Ramírez Cuéllar: Competition law must be aligned with the USMCA

The tense trade relationship with the United States is putting additional pressure on Mexico's new antitrust legislation to comply with the United States-Mexico-Canada Agreement (USMCA), admitted Alfonso Ramírez Cuéllar, a Morena representative.

Last February, the legislator presented a reform initiative to the Federal Economic Competition Law (LFCE) to comply with the constitutional reform of December 2024, which decrees the reorganization of functions of various state bodies, as well as their replacement.

Among them are the Federal Economic Competition Commission (Cofece) and the Federal Telecommunications Institute (IFT), currently constitutionally autonomous bodies that will transfer their functions to new federal government agencies.

Representative Ramírez Cuéllar's initiative is parallel to another one presented by the Executive Branch at the end of April.

This Monday, the legislator said that both bills will be processed during the special session scheduled for June.

"We have two initiatives, one presented by the federal Executive and another suggested by myself, which have significant similarities, but at these tables, in these discussions, we will have to clarify the different points of view to find a single path so that in June, when we hold the extraordinary session, we can pass good legislation," said Ramírez Cuéllar at the "Proposal for an Economic Competition Law" event held at the Colegio de México.

Amid tensions over the tightening of the United States' tariff policy, the legislator admitted that changes to the legislation must be aligned with the USMCA, so as not to create further sources of conflict.

He cited the example of competition supervision and telecommunications regulation, noting that the USMCA prohibits the state from simultaneously being a regulator and service provider, as this constitutes a conflict of interest.

"I believe that the issue of the body that asymmetrically regulates the telecommunications market should not have a conflict of interest; it should not carry out operational actions, should not be involved in a series of financial mechanisms, or provide services either, because then we would perhaps have a conflict of interest problem and would become both judge and jury," he said.

Mexico's potential noncompliance with the USMCA on this issue has been raised by experts, as the December constitutional reform proposes that telecommunications regulation should now be carried out by an executive branch (the Agency for Digital Transformation and Telecommunications, ATDT).

This is despite the fact that the government also controls companies that compete in the sector, such as the wholesale service operator Altan Redes and CFE Telecomunicaciones e Internet para Todos (CFE TEIT).

"And what the USMCA says in Article 21 (on competition) and Article 18 (on telecommunications) I believe are judicial mandates that we must comply with, and in the face of the catastrophe we are experiencing, we should not give any excuse for any challenge," said Ramírez Cuéllar, referring to the recent tariff hostility shown by Washington.

No sectorization

To avoid noncompliance, Ramírez Cuéllar's initiative proposes that the antitrust agency that replaces Cofece not be located within any federal public administration entity, thus avoiding conflicts of interest.

"I believe we need to strengthen (the new body), ensuring that it is not segregated within any state department, because that state department's key role may be to attract investment, perhaps without paying full attention, with all its intensity, to issues of competition and antitrust," the legislator stated.

Both the Morena party's initiative and the executive branch's proposal propose granting the antitrust agency greater investigative powers, as well as harsher fines for violators of the LFCE.

For example, they propose extending the period during which the agency can investigate non-notifiable mergers from one to three years, as well as increasing fines from 10% to 20% for serious collusion.

However, analysts warn that compliance with these mandates could remain a dead letter if the new agency is not provided with sufficient staff and budget.

"If you don't have sufficient resources in the new authority, the likelihood of catching criminals will be much lower, and increasing fines will be useless," said Ignacio Navarro, a former commissioner of Cofece, who commented on Ramírez Cuéllar's presentation.

Javier Núñez, also a former commissioner of Cofece and director of the mergers department at the former Federal Competition Commission (CFC), agreed with this.

“I see risks: a stronger authority with greater scrutiny capacity will have to deal with an environment of probably limited resources. When I took over, we were handling 250 cases a year, and it was crazy. You have to choose which issue to prioritize,” he said while participating in the panel.