June 22, 2020 / 4:20 PM / 2 months ago

Mexico antitrust body takes government to Supreme Court over energy policy

MEXICO CITY (Reuters) - Mexico’s antitrust regulator said on Monday it had filed a suit at the Supreme Court against the energy ministry over electricity policy, ramping up a controversy that has cleft divisions between the government and foreign allies.

On May 15, the ministry published new rules giving the state more control over approval of renewable energy projects in the power market, fueling concerns the leftist government was failing to honor contracts and bent on squeezing out companies.

The Federal Economic Competition Commission (Cofece) said in a statement that the energy ministry’s new dispositions violated the fundamental principles of “free competition”, and asked the Supreme Court to rule on the matter.

The ministry’s move “seriously affects” the structure of the electricity sector and impedes access to transmission and distribution networks, as well as favoring certain participants and hampering the ability of others to compete, Cofece said.

“If the policy continues, it can cause irreparable damage to the market due to absence of competition,” Cofece president Alejandra Palacios told Reuters in an interview.

President Andres Manuel Lopez Obrador has vowed to strengthen the state’s role in energy production, arguing that previous governments handed too much control to the private sector at the expense of consumers.

Private companies deny this, and the government’s efforts to reduce their influence have sparked protests from the European Union, Canada and Mexico’s top business associations.

After Cofece published its statement, Energy Minister Rocio Nahle said on Twitter the reliability of the national power system was “above any public or private economic interest.”

She made no reference to Cofece’s suit, but her words echoed arguments authorities have made in seeking to carve out a bigger role for the state at the expense of private firms.

Lopez Obrador is critical of Mexico’s regulators, arguing they are too expensive. Critics accuse him of trying to loosen curbs on his power. This month he backed a proposal to merge three regulators which could put an end to Cofece.

Reporting by Adriana Barrera; Writing by Dave Graham; Editing by Alistair Bell and Christopher Cushing

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