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English

Maritime transport: Cofece determines lack of competition in Cozumel

In maritime transport in Cozumel, Mexico, Cofece determined that there is a lack of competition.

The Cofece Investigative Authority concluded, preliminarily, that there are no effective competition conditions in six routes of the maritime passenger transport service in the form of ferries in Quintana Roo.

The routes are: with origin and/or destination Isla Mujeres to Puerto Juárez, Gran Puerto, El Caracol, Playa Tortugas and El Embarcadero, and from Cozumel to Playa del Carmen.

In the first place, Cofece established that Naviera Magna (Magna) has a high market share on these routes and that there are economic and regulatory barriers.

This allows Magna to set rates without its competitors being able to counteract it.

The economic barriers to market entry correspond to the high investment amounts for the acquisition and/or lease of the vessels and the scarcity of alternative uses, the recovery period and indivisibility of the investments, the advertising expenses, as well as the acquisition of insurance; while those of a regulatory nature are related to the Current Navigation Law that imposes nationality requirements on those interested in providing the ferry service.

Maritime transport

In this market, users do not have the option of other means of transport, such as land or air, that allow them to move between the islands and the mainland.

Although there are other forms of maritime transport such as ferry, nautical tourism, tender and charter, as well as private boats and motorboats, these satisfy needs different from those covered by ferries and, except for the ferry, they are not provided regularly or continuously.

Investigation

During the investigated period (January 2015 to July 2020), the entry of several companies into the maritime transport market was observed, without Magna having reduced its rates as a natural response to competition.

Currently its only competitors (one in Isla Mujeres and another in Cozumel) maintain a price monitoring strategy (always below Magna’s) without really generating competitive pressure.

The investigation of the Investigating Authority, with file number DC-001-2020, began ex officio on July 21, 2020 and ended on December 10 of that year, and today the extract of the Preliminary Opinion is made public.

The economic agents interested in this procedure may present the statements and allegations that they consider pertinent, so that the Plenary of the Commission issues the final resolution of this case.

If the meaning of this Preliminary Opinion is confirmed regarding the lack of effective competition conditions in the maritime passenger transport service in the form of ferries in Cozumel and Isla Mujeres, it will be up to the regulatory authority of the sector to establish rate regulation.

 

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