(Adds company responses in paragraphs 5-6)

MEXICO CITY, Jan 10 (Reuters) - Mexico's antitrust authority said on Wednesday it was investigating the country's freight rail transportation market amid government plans to build out railway infrastructure.

Without mentioning any companies by name, the antitrust watchdog Cofece said there were elements suggesting the "absence of competitive conditions" in the industry.

Mexico's rail sector, which moves a quarter of the total merchandise transported by land, is dominated by Canadian Pacific Kansas City (CPKC) and Grupo Mexico's transport unit.

In a statement, Cofece said that nearshoring - the trend of moving manufacturing from Asia to Mexico to be closer to the United States - meant that guaranteeing price conditions was "essential."

Canadian Pacific Kansas City's local affiliate said in a statement it would "fully cooperate" with the investigation, but that it does "not anticipate that this investigation will have a significant effect" on its operations.

Grupo Mexico Transportes declined to comment.

In 2021, Cofece said Mexico's railroads were nearly entirely managed by three groups: Grupo Mexico held 56% alongside its Ferromex and Ferrosur units; Kansas City Southern (now called CPKC) had 24%; and state-owned Ferrocarril del Istmo had 12%.

Cofece said the investigation period will take between 30 days and 120 business days, and may be extended up to two times.

In November, the government published a decree that gives preference to trains transporting passengers over those transporting freight on railways under concession.

Freight train companies have until Jan. 15, 2024, to submit proposals of how their railways can be adapted to offer passenger transportation. (Reporting by Noé Torres; Editing by Alistair Bell and Tom Hogue)