Private Enterprise and Financial Markets > Infrastructure and Financial Markets > Infrastructure > Energy
The Structure of Natural Gas Markets in Argentina and Antitrust Issues in Regional Energy Integration
By Diego Bondorevsky, Diego Petrecolla (12/01, IFM-131, En)
During the last two decades, Latin American countries have brought about important reforms in infrastructure services, encompassing changes both in ownership patterns and in operating terms. Regulatory frameworks have also evolved from monopoly and public ownership settings lacking specific regulations, towards scenarios where private participation prevails, with competition and regulation playing complementary roles. However, even though competition is a pivotal feature to all public services reform processes, a high degree of vertical and horizontal concentration pervades within the industrial structure of many of the countries in Latin American and the Caribbean. Furthermore, mergers and acquisitions taking place in the context of an increasingly global economy, without the appropriate legislation and accounting rules geared at promoting competition and restraining market control, have often led to reduce levels of competition for the market or in the market.
This article discusses to what extend the gas industry structures of Brazil and Argentina, controlled by a state-owned company and a private company, prevent an effective regional integration of gas markets. In order to move forward in developing these markets and speeding up investment in new transportation networks, the authors recommend three short-term measures. The first measure is to ensure that the divestment of assets that YPF pledged to carry out is indeed completed. The second measure is to guarantee that the natural gas production from Bolivia and Peru is not cornered or monopolized by large incumbent actors. The third step is for national and regional antitrust agencies to closely examine the impact of alliances between the dominant actors. Traditional competition tools, as those prohibiting anti-competitive agreements, or abusive exploitation of market power are required. However, appropriate regulations are crucial for ensuring that prices and access to essential facilities are nondiscriminatory and fair. The article is part of the set of publications included in the Competition Program.
Last updated: 02/26/07
