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07 April 2016
In February 2015 the Federal Economic Competition Commission (FECC) initiated an investigation to determine whether essential inputs or barriers to competition existed in the air transport services market at Mexico City International Airport. The investigation was the first of its kind undertaken by the FECC since its establishment under the new Federal Economic Competition Law (published in the Federal Official Gazette on May 23 2014).
On February 19 2016 the FECC Investigating Authority issued a preliminary ruling incorporating its findings and proposing corrective measures. According to the law, all economic agents with legal standing may challenge or support the preliminary findings and bring before the FECC any evidence to support their stance. Once the file is integrated, the FECC will have 60 days to issue its final resolution and recommendations.
The FECC found as follows:
In light of the findings, the FECC recommended that the airport:
The FECC recommendations constitute a major opportunity to promote regulatory improvements regarding the efficient use of slots at Mexico City International Airport, especially in the context of slot saturation. However, they also raise the following concerns:
Moreover, perhaps due to the wording used in the Federal Economic Competition Law, the FECC's preliminary ruling defined the relevant market in the same way as the essential input, while it identified passenger air services as the 'investigated market'. This practice is questionable, since the relevant market would ordinarily be defined with regard to the products or services affected by the lack of essential input. In this context, it will be interesting to observe how the concept of relevant market will be treated in future procedures.
For further information on this topic please contact Lucia Ojeda Cardenas or Felipe García Cuevas at SAI Consultores SC by telephone (+52 55 59 85 6618) or email (firstname.lastname@example.org or email@example.com). The SAI Consultores website can be accessed at www.sai.com.mx.
(1) Strictly speaking, the FECC characterised the essential input as the infrastructure for landing and take-off comprising the airport's airstrip, taxiways, visual aids and platforms.
(2) That is, the airline that occupied a certain schedule in the previous period has a priority over it on its reassignment.
(3) The preliminary ruling considered a 'new competitor' to be:
(4) In this respect, in other jurisdictions airlines appear to have property rights over slots. For example, in the United States slots are susceptible to sale; following the 2013 merger of US Airways Group Inc and American Airlines, JetBlue, Virgin America and Southwest Airlines all purchased slots from American Airlines, while Turkish Airlines purchased slots from Scandinavian Airlines-SAS in 2015.
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