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Gas station owners, uniting to abuse?

The private sector in Mexico has oscillated between monopolies and oligopolies
Gas station owners, uniting to abuse?
Mexico City
Newspaper Leader by EL UNIVERSAL
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Competitiveness is not deeply rooted in the Mexican business culture. For decades, this country knew only one TV station, one phone company, one bakery, and a few banks. The private sector has oscillated between monopolies and oligopolies.

When Mexico decided to open its doors at the end of the 80's, the panorama began to shift slowly. Changes are highly visible, for instance, in the telecommunication industry and the banking services. There is a diversity of offers of which the consumer benefits.

One of the industries which recently opened its doors to competition was the retail gasoline sector. Although gas station owners were private, the brand was always PEMEX – and the sole distributor.

In the past few months, each gas station is offering a different brand, foreigners can invest in the sector, and prices have been freed. Each station sells fuels at a different price, thus clients are able to choose the gas station they prefer.

It all sounds nice yet the Federal Economic Competition Commission (COFECE), published yesterday that it is investigating the practices of gas station owners which go against competition. In the last year, according to the COFECE, 10% of gas stations have changed their corporate name.

What's the harm in that? That purchases or mergers of gas stations be used to create “alliances” that go against the principle of competition. The emergence of powerful groups within the retail gasoline sector would represent the possibility of competition displacement, building barriers that could prevent access to new players and, eventually, the establishment of monopolistic practices that will only affect the consumer.

A similar investigation was published a few weeks ago on the distribution and commercialization of LP gas, stating prices had risen between 34% and 50% in the past year.

Freeing markets in Mexico was always conceived for the benefit of users. The premise is that the more companies in one sector, the greater competition to win clients and the better services and prices to be offered. However, what the energy industry is showing is the collusion of some competitors to the detriment of millions of Mexicans.

At this point, we need the intervention of the State as a regulatory body capable of providing the fastest solutions possible. Investigations that take months or years will not be useful.


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