Mexico - Competition authority has fined Telcel USD 1 billion for unfair practices

[AP] Mexico's antitrust agency confirmed Sunday that it levied a $1 billion (12 billion peso) fine against the Mexican cellphone subsidiary of tycoon Carlos Slim and ordered it to stop unfair practices.

The Federal Competition Commission said it found that Slim's Telcel business engages in "relative monopolistic practices" by overcharging competitors to connect calls to Telcel users.

The fine against Telcel is the maximum penalty possible — 10 percent of the company's assets because it is a repeat offender, the agency said in a statement. It gave Telcel 30 days to say how it will change its practices. Telcel also has 30 days to appeal.

Slim's telecom company, America Movil, revealed the fine April 15. It said it was studying all options for appeal.

A commission official said the fine is the largest ever levied by the 18-year-old watchdog agency and was made possible by a 2006 reform that raised fines for repeat offenders.
The agency's statement said Telcel charges competitors higher interconnection rates to call Telcel users than it does to connect calls between its own clients. The interconnection rate is even higher than the full price Telcel charges its users to make a phone call, the commission said.

Telcel engages in relative monopolist practices "by abusing 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 statement said.

The commission said that in setting the fine it took 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 resulted from an investigation begun in 2006 at the request of competitors such as Axtel, Megacable and Telefonica.

"The competition problems associated with high interconnection fees in Mexico generate losses of $6 billion each year to consumers," the commission said.
Telcel's parent company, America Movil, is the largest provider of wireless telephone service in Latin America, with 225 million subscribers. Its 2009 revenue totaled $30 billion.

Named the richest man in the world by Fortune magazine, Slim, 71, also controls Mexico's dominant landline phone company, Telmex. He is estimated to be worth $74 billion, with holdings in communications, retail, manufacturing, oil and construction. Some of his companies have come under various allegations of monopolistic practices in the past.


Mexico agency confirms $1B fine for Slim's company