MEXICO CITY — Mexico’s antitrust regulators have blocked the proposed merger of railway companies controlled by Grupo Mexico SA and Grupo Carso SA on grounds it would create a monopoly in the country’s railroad system, according to a wire service.
The board of the Federal Competition Commission ruled late Thursday that the proposed merger would violate Mexico’s competition regulations, a government spokesman said.
Copper mining giant Grupo Mexico and conglomerate Grupo Carso, which is controlled by Mexican business tycoon Carlos Slim, were seeking to merge their railway units into a single company. The resulting concern would have dominated 70 percent of international rail traffic by owning top lines in Mexico’s northwest and southeast regions.
Pundits had predicted an antitrust ruling against the merger. Soon after the plan was unveiled in January, sources close to competition commission said it could result in unfair competition for Mexico’s Grupo TMM rail unit Transportacion Ferroviaria Mexicana, which operates the country’s northeastern line in association with Kansas City Southern Industries Inc.
Mexico privatized the country’s railway system in the late 1990s, obtaining dlrs 2.27 billion as part of an effort to develop three regional railway networks. Under privatization rules set in 1995, railway operators were restricted to a 5 percent stake in rival companies.
Grupo TMM had objected to the proposed merger, saying in a statement that it would also have given the new concern control over 64 percent of domestic rail traffic, including railways in most big and medium-sized cities in Mexico’s northern and central regions.
The merger proposal was for Carso’s mining unit, Empresas Frisco, and one of its sister companies to have assumed a 20 percent stake in Grupo Mexico’s Infraestructura y Transportes Mexico SA, in exchange for their controlling stake in the southeastern Ferrosur rail line.
Infraestructura y Transportes Mexico would have also consolidated Grupo Mexico’s 74 percent stake in Grupo Ferroviario Mexicano, which owns the Ferromex line.
Union Pacific Corp. owns the remaining stake in Grupo Ferroviario Mexicano. Ferromex operates the Pacific-North, Nacozari and Ojinaga-Topolobampo lines in northwestern Mexico.
This is the second time that Grupo TMM and Grupo Mexico have faced off over rules of the rail privatization. Last year, Grupo Mexico obtained an injunction against regulations that allowed TMM to charge what it said were exorbitant fees for access to tracks, interconnections and terminals it operated in the cities of Queretaro and Monterrey.
The competition commission also blocked previous merger attempts made by Ferrosur, when it was controlled by troubled construction company Grupo Tribasa SA.