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Cofece is crucial to guarantee opportunities for SMEs

The Federal Commission on Economic Competition (Cofece) is crucial to guarantee opportunities for Small and Medium Enterprises (SMEs), highlighted the Ministry of Finance in the Economic Package that it proposed to the Congress of the Union.

In terms of competition, periods of economic contraction are usually accompanied by the exit from the market of a significant number of companies, especially small and medium-sized ones, which carries the risk of observing even more concentrated markets, either because companies fail and their market share is absorbed by larger companies, or because they are acquired by larger economic agents with greater advantages.

In the Mexican case, according to the document, it is foreseeable that some of this will happen in an economy that is structurally concentrated, and that usually grants market power to a few companies.

Hence, it is essential that this autonomous body is empowered to monitor the conditions of competition in the markets, either by analyzing market concentrations before they are carried out, investigating behavior due to abuse of market power or issuing recommendations to regulators to that legal frameworks do not impose barriers to competition.

Cofece and competitors

In the same vein, the OECD points out that previous economic crises show that competition policy plays a fundamental role in increasing the resilience of markets and supporting a rapid economic recovery.

For example, competition policy can participate in a relevant way in the development of policies that will make it possible for the market mechanism to reestablish itself after the crisis, by avoiding coordination between competitors to increase prices of basic goods or by dividing the market; by limiting and punishing the abuse of market power by large firms to crowd out small competitors; or by inhibiting operations between companies that generate market structures that put competition and free competition at risk in the long term.

Market

In addition, the economic effects can generate price increases due to changes in supply chains or coordination between economic agents to face economic restrictions.

This creates incentives for market participants to increase prices unjustifiably or collude with each other to raise prices and / or restrict the quantities supplied in the market.

In summary, Cofece plays a fundamental role in sanctioning and dissuading agents from engaging in such practices that affect economic growth.

The health emergency due to Covid-19 has great effects on human, economic and social costs for the world and for Mexico.

In this context, the IMF forecast for Mexico’s growth in 2020 compared to 2019 went from -6.6% in April to -10.5% in June.

The same body predicts that growth in 2021 will not be greater than 3.3 percent.

Features

Cofece is the autonomous constitutional body of the Mexican State, whose mandate is established in article 28 of the political constitution.

In general, Cofece has the responsibility to monitor, promote and guarantee competition and free competition in the country, so that markets work efficiently, in favor of consumers.

This means, the Cofece must work focused on the existence of conditions so that companies, businesses, businesses and professionals that sell goods and services can compete among themselves to win the favor of customers.

“This benefits us all, since companies have to improve the quality of their products and services, reduce costs in order to grant a lower price, and provide a higher quality service, so that you, as a consumer, can choose between the options that best suit your needs, “says Cofece.

 

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