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Introduction

On June 11, 2013, the Mexican Congress approved the most recent constitutional reform dealing with economic competition. Without a doubt, this is one of the most important and notable actions of the government in power. Through constitutional determination, the new Federal Commission of Economic Competition (COFECE) was set up, which, in its capacity as a autonomous constitutional body, was vested with a set of new powers aimed at eliminating barriers to competition and free market participation, regulating access to essential consumables, and ordering the separation of assets for the purpose of eliminating their anticompetitive effects.

In terms of of sanctions and procedures, it is noteworthy that the reform has established special penalties to severely punish monopolistic practices and concentration phenomena. It announced specific prohibitions related to cross-subsidies and preferential treatment and limited the means of defense to indirect amparo (protection) proceedings, while, at the same time, reserving such disputes for specialized courts.

The aforementioned regulatory changes are valuable in and of themselves because they were aimed at strengthening economic competition in Mexico. Even though the economic competition policy is the result of more than twenty years’ development and, after successive reforms, the existing regulatory framework approaches the best international practices in terms of its design, it is certain that the conditions under which some economic sectors operate in Mexico reflect a reality that is still far from a competitive marketplace, and the benefits that such markets generate. This situation is especially obvious in sectors that operate through network infrastructures.

The situation described above can be attributed to specific factors of an institutional, political, economic, social and/or cultural nature that together condition the effective application of competition standards. Nonetheless, it is also pertinent to point out that each sector or market offers a different panorama that needs to be recognized both by the rules of competition as well as by the regulation of that industry. Based on such consideration, in this paper three types of elements or conditions are presented that, if not recognized in a timely manner by the industry regulator and by the entity with jurisdiction, may limit the effective application of the most recent reform in the natural gas and electricity industries.

First, we will show the main obstacles documented by economic regulation in terms of creating competitive markets in the industries mentioned above. Second, we will refer to the different developments and maturities of the natural gas and electricity markets in Mexico. Third, we will present some of the elements that may limit the development of competitive markets on the level of regulatory design of the energy sector.

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