Remarks by Ángel Gurría
At the Forum on Competition and Regulation 2018
9 January, 2018, Mexico City, Mexico
(As prepared for delivery)
Mr Rector, Mr President of the Supreme Court, Mr Secretary of Economy, Madam Under-Secretary, Commissioners, Ladies and gentlemen:
This is the second year running that we have hosted this OECD Forum on Competition and Regulation. We hope to continue consolidating it as a benchmark for the commitment of the Mexican authorities to competition and regulatory improvement. I want to thank Secretary Guajardo for his leadership in bringing about this second edition.
We will be presenting some OECD reviews that are important for Mexico's development: the Competition Assessment in the Medicine and Meat Sectors and the analysis of the Governance of Regulators' Practices: Accountability, Transparency and Coordination. Both these reviews are the result of excellent collaboration between the OECD and the Ministry of Economy.
These reviews represent a continuation of long-standing cooperation with the Ministry of Economy which has spanned several presidential mandates, and which demonstrates that sound actions require continuity. The same holds for the economic reforms undertaken by the current government: we need to ensure their continuity in order to reap all their fruits.
Strengthening competition and establishing a high-quality regulatory framework are essential elements for promoting inclusive and sustainable growth. When industries are exposed to greater degrees of competition they experience faster growth in productivity, and this leads to more solid growth in the economy as a whole. Competition also makes it possible to level the playing field between firms and to foster a spirit of entrepreneurship and innovation. Greater competition enhances consumer sovereignty and benefits the most vulnerable population groups.
For its part, a clear, direct and predictable regulatory framework allows firms to participate in the market with certainty and to make investment plans, which in turn will generate more competition and greater benefits for consumers. Not only do we need clear rules, however – we also need strong, competent, independent and transparent regulators who can assure market participants that regulation will be applied objectively and impartially.
In recent years, Mexico has taken some important steps to improve its competition policies and to foster regulatory quality. The OECD has supported many of these efforts. In the last year, we have worked with the Ministry of Economy to identify best international practices in the privatisation, closure and sound administration of public enterprises, to prevent them from constituting obstacles to competition. We have also analysed the extent to which the "Mexican Official Standards" promote or limit competition, in order to develop alternatives for improving them.
On the regulatory front, Mexico launched, with the support of the OECD, an ambitious programme to cut administrative burdens for businesses by 36%: that programme was fully implemented in 2016. In February 2017, a constitutional reform was approved to establish a national policy for regulatory improvement. We are now conducting a review of Mexico's international regulatory cooperation, with a view to supporting the country's efforts to continue consolidating a regulatory framework that is congruent with its trading partners. We are also developing a manual for ex post evaluation of laws and regulations, so that regulations which have failed to achieve their objectives, or no longer do so, can be eliminated.
The two reviews that we are presenting today are part of this series of projects for strengthening competition and improving regulation in Mexico.
The first of these reviews is the Competition Assessment in the Medicine and Meat Sectors. This study is of particular importance as it deals with two sectors that are significant for the welfare of Mexico's citizens.
The review of regulations has yielded more than 100 recommendations for strengthening competition.
For example, the review found that, under current rules, 100% of imports of meat and offal must be inspected. This requirement is excessive and unnecessarily costly. Consequently, our report recommends developing a system whereby inspections are conducted by means of risk analysis: those establishments that have the best track record in complying with regulations will be inspected less frequently. This will promote more efficient access for imports into the Mexican market, and will foster competition.
In the medicinal product sector, the study recommends regulating the benefits that pharmaceutical companies offer doctors, whether those benefits take the form of cash bonuses or of attendance at congresses and conferences. Regulation of this aspect will facilitate competition and eliminate illegitimate incentives for doctors to prescribe certain products. Another OECD recommendation is to urge pharmacy employees to advise customers about cheaper generic drugs that may be available, and to allow prescribed medications to be substituted by the generic equivalent, when the patient so agrees. These are but a few examples.
Our estimates suggest that, if the majority of the 100-plus recommendations in the review were to be adopted, the annual positive impact for the Mexican economy could amount to 44 billion pesos, thanks to efficiency gains and lower consumer prices for goods and services. I invite you to read these recommendations carefully.
The second study that we are presenting today, Governance of Regulators' Practices: Accountability, Transparency and Coordination, focuses on another of the areas in which we have been working closely with Mexico: the governance of regulators.
Economic regulators help to guarantee the provision and quality of public services, they facilitate investment in infrastructure, and they protect market neutrality. Their good performance, then, is crucial for promoting more inclusive growth and strengthening confidence in institutions.
This review covers a selection of international best practices in the area, including the case of Mexico. It examines how regulators in Australia, Portugal, the United Kingdom and Mexico have addressed the challenges of governance in order to promote greater accountability and transparency. These two aspects are fundamental to regulatory activity, as the regulatory agencies have broad powers and their rulings affect investment decisions, property rights, financial yields, and the rates and fees paid by users.
The report identifies some clear lessons that can help regulators in OECD countries strengthen their governance and perform their duties more effectively. One of these lessons is that regulators must be proactive and must be clear in communicating their role, their mandate and their activities. This can be achieved through periodic performance reports that are publicly available; annual reports that are clear, useful and detailed; and guidance and information for consumers at readily accessible websites.
Ladies and gentlemen,
At the OECD, we are convinced that competition and regulatory quality are essential for levelling the playing field among firms, for strengthening the business fabric, for fostering entrepreneurship, for offering certainty and clarity, and for making consumption more democratic.
I invite you to read carefully through the reports we are presenting today, and to take an active part in the discussions that will ensue today and tomorrow in the context of this Second OECD Forum on Competition and Regulation. Your ideas will constitute a very valuable contribution to improving policies in these areas, and for building a Mexico that is more inclusive and competitive.
You can count on the OECD! Thank you very much.