Mexico Antitrust Regulator Responds To Telcel Over $1 Billion Fine
April 27 2011 - 3:21PM
Dow Jones News
Mexico's antitrust regulator responded Wednesday to comments by
America Movil SAB (AMX.MX, AMX) unit Telcel against a $1 billion
fine that the competition watchdog imposed on the grounds that the
mobile operator uses its market weight and high interconnection
fees to displace competitors.
Eduardo Perez Motta, president of the Federal Competition
Commission, or CFC, said in an emailed statement that, by charging
competitors high rates to terminate calls on its network, Telcel
pushes their costs up and maintains its ability to charge high
rates to its own customers.
Telcel said Tuesday that it will appeal the ruling and fine,
which it described as "arbitrary, biased, opportunistic and
excessive."
The company, which has about 70% of the country's 91 million
mobile users, said it has never been investigated or faced
sanctions for practices of the kind for which it is being fined,
and "so there is no repeat offense," which the commission cited in
imposing the maximum penalty allowed.
Perez Motta said the size of the fine was based on the size of
the estimated damage to consumers--$6 billion a year--caused by
interconnection rates. "The fine is big because the damage is big,"
he said.
The regulator said it was "tempting, but unsustainable" to
interpret the fine as politically motivated or a move in favor of
the country's broadcasters--Grupo Televisa SAB (TV, TLEVISA.MX) and
TV Azteca SAB (AZTECA.MX)--which are in dispute with America Movil
and other companies controlled by Carlos Slim over advertising
rates and mobile interconnection.
He said the CFC supports allowing Telefonos de Mexico SAB (TMX,
TELMEX.MX), which is 60% owned by America Movil, to compete in the
pay-television market, and will back any plans for a third
nationwide broadcast network. Currently, Televisa and TV Azteca
split the free-to-air television broadcast market about 70%-30%.
Telmex, meanwhile, is still seeking government authorization to add
television to its services.
In a separate statement, the CFC insisted that Telcel is a
repeat offender, citing a previous fine against the company for
"relative monopoly practices," although these practices weren't
identical to the current case.
A coalition of smaller phone companies has joined forces in
efforts to bring down Telcel's interconnection fees from their
current 95 Mexican cents (8 U.S. cents) per minute. That fee was
agreed by Telcel, Telmex, and Telefonica SA (TEF), but many
operators have rejected it as too high.
The CFC said there are 41 disagreements against interconnection
rates filed with the telecommunications regulator Cofetel, and that
Telcel has systematically taken court action against Cofetel's
interconnection rulings. Cofetel recently set a rate of 39 Mexican
cents per minute between Telcel and fixed-line operator
Alestra.
-By Anthony Harrup, Dow Jones Newswires; (5255) 5980-5176,
anthony.harrup@dowjones.com
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