After decades of economic policies that created powerful monopolies, Mexico has undertaken major reforms to open markets and strengthen antitrust regulation. Constitutional amendments establish autonomous regulators for telecommunications and antitrust to break up monopolies and increase competition. Key changes include allowing full foreign investment in telecom, limiting cross-ownership, mandating interconnection between networks, and strengthening regulators' powers while limiting legal challenges from monopolies. The goal is to lower costs, enhance quality, and increase investment and growth through a more modern and competitive economy.

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MEXICONOW MAY - JUNE 201316
S
ince its independence, Mexico has
been subject to the control of small
groups of powerful people that in-
herited privileges from the Spanish Crown,
strong institutions that ruled the country
since the fall of theAztec Empire. Mexican
history has been full of fratricidal struggles
by groups that had a different ideology on
how to run the country.
After the Mexican revolution of 1910,
a change in power took place, ousting the
XIX Century establishment of the dictator,
General Porfirio Diaz. However, some of
the fortunes that came from such estab-
lishment regrouped and aligned with the
revolutionary hierarchy.
After the revolution, during and after
the Second World War, Mexico grew at a
very fast pace, developing the so called
“Mexican Miracle”, when the country de-
veloped a public policy called “desarrollo
estabilizador” (stabilized growth). Such
policy was mainly based in substitution of
imports, by establishing sheltered markets
by catering to foreign and domestic inter-
ests that were willing to risk capital by
investing in Mexico in a highly protected
environment.
If an investor wanted to enter the
Mexican market, it was necessary to make
a deal with the government, by making a
commitment to risk capital, and create jobs,
in consideration of having the government
close the borders to competing products
and inputs to manufacture the given prod-
ucts and controlling prices in a high rate.
This economic policy indeed created
a high growth of the economy and gener-
ated a lot of jobs, principally in Central
Mexico, but also generated a new cast of
privileged groups that associated with the
revolutionary leaders, creating a culture
of easy money making in a monopolistic
closed market.
In the late fifties President López Ma-
teos, nationalized power generation and
distribution, and in the late seventies, Presi-
dent Echeverria started to buy businesses
that had grown out of the protected markets
policy, and by the eighties the Mexican
economy was under government control of
about 80% of it economy, when the system
collapsed because of wide spread corrup-
tion in government controlled companies
that were inefficient, and government
uncontrolled spending.
In the early nineties, President Salinas,
started a spread policy of divesting govern-
ment owned companies that were viable,
selling to Carlos Slim and his group of
investors the government share of Telefo-
nos de México (Telmex). The government
also sold the Mexican banks that had been
nationalized in the eighties by President
Lopez Portillo.

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MAY - JUNE 2013 MEXICONOW 17
On the private sector side, many Mexi-
can companies and investors continued
working side by side with the government
in creating protected environments for
their business, derived either by collu-
sion with government officials or from
government “economic growth” policies,
thus, the transportation sector, electronic
media, beer, steel and cement consortiums,
agriculture distribution, milk and poultry
agribusinesses and others grew under pro-
tected monopolistic environments.
Upon the advent of the North Ameri-
can Free Trade Agreement “NAFTA”,
President Salinas created the firstAntitrust
Law in 1992. Such law establishes the first
Antitrust Board (“Comisión Federal de
Competencia” or “COFECO”). This law
was mainly modeled from the Sherman
Act of the United States. However, the law
lacked the establishment of an efficient set
of rules that could isolate the strength of
the regulator from a peculiar constitutional
control recourse that exists in Mexico,
modeled from a Spanish judicial tradition,
the “Amparo”. This is a constitutional re-
course that permits any private individual
or entity to stop any act of authority that
allegedly violates the plaintiff’s constitu-
tional rights, of having the actions of any
authority be based on the letter of the law
or its legal interpretation.
Using the Amparo, the powerful mo-
nopolies of Mexico made almost impos-
sible for the antimonopoly regulator to
effectively stop absolute or relative mo-
nopolistic practices, to the degree that, for
instance, it took for COFECTO eighteen
year of heavy litigation against Telmex
(the telecommunications monopoly) to
rule that Telmex had dominance in the
telecommunications’ market, that gener-
ates an estimated annual income of about
twenty six billion dollars.
From the year 2000, after the Partido
Acción Nacional took office, ousting PRI
from a 71 year of full power at the fed-
eral level, and during the twelve years of
PAN’s federal administrations, there were
constant failed intents to make changes in
the law and in the constitution to strengthen
COFECO’s ability to fight monopolies, un-
til the year 2011, when Congress enacted a
wide spread reform in the FederalAntitrust
Law making COFECO stronger, and initi-
ating a wide spread reform ofAmparo Law,
that could effectible stop the abuse of this
recourse made by dominant companies.
In the year 2012, PRI, through Enrique
Peña Nieto, came back to power, with a
voting result of 38%, with a controversial
campaign where it is alleged that he was
backed-up with illegal campaign contribu-
tions coming from the monopolistic groups
of Mexico, including the electronic media.
To lower political pressure coming from
multiple political groups that obtain force
and independence after the PAN destroyed
the vertical power structure that PRI de-
veloped in its long lasting rule of Mexico,
President Peña called the two main op-
posing parties, the PAN and the left wing
Partido de la Revolución Democrática or
“PRD”, to enter into a 94 points agreement
to carry out a wide spread transformation
for Mexico, in multiple structural and po-
litical aspects, ranging from education to
electoral reform, with a big component of
economic (antitrust, telecommunications
and energy) , financial and tax reform.
About 90% of these reforms had been
proposed by PAN leadership in the prior
twelve years, but were denied by the PRI/
PRD opposition.
Two of these very important reforms
were the antitrust and telecommunications
reforms. These reforms are made from a
constitutional base, to avoid the risk that
federal law may be maneuvered by Con-
gress, subject to the pressure of powerful
monopolistic lobby. Because constitutional
amendments need a qualified majority of
2/3 of Congressmen and Senators pres-
ent with a majority quorum, and subject
to the ratification of the majority of state
congresses, it is quite difficult for the mo-
nopolistic forces to prevail in achieving
their goals in this constitutional reform
environment.
As a result of this presidential initiative
that was the result of a complicated nego-
tiation between the leaderships of the gov-
ernment, PRI, PAN and PRD, a profound
reform was made in these fields.
We will now highlight the principal
changes made:
1. General principle that the right to be
informed shall be a warrant by the State,
including the access to information tech-
nology and radio communications (elec-
tronic media), for the freedom of speech
in an economic free environment.
2. A general declaration that telecom-
munications are public services of general
interest, that the State warrants to be pro-
vided under an economic free environment,
quality, universal, multicultural and free
from ideological intervention, intercon-
nected and convergent, continues, with free
access and without any illegal interven-
tion.
3. The State will warrant that all broad-

