Mexico’s Supreme Court blocks injunctions aimed at delaying regulation

4 May 2011

Mexico’s Supreme Court has ruled that Telcel, the local mobile subsidiary of Latin American telecoms giant America Movil (AM), cannot utilise court injunctions to suspend the effects of rulings by the country’s telecommunications regulator while they are being challenged by phone operators. According to the Wall Street Journal, AM, which is controlled by Mexican billionaire Carlos Slim, saw the Supreme Court vote in favour of the new measure six to four, and the decision is widely expected to create a more competitive environment in the Mexican mobile sector, which has long been dominated by Telcel, by forcing the latter to charge rivals lower rates to complete calls on its network. In response Telcel said that it respects the court’s decision, but noted that any legal cases that were currently ongoing would continue to be fought.

The development comes in light of continued criticism that Slim’s companies have often used the country’s legal system to hinder regulation, with interconnection fees highlighted as a notable example. Under the country’s existing legislation if operators are unable to agree on an interconnection rate then regulator Cofetel is permitted to intervene and set the price. However, in instances where this has happened Telcel has often challenged the regulator’s decision in court, obtaining injunctions that, in essence, allowed it to ignore the Cofetel-set rate until the legal case is concluded. The Organisation for Economic Cooperation and Development (OECD) in a recent letter to Cofetel, pointed out the issue, stating: ‘In Mexico, there is a surprisingly high number of appeals that result in suspending the application of a regulatory decision … In this context, Mexico is a unique case in the OECD.’