Mexico: Mexico’s Largest Mobile Operator Proposes A Settlement To Enhance Competition Leading Mexico’s Antitrust Authority To Repeal Its Historic Fine

Last Updated: 24 May 2012
Article by Tad B. Lipsky and Maria Fehretdinov

Last Thursday, Mexico's antitrust commission repealed its largest fine ever issued—a US$925 million fine against Telcel, a communications company that controls approximately 70 percent of the Mexican mobile market with 66.7 million wireless subscribers.1 The Federal Competition Commission (CFC), initially imposed this fine on April 7, 2011, after a six-year investigation into Telcel.2 Authorities believed that the company was using its market power to displace competitors by imposing high interconnection charges on its twenty rival competitors in order for them to access Telcel's wireless network.3 The CFC alleged that the mobile company was engaging in a margin squeeze, by charging high wholesale prices for interconnection while instituting low retail pricing, in violation of Article 10 of the Mexican Competition Law. The CFC alleged this conduct raised costs for downstream rivals and drove out competitors.4 Telcel responded that the interconnection rates had been freely negotiated by the parties in contracts overseen and approved by Mexican telecommunication regulators,5 and appealed the fine. On appeal, Telcel proposed a settlement agreement which the CFC accepted on the premise that the terms of the agreement will more effectively benefit competition than imposing a massive fine against the company.6

The settlement consists of five conduct remedies designed to ensure that "the size of Telcel's network isn't used to sideline competitors," the CFC explained.7 Telcel agreed to reduce the amount it charges on incoming calls by billing to the second, rather than rounding up to the minute. In addition, the company will reduce its interconnection rates by 62 percent, from seven cents to two cents per minute. Telcel also agreed to offer equal interconnection rates to all operators and charge its customers the same amount for calls within its network as it does for calls to its competitors' networks. Telcel will maintain these rates through 2014, at which time the company will work with regulators to further reduce its fees. Failure to comply with the terms of the agreement can result in a fine of up to eight percent of Telcel's annual revenue. The CFC estimated that inflated interconnection rates were costing Mexican consumers up to $US6 billion per year, so the settlement will lower these rates while also protecting legitimate business practices.8 Telcel did not admit any anticompetitive wrongdoing, nor did the regulator find such, in executing the settlement.

The pricing relief included in the settlement is an extraordinary antitrust remedy. Most antitrust remedies focus on improving competitive processes and opportunities, which thereafter can affect pricing, but do not tend to govern pricing itself because of substantial monitoring costs and the risk that such behavioral remedies will restrain potentially procompetitive behavior, lead the firm to cut back on productive investments and/or prevent the firm from responding effectively to changing market conditions.9 By regulating price directly as part of this remedy, the CFC seems to have set such doubts aside and created a precedent for resolving future enforcement actions with pricing commitments. The ultimate fate of the remedies adopted in this specific case should be a subject of intense interest by antitrust enforcement agencies worldwide, since similar issues—both substantive and institutional—tend to arise in many industries and in many different jurisdictions.

The settlement, which was executed just days before Mexico's first presidential debate for the July general election, was negotiated after Mexico's sweeping reforms of its competition laws. Following the Mexican competition authorities' pledge to enhance the competitive environment in the telecommunications market, Congress and the Supreme Court strengthened penalties in this arena.10 In April 2011, Mexico's Congress approved a tough new antimonopoly law that raised fines for monopolistic practices and instituted prison terms for executives in violation of the competition laws.11 Last May, the Supreme Court banned América Móvil from suspending the Federal Telecommunication Commission's (Cofetel) imposition of lower interconnection fees by filing for an injunction and ruled that Cofetel's tariffs would be in effect during such pending litigation.12 Notwithstanding this aggressive enforcement environment, Mexico's enforcers declined to impose the maximum possible penalties against Telcel or its parent company América Móvil, which has 225 million subscribers in 18 countries.


1 Comisión Federal de Competencia México, Impone CFC a Telcel Compromisos Para Reducir Tarifas de Interconexion en Beneficio de los Consumidores, CFC-10-2012 (May 3, 2012), .

2 Comisión Federal de Competencia México, Resolución del Pleno de la Comisión Federal de Competencia, DE-37-2006, Apr. 7, 2011, .

3 Id.

4 Diario Official de la Federación (Mex.), translated in Federal Law of Economic Competition (Dec. 24, 1992), , modified in Diario Official, 10 de mayo 2011, .

5 Supra note 2.

6 Supra note 1.

7 Id.

8 Supra note 1.

9 See e.g., generally Antitrust Division Policy Guide to Merger Remedies, U.S. Dep't of Justice, Antitrust Division (October 2004), at

10 Comisión Federal de Competencia México, Recomendaciones para promover un marco regulatorio más favorable a la competencia en la interconexión entre redes de Telecomunicaciones (June 2009),

11 See Maria A. Fehretdinov & Abbott B. Lipsky Jr., Mexico's Tough New Approach To Antitrust Enforcement, Law360, June 6, 2011, .

12 See Suprema Corte de Justicia de la Nación, (last visited May 8, 2012). Under Mexico's telecommunication laws, if operators are unable to agree on an interconnection rate, Cofetel can intervene and set the rate. Yet, by challenging the regulator's actions, América Móvil could suspend the imposition of Cofetel's lower interconnection tariffs until after the litigation had ended.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.