In Mexico, four economic interest groups control the passenger autotransport service

The control of four economic interest groups in the federal passenger trucking service inhibits better prices for users, according to a study presented by the Federal Competition Commission (Cofece) in the Senate of the Republic.

In Mexico, four economic interest groups control the passenger autotransport service. Image: Pixabay
In Mexico, four economic interest groups control the passenger autotransport service. Image: Pixabay

The document received by the Communications and Transportation Commission, chaired by Senator Higinio Martinez, indicates that 29 economic interest groups were identified throughout the country, of which there are four major suppliers that are unique in a large percentage of the routes, in addition to controlling more than half of the trips and passengers transported in the country.

In the presentation of the content of the study, Juan Manuel Espino, director-general of Economic Studies of the Cofece, said that although there are demand conditions for many routes to have more than one supplier, there is no presence of competitors.

These four large economic interest groups, he added, control 218 of the 820 terminals, which represents "more than half of the bullfights in the country and more than half of the passengers transported.

In addition, he said that 76.8% of the nearly 6,000 routes identified for the study are served by a single economic agent, and 88% of their routes do not face competition.

Similarly, he said that 820 terminals, of the 899 identified, are controlled or owned by a trucking company, ie, "whoever has control of the central does not give incentives to let in a new competitor and if he leaves, he does so in conditions of disadvantage.

Juan Manuel Espino explained that, due to current regulation, the market for federal passenger transport service presents competition problems and inhibits the participation of more companies and economic agents. This represents a loss of welfare for consumers, he said.

In this sense, he considered that the entry of a new competitor on a route would reflect a decrease of up to 40% in the price per kilometer. Families face a system of fixed prices per route regardless of day and time of the week, he explained.

This situation, he added, prevents the emergence of new business models and, therefore, prevents more choice and better prices for the consumer.

Given this scenario, he said that Cofece recommends the entry of flexible business models, open access to public terminals, provide legal certainty and transparency to new competitors.

Espino recalled that this year expire seven concessions of bus terminals, including the Central North in Mexico City, so he suggested that the government recover to re-concession in other terms and rules, and open access to potential economic agents on equal terms.

It also recommended updating the regulatory framework and modifying the entry conditions for new companies in public power plants, in order to introduce competitive pressure.

By Agencies

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