ICE hit with USD4m fine for anti-competitive offer

29 May 2015

Costa Rican telecoms regulator Superintendencia de Telecomunicaciones (Sutel) has fined state-backed operator Grupo Instituto Costarricense de Electricidad (Grupo ICE), which offers telecom services under the Kolbi brand, for ‘a very serious infringement’ of anti-monopoly rules in the mobile market in 2011-2012. Kolbi has been issued a fine of CRC2.158 billion (USD3.965 million), equivalent to 0.58% of the group’s mobile turnover in the most recent fiscal year, for the infraction. The telco was accused of margin squeezing through its pre-paid ‘Chip Extremo’ promotion, which offered customers free bonus minutes. According to Sutel, the service was offered in November and December 2011 and October and November 2012 and had an anti-competitive impact on the basis that ‘if competitors had wanted to match the offer within the prescribed period, [they] would have incurred economic losses.’

Elaborating on the decision, El Financiero quotes Sutel president Gilber Camacho as saying: ‘What matters is the time [it] made the promotion, when Claro and Movistar were entering [the market], as it constituted a barrier to entry.’ The official added that the regulator had received a complaint from Movistar in December 2011 pointing out that the promotion lowered the per-minute cost of calls below Sutel’s minimum rate, and below the established interconnection rate, so that newcomers Claro and Movistar could not afford to replicate the offer without suffering a loss. As an example, Movistar noted that, with the bonus, a CRC1,500 top-up would provide CRC7,500 of credit, or 221 minutes of calls. Considering the amount actually paid by the customer, the per-minute cost of a call falls to just CRC6.8 per minute – compared to an interconnection charge of CRC17.95 per minute, and Sutel’s tariff floor of CRC34.

For its part, ICE has denied any wrongdoing, saying that: ‘Given…the complexity of the resolution, ICE is proceeding with legal analysis to determine appropriate action.’ Sutel has given the operator three business days in which to file an appeal.