MEXICO Law and Practice Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
1.4 Sale of Power Industry Assets The sale of power assets or businesses is sub- ject to regulatory authorisations, as well as pre- merger control clearance. The LESE (and its rele- vant regulations) governs the transfer of permits, while the Federal Law of Economic Competition (LFCE) establishes the relevant rules and proce- dures on merger control. From a regulatory standpoint, the CNE has authority to approve or deny the assignment of power generation, storage or supply permits, or changes of control within permit holders. It is worth noting that power activities (including fuel supply) are subject to strict legal separa- tion requirements, which are designed to pre- vent vertical integration that could distort market dynamics and free competition principles. On the antitrust front, the sale of power assets may be subject to approval by the federal anti- trust agency. Thresholds are determined based on the value of the transaction and/or the par- ties’ market power, as established in the LFCE. The Mexican legal regime on economic compe- tition is also undergoing material changes due to the replacement of the Federal Economic Competition Commission (COFECE) (as an independent antitrust agency) with a new public instrumentality under the Ministry of Economy, which will have authority on economic competi- tion matters. These changes are also expected to bring about substantive amendments to the rules governing monopolistic practices, pre- merger control procedures, investigations and sanctions against market participants. 1.5 Central Planning Authorities SENER is the policy maker in charge of strategic planning in the Mexican power sector.
remain under the exclusive authority of the State. Foreign investors benefit from both local and international protections against government actions, such as seizure, confiscation, expro- priation or other regulatory measures affecting their assets. Locally, foreign investors may resort to admin- istrative courts to seek relief. Internationally, foreign investors are (typically) protected under the relevant bilateral investment treaties (BITs) executed and ratified by Mexico, which provide access to investor-state dispute settlement mechanisms. Mexico has ratified more than 40 BITs and has recently ratified its adherence to the ICSID Convention. The protections granted to foreign investors in Mexico under such BITs are usually the same – ie, fair and equitable treat- ment, national treatment, most-favoured nation clause, performance requirements and expro- priation (whether direct or indirect). Despite not being party to the ICSID Conven- tion until recently, Mexico has been a prominent participant in international investment arbitra- tion, with approximately 22 procedures (most of them governed by Chapter XI of the North American Free Trade Agreement). The international investment protection obliga- tions assumed by Mexico provide foreign inves- tors a number of benefits and remedies intended to secure the legal certainty of their investments in Mexico; however, the scope and applicability of these protections may vary depending on the specific structure, nationality, and characteris- tics of each investment.
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