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MEXICONOW MAY - JUNE 201318
cast shall be rendered as a public service in
an economic free environment, with open
competition, securing quality that brings
culture to all the public, preserving the
diversity and pursuing the truth in informa-
tion, preserving national identity values and
education.
4. Prohibition of broadcasting of adver-
tising in form of news reports.
5. Mandate to legislate in broadcasting
contents and broadcasters liabilities in third
party contents, without affecting the right
of free speech.
6. 100% foreign investment in telecom-
munications fields.
7. Up to 49% in broadcasting provided
international reciprocity exists.
8. The establishment of a government
agency that will regulate public radio and
television.
9. Immunity for all broadcasters for
securing the freedom of speech, within
the limits of moral standards, public order
disruption, felonies and the right of third
parties.
10. The creation of a constitutional
autonomous institution (Instituto Federal
de Telecomunicaciones or “IFETEL”), that
will regulate telecommunications in all
fields, including antitrust. This institution
will be governed by a 7 person board, se-
lected by the Senate, among the top rated
candidates selected through a technical
examination designed and administered
by three autonomous independent bodies
of government not linked to the executive
branch (the Mexican Central Bank, the
Institute of Statistics and the Board for
Education Valuation).
11. The new Federal Antitrust Board
Comisión Federal de Competencia
Económica”), that will have a similar
structure than the IFETEL, will regulate
all antitrust fields different than telecom-
munications and broadcast.
12. The two new authorities will be
guided by the following main provisions:
• Asymmetric regulation for antitrust,
to open new competition markets.
• Limit regional to national and region-
al economic concentrations, controlling
cross ownerships and braking up monopo-
lies by stock/equity or asset compulsory
divestments.
• Public bid processes in granting
of broadcaster’s concessions, excluding
public media, avoiding concentrations,
securing the best consumer prices.
• Severe sanctions to violators of regu-
lations, including felonies and cancellation
of concessions.
• Amparo procedures are the only
recourse that is available against the
regulator’s resolutions, and cannot stop any
administrative process, excepting fines, and
breakout procedures (this items developed
political controversy between the Lower
and Upper House of Congress, because the
Senate watered down the effectives of the
regulator).
13. All amparo procedures are to be
substantiated by special courts specialized
in the respective fields.
14. All television broadcast shall
migrate from analog technology to digital
technology at the latest by 2015.
15. Local loop availability to all com-
petitors. This will principally enable
Telmex competitors to offer telecom-
munications services to consumers up to
their homes or businesses, using Telmex
infrastructure, without Telmex blocking
access thereof.
16. The Federal Commission of
Electricity (“CFE”) will grant its telecom
infrastructure to Telecom Mexico for the
proper use of CFE’s infrastructure. This
will promote the use of such infrastructure
for the development of telecommunica-
tions, principally in rural areas.
In conclusion, all of these constitutional
reforms will develop the necessary basis
to generate a first world set of rules for
antitrust and telecommunications, that will
effectively break-up Mexican monopolies,
and preserve a humble antitrust environ-
ment, and that will promote telecommuni-
cation business, first for the benefit of end
consumers, including businesses, that will
lower prices and enhance quality.
We believe Mexico has very sophis-
ticated companies with world class re-
sources, who have been working within a
protective environment, that do business
in many other parts of the world, and with
these changes will easily adapt to a more
modern set of fair antitrust rules.
With these profound changes, Mexico
will enhance its business opportunity of-
fer, will lower the cost of doing business,
creating opportunities for investors that will
have the need of Mexican human capital,
and will improve its competitiveness; thus
increasing its rate of growth badly needed
to fight poverty, while improving its demo-
cratic governance by having a more open
broadcast market.
Carlos Angulo Parra is a former
senior partner of Baker and McKenzie in the
area of corporate law. Today he serves as
Congressman for the PAN, representing the third
District of Chihuahua in the Federal House of
Representatives.
He may be reached at
carlosangulo50@gmail.com