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Client Alert | CRE's Resolution on the Fuels Market

01/21/2020

Legal News / Updates

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The Energy Regulatory Commission considers there is greater participation in the fuels market and eliminates strict regulation to PEMEX

On December 16, 2019, the Energy Regulatory Commission (CRE for its acronym in Spanish) approved the Resolution that frees Petróleos Mexicanos and its subsidiary companies (PEMEX) from the regulation that did not allow the oil company to freely establish prices for its first-hand marketing in storage facilities, among other contractual terms, of fuels (Resolution eliminating Asymmetric Regulation). Such Resolution was published in the CRE website on January 15, 2019.

The Hydrocarbons Law of 2014 required the CRE to provide asymmetric regulation to limit the “dominant power” of PEMEX and allow the entry of new participants into the sector (Asymmetric Regulation). These restrictions were intended to level the playing field for new competitors in the market for the sale of fuels, in particular gasoline, diesel and liquified petroleum gas, until increased participation from competitors led to the efficient and competitive development of the markets.

Four years after the Asymmetric Regulations came into force, the CRE considered that PEMEX ceased to “exercise a dominant power that displaces economic agents or groups in First Hand Fuels sales and marketing of fuels”, based on the increase of permits granted for the marketing, imports, storage and distribution of fuels by means other than pipelines, as well as in the number of non-PEMEX branded service stations. We note that the Resolution eliminating Asymmetric Regulation does not reflect a competitive assessment in terms of the Federal Law on Economic Competition (Ley Federal de Competencia Económica) nor mentions the volumes of product actually sold by agents other that PEMEX.

The elimination of the Asymmetric Regulation allows PEMEX to freely determine its prices -with the possibility of granting considerable discounts or of raising the price to specific clients, even in a discriminatory manner-, thus endangering current and potential competitors in the fuels market.

It’s worth noting that the Resolution eliminating Asymmetric Regulation has not been published in the Federal Official Gazette (DOF), was not submitted to public consultation nor has an opinion from the Federal Economic Competition Commission. The only recourse available against it is the amparo indirecto.

Ver Flash Informativo en español: Acuerdo de la CRE relacionado con el Mercado de Combustibles