Dear clients and friends,

On December 20, 2024, the Decree with the amendments to the Mexican Constitution, related to the organic simplification (the “Decree”) was published in the Official Gazette of Mexico City.

In summary, according to the Decree:

• The Federal Economic Competition Commission (COFECE) and the Federal Telecommunications Institute (IFT) will be abolished, and their authorities will be absorbed by the Federal Executive, acting through a governmental body / agency in charge of free competition and market access, as well as an organism in charge of developing and leading telecommunications and broadcasting policies, respectively. It is expected that the agency for free competition and market access will be overseen by the Secretariat of Economy, while the organism responsible for telecommunications and broadcasting policies will be overseen by the Ministry of Infrastructure, Communications, and Transport.
• The National Institute for Transparency, Access to Information, and Personal Data Protection (INAI) will be abolished. It is expected that the authority that INAI had in protecting the right of access to information and personal data protection, as well as transparency policies, will be absorbed by various government bodies, depending on their area of competence, including, among others, the Secretariat of Public Administration, the control and disciplinary body of the Judiciary, the Comptroller's offices of the Congress, the National Electoral Institute, and, in general, the Federal Executive, according to the applicable organic law.
• The National Hydrocarbons Commission (CNH) and the Energy Regulatory Commission (CRE) will be abolished, and their authorities will be transferred to the federal agency in charge of leading and overseeing the country's energy policy. In this regard, it is expected that the Secretariat of Energy will be responsible for absorbing the powers of the CNH and CRE.
• The National Council for the Evaluation of Social Development Policy (CONEVAL) will be abolished, and one of its functions, measuring poverty, will be transferred to the National System of Statistical and Geographic Information.
• The National System for Continuous Improvement of Education, previously responsible for conducting studies, specialized research, and diagnostic, formative, and comprehensive evaluations of the National Education System, as well as determining indicators for continuous improvement in education, will be eliminated. It is expected that the Secretariat of Public Education will absorb these powers.

The Decree will come into force the day after its publication. However, it is important to note the following:

• - The elimination of INAI, CNH, CRE, CONEVAL, and the National System for Continuous Improvement of Education will take place once the necessary secondary legislation is enacted to amend the relevant laws in compliance with the Decree. In this regard, the Congress will have 90 calendar days to issue the corresponding secondary legislation.
• The amendment of Article 28 of the Constitution of Mexico, which decrees, among other things, the elimination of COFECE and IFT, will come into force 180 days after the secondary legislation on competition and market access, as well as telecommunications and broadcasting, is enacted by the Congress to carry out the authorities set forth in the amended Article 28. In this case, no deadline has been set for the Congress to issue the corresponding secondary legislation..

Additional remarks on economic competition / telecommunications and broadcasting:

• According to the Decree, the agency of free competition and market access will have legal personality and its own assets, will be endowed with technical and operational independence in its decisions, organization, and functioning, and the separation between the investigative body and the one that resolves procedures within the agency shall be guaranteed. With this, it is feasible to assume that the new competition agency: (i) will be a decentralized agency of the Federal Public Administration; and (ii) will maintain an operational model similar to COFECE, with the exception that it will be overseen by the Ministry of Economy and will not be headed by a collegiate body (the Plenum).
• The authorities of economic competition to regulate asymmetrically the participants in the telecommunications and broadcasting markets, which previously belonged to IFT, will now belong to the new agency of free competition and market access. Thus, the Decree grants the new competition agency all the authorities of economic competition, including those related to telecommunications and broadcasting, allowing the new telecommunications and broadcasting agency to focus on its direct authorities, which mainly involve the regulation, promotion, and supervision of the use, management, and exploitation of the radio spectrum, networks, and the provision of broadcasting and telecommunications services, as well as access to active and passive infrastructure and other essential inputs.

If you have any questions or require advice regarding the Decree, its interpretation, or the analysis of present or estimated consequences, our team of experts is at your service.

Paul Kavanagh: paul@k-g.com.mx

Patricio Gorozpe: patricio@k-g.com.mx

Yakov Kobets: ykobets@k-g.com.mx