OECD Competition Assessment Reviews: Mexico

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Many of Mexico’s product markets remain among the most heavily regulated in the OECD. These structural flaws adversely affect the ability of firms to effectively compete in the markets and hamper innovation, efficiency and productivity. Against this backdrop, this report analyses Mexican legislation in the medicine (production, wholesale, retail) and meat sector (animal feed, growing of animals, slaughterhouses, wholesale and retail) along the vertical supply chain. Using the OECD Competition Assessment Toolkit to structure the analysis, the report reviews 228 pieces of legislation and identifies 107 legal provisions which could be removed or amended to lift regulatory barriers to competition. The analysis of the legislation and of the Mexican sectors has been complemented by research into international experience and consultation with stakeholders from the public and private sectors. The OECD has developed recommendations to remove or modify the provisions in order to be less restrictive for suppliers and consumers, while still achieving Mexican policy makers’ initial objectives. This report identifies the potential benefits of the recommendations and, where possible, provides quantitative estimates.

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The medicines sector has enormous economic and social implications for Mexico. It is an important source of employment (367 056 people, as of 2013) and contributor of GVA (from 2005 until 2015, the GVA for medicine manufacturing was, on average, 0.67% of total GDP). Among its main constraints are a lack of regulation concerning pecuniary advantages pharmaceutical companies can provide to doctors; patients’ restricted possibilities to substitute branded medicines for generics; a regulatory model of maximum prices for patented medicines that leads to high prices for Mexican consumers; the confidentiality of the amendment to the medicines-pricing agreement; and provisions that allow the sector’s regulators unguided discretion. In addition, several dispositions discriminate against foreigners, in both the private and the public sectors. The report also finds various Mexican standards that expressly state that they are not in line with international norms.

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