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Jose Prado is a Partner for Holland & Knight's
Mexico City office
Carlos Ochoa is a Partner for Holland & Knight's
Mexico City office
Alberto Arteaga is an Associate for Holland &
Knight's
Mexico City office
Lilia Palma Salas is an Associate for Holland &
Knight's
Mexico City office
One of the purposes of the 2013 Amendment to the Mexican
Constitution was to promote competition in telecommunications and
broadcasting services. As part of the reform, the Federal
Telecommunications Institute, or Instituto Federal de
Telecomunicaciones (IFT), was created as a constitutional
autonomous organization at the same level of the executive branch
and to independently rule both the telecommunications and
broadcasting sectors with technical and antitrust authority. A new
Telecommunications and Broadcasting Law also was enacted, along
with secondary regulations.
Under Transitory Articles Four and Eight of the constitutional
reform, IFT declared "preponderant agents" in
telecommunications and broadcasting sectors as being those that,
directly or indirectly, had market share of greater than 50 percent
of users, subscribers, audience, net traffic or used capacity.
As a consequence of the declaration, and to ensure a competitive
market, IFT has the ability to impose asymmetric regulation on
preponderant agents related to information, quality of services,
exclusive agreements, terminal equipment, tariffs and unbundling of
local loop, as well as accounting, functional or structural
separation.
Federal Court Resolutions on Preponderance
In February 2017, Mexico's Federal Courts that specialize in
Antitrust, Broadcasting and Telecom issued several resolutions on
preponderance for the telecommunications sector. In general, the
courts resolved a number of issues.
Preponderance declaration and asymmetric regulation are not
penalties but regulatory decisions.
Asymmetric regulation must allow preponderant agents to
continue in the market and obtain a reasonable return of
investment.
Asymmetric regulation by the antitrust agency (IFT) is not
subject to constitutional control but to public policy evaluation.
However, it is also subject to the same law provisions as any other
act of authority.
Transitory articles of the Mexican Constitution are not subject
to amparo injunctions, as they are also part of the
Constitution.
Concessions cannot be revised to impose obligations that affect
in a disproportionately or unjustified manner the rights and assets
of holders.
Preponderance proceedings are subject to administrative
proceeding law and not to competition law, as it is an
extraordinary proceeding ordered by the Mexican Constitution.
Revisions imposed to concessions by preponderance (asymmetric
regulation) does not breach the legal principle of applying the law
backwards, as such proceeding comes from the Constitution.
The opinion of the Ministry of Communications is not necessary
for declaring preponderant agents.
These resolutions not only provide guidance regarding the
Federal Courts' position on preponderance in the
telecommunications sector but also provide valuable precedents for
other legal areas related to broadcasting, subscription-based
television and services, revisions or renegotiations of
concessions, antitrust issues and constitutional construction.
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.
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