Cofeco confirms, details USD1 billion Telcel fine

26 Apr 2011

The Mexican antitrust agency, the Federal Competition Commission (Cofeco) has confirmed that it has fined Telcel, the local wireless unit of Latin American telecoms giant America Movil (AM), and revealed further details of its judgement, while also stating that the MXN12 billion (USD1 billion) penalty is the largest ever levied in its 18-year history. According to the Associated Press, Cofeco reiterated that it had found Telcel as having engaged in ‘relative monopolistic practices’ by overcharging its competitors to connect calls to Telcel subscribers, with the regulator claiming that Telcel charged its rivals higher interconnection rates than those related to connecting calls between its own clients. Further, Cofeco went as far as noting that the interconnection rate for other operators was, in fact, higher than the full price Telcel charged its subscribes to make a call. According to Cofeco, Telcel abused ‘its substantial power in the market to unfairly displace its competitors and thus affect the competition process in the landline and cellphone markets, hurting the consumer.’

The fine, the watchdog confirmed, is the highest it can levy – 10% of the company’s assets – due to the fact that Telcel is classified as a repeat offender. In making its decision regarding the fine, Cofeco said that it had taken into account the seriousness of Telcel’s practice, how intentional it was, the duration of the practice and Telcel’s share of the market. The decision itself resulted from an investigation first started back in 2006 at the request of operators such as Axtel, Megacable and Telefonica. The market’s largest mobile operator, Telcel has now been given 30 days to appeal the fine, while Cofeco has also given the cellco the same amount of time to detail how it intends to change its practices. Unsurprisingly perhaps, AM has said it is examining all options for appeal.

Mexico, Radiomovil Dipsa (Telcel)