Federal Competition Commission ("CFC") has revoked a
fine of approximately US $1 billion that it had imposed on Mexican
telecommunications company Radiomóvil Dipsa, S.A de C.V.
(Telcel), a subsidiary of América Móvil, owned by
Mexican billionaire Carlos Slim.The revocation resulted from Telcel
having agreed to comply with certain commitments, including
suspending the conduct that led to the CFC investigation and
decision to fine, taking advantage of a peculiar feature of Mexican
In April 2011, the CFC decided to fine Telcel for monopolistic
conduct in how it charged competitors for terminating their calls
on the Tecel mobile telephone network. The CFC action resulted from
a complaint filed in 2006 by Axtel, Alestra, Marcatel, Megacable,
Protel and Telefónica. The CFC determined that Telcel had
increased its competitors costs by fixing an interconnection fee
(off-net) that was higher than the fee charged on calls in its own
network (on-net) and higher than charges to its own users.
The US $1 billion fine, the largest ever imposed by CFC, was
equivalent to 10% of the value of Telcel's assets.
In 2011, Telcel filed with the CFC a petition for reconsideration
and, according to a just-released report from CFC, Telcel agreed
to assume certain commitments, including not engaging in any
monopolistic practice, suspend any such practice that might be
ongoing, and reduce interconnection fees based on a model proposed
by the Mexican Telecommunications Commission. In particular, Telcel
Reduce its interconnection fee.
Offer the reduced interconnection fee to any provider that
Desist from any legal action regarding interconnection fees
against the Mexican Telecommunications Commission.
Offer plans and promotions, including more flexible use of air
Provide CFC with all information needed to verify compliance
with the commitments.
The CFC report also indicates that, if Telcel breaches any of
these commitments, the CFC will be entitled to impose a fine of up
to 8% of Telcel's annual revenues. The report states that the
commitments resolve, in an efficient, durable, and continuous
manner, one of the main competition issues in this market: the high
interconnection fees that have inhibited the capacity of smaller
networks and forced users to pay artificial prices. According to
the report, this is the first time Telcel has accepted a
governmental resolution on interconnection fees. It observes that
one of the purposes of the recent amendments to Mexican Competition
Law is met, since fines are intended to dissuade agents from
engaging in unlawful practices. CFC also mentions that the expected
annual economic benefits for consumers will far exceed the amount
of the fine.
Mexican Competition Law allows companies to avoid penalties imposed
by the CFC by making such commitments, but this benefit can be
claimed only once every five years. This benefit is available
before the CFC issues a final resolution in its investigation, and
it requires that the company determined to have violated the merger
or monopolization rules submit a written commitment agreeing to
suspend, cancel or correct the allegedly illegal action. According
to the Law, the request must substantiate that the commitment has
the potential to restore free competition and that the proposed
means are appropriate. If the CFC is satisfied, it may revoke the
fine. However, private parties injured by the alleged violation
still have a right to seek payment of damages from the alleged
violator of the Law. If within the next 5 years Telcel enters into
a merger or engages in a monopolistic practice in violation of the
Law, for which the CFC decides to impose a fine, Telcel could not
again seeks to revoke the fine by agreeing to suspend the
The telecommunications market in Mexico is complex, and despite the
revocation of the fine, the CFC's actions here reinforce the
CFC's commitment to challenge monopolistic practices and
promote free competition. Avoiding a fine by making commitments to
correct the conduct is a "benefit" that may only be
claimed once every five years according to Mexican Competition Law,
Telcel therefore will have to be cautious about future activities
to avoid being fined again by CFC.
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