Lowering Barriers to Entry

Jul 1, 2002

There are small signs that Mexico's competition authorities are beginning to stand up to the rich and powerful bosses who have defied control for years. But the regulators have a hard battle ahead of them.

Mexico has a well-run economy. Its sound public finances, low inflation and manageable external accounts won it an investment grade credit rating in 2000. But the government of President Vicente Fox wins few accolades for disciplining the cartels and quasi-monopolies that dominate the country. Telmex still runs the phones, Televisa and TV Azteca split control of the television advertising market, and Bancomer and Banamex control over half the banking system. Two beer companies - Grupo Modelo and Femsa - brew nearly all the beer drunk in Mexico. State-owned companies monopolize the electricity, oil and gas. A state-owned holding company controls 75% of the airline industry. This system of monolithic business empires controlled by wealthy, politically powerful families and state monopolies grew up in the second half of the 20th century when the economy was sealed off from foreign competition and investment. One would have thought that this had changed...

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