Mexican Railways Lack Competition, Antitrust Agency Finds
15 Marzo 2017 - 2:41PM
Noticias Dow Jones
By Anthony Harrup
MEXICO CITY -- Lack of competition in Mexico's private railway
systems leads to high tariffs for users and delays that ultimately
hurt production and economic growth, antitrust officials said
Wednesday.
Grupo Mexico SAB and Kansas City Southern de Mexico, a unit of
Kansas City Southern, the two firms said to benefit from the lack
of competition, are able to set prices for interconnection and
restrict access to their lines, raising the cost of rail transport,
said Carlos Mena, head of investigations at the Federal Competition
Commission.
Mining and railroad company Grupo Mexico operates the Ferromex
and Ferrosur railways, and KCSM operates another network, which
together with joint-venture Ferrovalle control nearly three
quarters of Mexico's railways.
The companies and other interested parties have 20 days to
respond to the findings, and the commission another 30 days to
confirm or reject the preliminary ruling. Confirmation could lead
to transport authorities taking action to address the lack of
competition.
A spokesman for KCSM said the company would make a statement
later Wednesday. Grupo Mexico couldn't immediately be reached to
comment.
Rights of way allow trains of one company to use the lines of
another for a fee, but since the railway companies operate both
railway lines and freight services, there is an incentive to
restrict passage of rival trains, according to the antitrust
commission.
The probe found that the tariff on lines other than the one
where a journey begins averaged 8.3 times the tariff on the
original line, Mr. Mena said. Users have also suffered delays of up
to a week if their train cars have to switch to a locomotive of the
other company. Only once have the railways made a right-of-way
agreement since privatization in the mid-1990s, and that was
limited, the official said.
"Without effective competition in the transport sector, our
country can't hope to become a logistics platform for domestic and
international trade, which would condemn us to low economic growth
and persistent inequality between regions," he said.
The commission said uncertainty over delivery times and costs
encourages the use of more expensive or less efficient modes of
transport such as roads and ports.
Rail freight is used extensively in Mexico by the agricultural
sector, and heavy industries such as mining, cement and
automotive.
"We also identified that there are companies that use railways
to transport their goods in other countries, but in Mexico they
don't because of the prices..and they decide to do it by road or by
ship," Mr. Mena said.
Write to Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
March 15, 2017 16:26 ET (20:26 GMT)
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