(Source: Kansas City Southern press release, March 16, 2017)
KANSAS CITY, Mo. — Kansas City Southern (KCS) announced today that yesterday the Mexican Economic Competition Commission (Commission) published in the Mexican Official Gazette of the Federation an abstract of its preliminary report (Preliminary Report) on effective competition in the market for interconnection services, trackage and switching rights used to provide railway freight public services in the rail freight industry in Mexico (Relevant Market).
In the abstract of its Preliminary Report, the Commission concludes that conditions of effective competition are lacking in the market of trackage rights in the rail networks operated by Kansas City Southern de Mexico, S.A. de C.V. (KCSM), Ferrocarril Mexicano, S.A. de C.V., Ferrosur, S.A. de C.V. and Ferrocarril and Terminal del Valle de México, S.A. de C.V., an entity partially owned by KCSM.
KCSM respectfully disagrees with the Commission’s reasoning and preliminary conclusions, and will exercise its rights within the next 20 business days to file evidence and arguments to support its position, as provided in the Mexican Federal Economic Competition Statute. After the end of the aforementioned 20 business-day period, the Commission has an additional term of up to 110 business days to issue a final report in connection with effective competition conditions in the Relevant Market.
No remedy, sanction, penalty or other alteration of the rights of KCSM is imposed by the Preliminary Report. Any such action could only be considered subsequent to the issuance of a final report by the Commission and then only separately by the Regulatory Agency of Railway Transportation (Railway Regulatory Agency or Agency) at the SCT.
As such, the preliminary conclusions have no impact on KCSM’s current business and operations.
In the event that in its final report the Commission confirms its preliminary conclusions, the Railway Regulatory Agency of the SCT would have authority to consider specific remedies, which could include, among others, imposition of limited mandatory trackage rights on KCSM and other concessionaries, for specific commodities, routes or segments thereof, in addition to the mandatory trackage rights already provided in their corresponding concession titles. The Agency may also impose the service conditions and rates for these limited mandatory trackage rights. Before any such action, however, the Agency must first evaluate the evidence and arguments offered by the applicable concessionaires.
Should the Commission’s final report affirm the preliminary conclusions and the Railway Regulatory Agency consider specific remedies for such findings, KCSM will exercise all of its rights under its concession and the law to ensure that any actions considered by the Agency are workable and consistent with KCSM’s rights under law and under its concession.