Cofeco withdraws Telcel fine in return for competition commitments

4 May 2012

Mexico’s Comision Federal de Competencia (Cofeco) has reportedly reversed its decision on the record USD1 billion fine it had levied against the country’s largest cellco by subscribers, Telcel. As previously reported by CommsUpdate, the mobile operator, a subsidiary of Latin American telecoms giant America Movil (AM), was handed the financial penalty in April 2011 after the watchdog found that it had engaged in ‘relative monopolistic practices’ by overcharging its competitors to connect calls to Telcel subscribers; Cofeco at that date claimed that Telcel charged its rivals higher interconnection rates than those applied to connecting calls between its own clients.

In the latest development the Wall Street Journal reports that, in exchange for the fine being withdrawn, Telcel has agreed to a number of commitments aimed at ensuring that it does hinder competition in the wireless sector in the future. Among the five requirements laid out by Cofeco most notable perhaps is the call for Telcel to continue the reduction of its mobile interconnection rate, with the cellco understood to have agreed to offer lower rates to all operators. Further, it will work with regulators on further rate reductions after 2014, and has agreed to drop any outstanding lawsuits against interconnection rulings. Among the other commitments made, Telcel will reportedly offer tariffs with identical charges for calling numbers both on its own network and on those of other operators, with Cofeco noting that such calling plans will help in ‘balancing conditions between Telcel and its competitors, and making sure the size of Telcel’s network isn’t used to sideline competitor.’ According to the report, should Telcel fail to comply with any of the terms of the agreement it may face a fine of up to 8% of its annual revenue.

The regulatory decision is understood to have been made unanimously by the Cofeco board.

Mexico, Radiomovil Dipsa (Telcel)