AHISA

MEXICO, 2002

The Ministry of Finance and Public Credit published an announcement for a public bidding to engage the capital share of Aseguradora Hidalgo (AHISA), property of the Federal Government and Petroleos Mexicanos. In compliance with the bidding bases, Mapfre America Vida, Seguros Inbursa and Fianzas Guardiana Inbursa Group, Ausa Holding Company, and MetLife and MetLife International Group notified to FCC their intention to participate in the bidding.

In the investigation, the FCC determined that the regulatory framework for the insurance market in Mexico includes the Acquisitions, Leasing and Public Sector Services Law, which establishes that all contracts to acquire goods and services from the Public Sector must be through bidding. However, article 1 of this Law, establishes an exception to this rule when the contract is carried out between two entities of the Public Administration. This exception gave AHISA a preference for hproviding collective insurance for the public sector.

The relevant market was collective, individuals and group modality life insurance, such as accidents, damage, illness, and pension. This market has experienced a substantial transformation in the last years, due to the increase of competitors, the privatization of a government firm, and new entrance following the implementation of NAFTA and EU� FTA.

Following the privatization of AHISA, the public sector will have more options when hiring collective insurance for its employees. The FCC also estimates that concentration indexes will decrease as insurance contracts for the public sector expire. Moreover, AHISA will loose exclusivity and preference benefits as a result of the privatization due to the fact that future insurance contracts for the public sector will have to be assigned through annual biddings.

The FCC determined that AHISA did not have substantial market power in the relevant market over any of the participants in the bidding. The bidding eliminates entry barriers and also increases foreign investment in the relevant market. As a result of the analysis, the FCC granted favorable opinion to each participant in the bidding.