Mexico’s Competition Authority Faces Uncertain Future Amid Budget Cuts and Reforms

Mexico’s Federal Economic Competition Commission (COFECE) faces significant challenges as it prepares for dissolution and replacement by a new government-controlled competition authority.

The transition, prompted by controversial constitutional reforms and accompanied by severe budget cuts, has raised concerns about the future enforcement of antitrust regulations in the country.

Constitutional Reforms and COFECE’s Dissolution

In December 2024, constitutional reforms aimed at “organizational simplification” were published in Mexico’s Diario Oficial de la Federación, signaling the end of COFECE as an autonomous body. The reforms outline the creation of a new competition authority within the government to oversee and address anticompetitive practices across all sectors. COFECE emphasized that its existing recommendations and pending investigations would depend on the authority granted to the new entity by secondary legislation.

Since its inception in 2013, COFECE has played a pivotal role in promoting fair competition, particularly in innovative sectors such as fintech. The 2017 Financial Technology Institutions Law (Fintech Law) enabled the emergence of fintech companies as viable alternatives to traditional banks. However, COFECE identified barriers hindering the sector’s growth and issued a 2024 report with 21 recommendations to address these challenges, including opening payroll portability to foster fair competition.

Budget Cuts and Operational Challenges

COFECE faces immediate financial constraints, with its 2025 budget reduced to less than one-third of its original request. The commission stated that these cuts threaten its ability to fulfill its statutory duties and ensure an orderly transition to the new competition authority. In a recent statement, COFECE urged the government to provide sufficient resources for its closure and the continuation of due processes.

Despite its imminent dissolution, COFECE continues to oversee critical antitrust matters, including the analysis of over 150 merger operations representing approximately 10% of Mexico’s GDP. The commission has taken “extraordinary measures” to sustain operations and ensure the transfer of responsibilities to the new authority, though details of these measures remain undisclosed.

The Role of Secondary Legislation

The success of the new competition authority will hinge on the content of secondary legislation, which will define its scope, powers, and tools to enforce antitrust policies effectively. COFECE expressed its willingness to collaborate with Congress to shape legislation that ensures robust competition enforcement benefiting Mexican consumers and businesses.

Implications for the Fintech Sector

The fintech sector is a priority area for the new competition authority, given its role in fostering innovation and financial inclusion. COFECE’s recommendations, such as promoting payroll portability, remain relevant but await adoption under the new legislative framework. Ensuring continuity in competition policies will be critical to maintaining investor confidence and driving growth in this burgeoning sector.

Looking Ahead

As Mexico transitions to a new competition regime, uncertainty looms over the effectiveness and independence of the incoming authority. The dissolution of COFECE, coupled with budget constraints, underscores the need for transparent and comprehensive secondary legislation to safeguard competition, promote innovation, and protect consumer welfare.

The outcomes of this transition will not only shape Mexico’s antitrust landscape but also influence the broader economic environment as the country navigates these transformative reforms.