Mexico has never been a country where competition and free competition reign, despite the long-standing prohibition of monopolies in our Constitution. And it is natural: competition has to be a State policy that is enforced, since it will never be the big businessmen who spontaneously seek something other than preserves and privileges.
The institutional and regulatory design that ensures that any number of suppliers participate in the markets, with more and better goods and services, where innovation and efficiency influence consumer preferences, has never been fully effective in our country. However, there we took it.
Since the 1990s, the content of article 28 of the Constitution has been expanded; The first Federal Economic Competition Law (1992) was issued and the first competition agency was created, as part of the economic reforms that would give way to NAFTA. Legislation was added to ensure competitive processes in government purchases and in the development of public works.
The process continued with the constitutional reform of competition, broadcasting and telecommunications of 2013, which built the current regulatory framework so that monopolistic practices and illegal concentrations are investigated and sanctioned, created autonomous regulators (Cofece and IFT) and specialized courts.
However, competition has gone out of style, whatever the laws and regulators in Mexico and the world say. We see daily the resurgence of protectionism, populism and nationalism, to the detriment of regional and global free trade. Let’s see some examples. Nearshoring and friendshoring, with all their advantages, result in building supply chains among like-minded people, not necessarily with the most efficient supplier. The measures that subsidize and favor local production and consumption for the sake of sovereignty or national security point in the same direction, regardless of whether or not it is competitive in that sector.
In Mexico, policies have been implemented that affect the markets, by placing economic activities in the hands of military power instead of those of the best offeror, be it railways, airspace or ports. The tenders gave way to direct awards. Activities have been re-nationalized throughout the value chain of the hydrocarbon and electricity sector to protect productive State companies, to the detriment of cleaner and more efficient technologies.
More examples? The recent blow to the science and technology system undermines innovation, which is a pillar of competition. The disappearance of FinRural reduces specialized financing for the countryside, making it less competitive. The protection of banks discourages Fintech companies and hinders financial inclusion.
The list could go on. We have been left with rules that say one thing, and practices in a different sense. The challenge is the construction of a new paradigm that defines the role that competition will have in an economy with greater government intervention, and that as a society we look for the new model to reduce inequality and promote respect for human rights.
*The author is a partner at the González Calvillo law firm, where she heads the area of economic competition. She former commissioner of the extinct Cofeco.
