FTC looks to block Claro/Digicel merger

4 Jan 2012

Jamaica’s Fair Trade Commission (FTC) has filed a lawsuit with the High Court seeking to scupper the planned merger of wireless operators Claro Jamaica, a subsidiary of Mexican telecommunications powerhouse America Movil (AM) and Digicel Jamaica, part of the pan-Caribbean Digicel Group. The FTC believes that the merger will seriously hinder competition and will have an adverse effect on customers. The FTC is seeking an injunction to block the merger, as well as a fine of USD5 million to Digicel Jamaica for breaching the Fair Competition Act.

The merger is part of a larger deal between the two groups announced in March 2011, in which AM would acquire Digicel’s operations in Honduras and El Salvador, with Digicel taking control of AM’s Jamaican arm. The swap received approval in Jamaica in August 2011, when Prime Minister Bruce Golding gave the companies the green light. In order to safeguard competition, Golding promised to fast-track legislation to amend the Telecommunications Act. In addition, Digicel was instructed to maintain both sets of network infrastructure, and each network would still need to meet the coverage requirements of the respective concession agreements.

The country’s third wireless operator, UK-based LIME Jamaica objected to the merger, claiming that the PM has overstepped his authority and that the decision would have a negative impact on the industry. LIME took legal action to overturn the approval, but the case was rejected on the grounds that the court did not have the power to dictate the actions of regulatory authorities.

Jamaica, America Movil Jamaica (Claro), Digicel (Jamaica), LIME Jamaica