Mexico’s Antitrust Watchdog Targets Gruma for Dominating Corn Flour Market

Mexico’s antitrust authority, Cofece, has flagged corn flour and tortilla manufacturer Gruma for having too much market power, leading to higher prices for consumers. In a preliminary decision announced on Monday, Cofece concluded that the market for corn flour is not competitive, which is crucial for Mexico’s economy and the price of tortillas.

Corn tortillas are a dietary staple for 70% of Mexicans, making up about 6% of household food budgets. Cofece’s findings revealed that Gruma controls between 50% and 90% of corn flour sales in eight regions across the country. To improve competition and reduce prices, Cofece recommended that Gruma sell five of its corn flour plants and stop certain business practices that hinder tortilla makers from changing suppliers.

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The investigation showed that Gruma holds a significantly larger share of the corn flour market than any other competitor, being 22 to 80 times bigger than its nearest rival in those regions. Additionally, Gruma’s average prices are nearly 10% higher than those of its national competitors. Following the announcement, Gruma’s shares dropped over 6%.

In response, Gruma stated that it has cooperated fully with Cofece and has always acted lawfully. The company mentioned that since the ruling is still preliminary, it cannot predict the final outcome of the case.

The probe looked into the distribution, marketing, and related services of corn and corn flour. Gruma and other involved parties will have the chance to present their arguments before the final decision is made. For now, Gruma is not required to take any immediate action.