The Panel of the Mexican Federal Competition Commission (COFECE) published an excerpt of its final report regarding its assessment of effective competition, and found that 20 of 31 Kansas City Southern (KCS) routes under analysis lacked effective competition. KCS disagrees.
KCS confirmed that on Feb. 6, COFECE published its report on effective competition in the market of freight railway transportation services regarding certain chemical and petrochemical products, namely, anhydrous ammonia, chlorine, ethylene oxide, and caustic soda shipped in certain specific routes with an origin or destination in the southern region of the State of Veracruz.
“Kansas City Southern de México (KCSM) is only involved in rendering freight transportation services in limited segments of only five out of the 20 routes, and only in connection with the shipment of chlorine and ethylene oxide,” KCS said. “The report is mainly focused on routes fully operated by a different concession holder. During 2019, KCSM’s revenue associated with these five routes was less than $1.5 million.”
The issuance of the report “has no impact on KCSM’s current business, operations or rights under the concession,” KCS said. “The COFECE findings were largely in line with KCS’s expectations for this proceeding based on the conclusions set forth in the COFECE’s preliminary report in March 2019. KCSM respectfully disagrees with the reasoning and conclusions of COFECE since they are contrary to the rule of law, the rules of procedure and relied upon faulty economic analysis. KCSM is currently analyzing all available legal options to challenge the Final Report.”
“The COFECE final report will now trigger a review by the Railway Regulatory Agency, which will exercise its statutory powers that could include, among other things, imposition of trackage rights (on KCSM and/or other railroad operators) or rate regulations that would be limited to the routes and relevant products indicated in the final report,” KCS noted.
“Before any such action is taken, the Agency must first evaluate the evidence and arguments offered by the affected railroad operators, including KCSM.” KCS said. “This will likely include hearings with the Agency. Should the Agency mandate remedies that we deem to be unacceptable (operationally or otherwise), KCSM will exercise its rights under its concession and/or applicable law to ensure that any such actions are consistent with our rights.”