https://digitalrepository.unm.edu/usmexlj Jurisprudence Commons Recommended Citation
-
Article 5
GABRIEL CASTANEDA
GALLARDO*
Mexico has had new and modern legislation on competition since June
1992: The Ley Federal de Competencia Econ6mica (the Federal Law on
Economic Competition, LFCE),' regarded by several specialized fora as
comparable to and even more liberal in some respects than its counterparts
of the United States and Canada.2 Mexico has also formed a governmental
agency entrusted with its enforcement, the Comisi6n Federal de
Competencia (Federal Competition Commission, CFC). This paper reviews
the origins of both, after their second anniversary, and comments on
relevant aspects thereon, to offer a point of view on future developments.
Before starting, it is necessary to state a caveat: the author is a true
believer in antitrust law and policy. There is perhaps no better instrument
to correct and remedy the imperfections generated in a market economy;
there is probably no equivalent as an aid to prevent abuse of market
power, whether coming from the private or the public sector; there is
probably no more efficient guarantee of open markets. Competition law
and active policy support contribute to the "democratization" of market
entry by encouraging rivalry, which in turn brings lower prices, better
product quality, and diversity of consumer choice. But, of course,
competition and its set of analytical concepts and rules, when properly
enforced, may conflict with powerful interests. It is only natural that
such interests react through subtle or open mechanisms to exert pressure
over regulators and the decision-making process to keep their privileges
intact. Considering such pressure in the context of Mexican business and
politics, it is fair to say that the early enforcement of the LFCE has
suffered obstacles and opposition in a fast-track manner, when compared,
for example, to enforcement of the Sherman Act in the United States,
which confronted serious attacks from large firms, regulators, lawmakers
and lobbyists. This is particularly relevant if we analyze the history of
the Sherman Act from 1890 until the issuance of the Federal Trade
Commission Act and the Clayton Antitrust Act in 1914. 4 However, the
more violent the attacks, the more supporters of the LFCE will be required
to create defenses. There may be delay in development of such defenses
or effective enforcement, but I believe that competition policy will
overcome these formidable obstacles, some of them transitional, such as the
current economic crisis with which Mexico now struggles, and others of
a more structural nature, such as the influence of regulatory capture.
It is far from clear that competition policy should be kept dormant
in order to ease the current economic crisis, as some voices may advocate.,
There appears to be no evidence that the formal antitrust "black out"
helped pull the United States out of the Great Depression which
commenced in 1929. Although there is no empirical evidence at hand, a
concentrated econ ny sch as the Mexican cannot benefit fr a f.r..al
(or informal) antitrust enforcement "black out." On the contrary, a
reversal in antitrust enforcement will probably have the effect of
entrenching both state controlled industries and private sector anticompetitive
activities. This in turn will foster higher concentration ratios and collusive
arrangements, thus generating an efficiency reduction which will take
longer to cure. Therefore, the current crisis, paradoxically, may be a
good reason not to shut off competition policy. In order to emerge from
the crisis in a stronger position, Mexico needs plain, leveled market fields.
Competition policy should help the government avoid being held hostage
to mighty interests and should stimulate a solid private enterprise
environment offering more opportunities to more economic agents.
Far more harmful to competition law and policy is to support a selective
enforcement policy. It may be better to have no competition enforcement
at all, than to have a policy that discriminates according to the size or
the direction of special interests, because then competition policy becomes
a Mr. Hyde, distorting markets and creating havoc among the business
community, along with imposing damaging transaction costs on the
economy.
Mexico is now preparing for an indispensable major national campaign
for law and order. Competition law and policy must indeed be a part
of it, since it goes to the heart of the economic component of the
campaign: to create clear and permanent incentives to market entry. With
no clear and enforceable rules there will be no incentives. Mexico's much
needed campaign for law and order will have to fi (...truncated)