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 Business News | November 2007 
Mexico Begins Antitrust Probe of Mobile-Phone Market
 Adriana Arai & William Freebairn - Bloomberg
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| | Carlos Slim, 67, amassed his fortune building a tele-communications empire across Latin America. He is worth $59 billion and tied for first place as the world's richest person with Microsoft Corp.'s Bill Gates, according to Forbes magazine. |
Mexico's antitrust regulators started an investigation of market dominance in the country's mobile-phone industry, challenging the power of billionaire Carlos Slim's America Movil SAB.
The Federal Competition Commission is reviewing the market for completing calls to and from mobile phones, the agency said in an e-mailed statement today. The statement didn't identify any company by name. America Movil, which helped make Carlos Slim one of the world's richest men, controls three- quarters of Mexico's wireless market.
The probe is a renewed attempt to curb Slim's market power, 17 years after he bought a national phone monopoly from the government. President Felipe Calderon, who vowed to make Mexico more competitive and boost job growth when he took office last year, told Slim at a public event in March that consumers must be given more choice.
"There's more political interest now to foster competition in telecommunications," analyst Manuel Jimenez Zaldivar, who covers phone companies for IXE Grupo Financiero SA in Mexico City, said in a telephone interview before the announcement.
The investigation responds to complaints from local and long-distance providers that the fees they pay America Movil and other mobile-phone operators to connect calls to their wireless customers are too high, the antitrust commission said today. Mexico's Ministry of Communications and Transportation can set rates for calls between companies deemed dominant and their smaller rivals, the commission statement said.
Agency Statement
The vote to begin the investigation and authorized the collection of needed documents "should not be taken as a prejudgment that any economic agent has substantial power in the market," the commission said in a statement on its Web site.
Lack of competition in the telecommunications, energy, transportation and financial-services industries is stifling Mexico's growth and hurting consumers, antitrust chief Eduardo Perez Motta said at a conference in October.
Mexico's $839 billion economy expanded 2.8 percent in the second quarter, lagging behind Brazil's 5.4 percent increase and Argentina's 8.7 percent advance.
America Movil fell 89 centavos, or 2.8 percent, to 30.90 pesos at the close of Mexico City trading. Investors anticipated the probe after newspaper El Semanario reported Nov. 23 that regulators would announce the formal investigation of America Movil and fixed-line telephone company Telefonos de Mexico SAB, also controlled by Slim.
America Movil spokeswoman Patricia Ramirez declined to comment on the investigation.
Telecom Empire
Slim, 67, amassed his fortune building a telecommunications empire across Latin America. He is worth $59 billion and tied for first place as the world's richest person with Microsoft Corp.'s Bill Gates, according to Forbes magazine.
Perez Motta and central bank Governor Guillermo Ortiz have said in speeches in the past two years that rates charged by Telefonos de Mexico and the Telcel unit of America Movil are among the highest in the 30 countries that make up the Organization for Economic Cooperation and Development.
Telefonos de Mexico, also known as Telmex, disputes that claim, saying the study adjusts prices for the purchasing power of each country. Without the adjustment, the company says its rates are among the cheapest.
The probe will test a new antitrust law enacted last year that gave regulators more power. Telmex has overturned every antitrust ruling in the courts since Slim gained control, including one in 1997 that declared the company dominant.
Telefonica Seeks Entry
Telefonica SA, Slim's biggest rival in Latin America, wants to use antitrust laws to enter the fixed-line phone business in Mexico as a prelude to introducing high-speed Internet and television services. Telefonica filed complaints against Telmex and America Movil last week with the antitrust agency, the Spanish wire service EFE reported.
The antitrust commission may announce an investigation of fixed-line telephone practices in the coming days, Jimenez Zaldivar said.
"What Mexico needs is a more focused and specific set of regulations, without the legal loopholes we have seen companies use," Jimenez Zaldivar said.
To contact the reporters on this story: Adriana Arai in Mexico City at at aarai1@bloomberg.net; William Freebairn in Mexico City wfreebairn@bloomberg.net. |
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