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 News Around the Republic of Mexico | February 2008 
Mexico Widens Monopoly Probe of Slim's Telecoms
 Chris Aspin - Reuters
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| | Carlos Slim (Imperio Reséndiz/Presidencia de la República) | | |
Mexico City - Mexico's antitrust watchdog widened a probe on Wednesday into monopolistic practices by telecommunications companies owned by billionaire Carlos Slim.
The Federal Competition Commission said it is starting an investigation into the interconnection services of fixed-line networks, a thinly veiled reference to Slim's Telmex, which has around 90 percent of Mexico's 20 million fixed-line telephones.
It is the seventh investigation against Slim companies in the last three months. Six are looking into "dominance" issues involving Telmex, or Telefonos de Mexico. The other is against his cell phone company, America Movil, and its interconnection fees. America Movil provides service to seven out of every 10 mobile phones in Mexico.
Telmex was declared "dominant" several years ago by antitrust regulators, but Slim was able to have that ruling overturned in Mexican courts.
The probes come after promises by President Felipe Calderon to boost economic growth by improving competition in key sectors of the economy such as telecommunications. Economists say Mexican growth is hampered by high costs for telephone and Internet services.
Competitors have complained to the anti-monopoly commission that Telmex (TMX.N)(TELMEXL.MX) and America Movil (AMXL.MX)(AMX.N) wield too much power in their markets, which hurts competition.
In a statement in the government's Official Gazette, the competition commission said it started the probe after it received a "formal complaint."
Slim's companies were not immediately available for comment, but in the past have defended their market shares by saying they invest more than rivals and also provide services in non-profitable rural areas.
Slim bought Telmex from the government in 1990 and spun off America Movil in 2000. Fortune Magazine has called him the world's richest man, with a fortune of $59 billion. But given his wealth is mostly in stocks, it varies greatly with share price fluctuations.
Telmex rivals have argued Slim's company charges high interconnection rates as a tool to maintain its advantage. Rivals have to use its lines to place calls, which allows Telmex to control phone rates.
The commission gave no time frame for the latest investigation, which could take months.
Mexico's cable TV industry wants the government not to give Telmex the rights to offer television services without first negotiating lower phone call rates.
Alejandro Puente, the head of the Cable Television Industry Chamber, slammed antitrust regulators last month for not starting a probe into the fixed-line telephone industry earlier.
Puente said that, if the competition commission had launched a probe earlier and declared Telmex dominant, it would have given the government more ammunition during TV negotiations to force Telmex to lower rates.
Mexico's Communications and Transport Ministry can set rates for calls between dominant companies and their smaller rivals.
Calderon has promised to get tough on industries where weak competition has led to unfair pricing and little choice for consumers and businesses. But there have been few signs he is making serious moves against big corporations.
(Additional reporting by Tomas Sarmiento; Editing by Andre Grenon) |
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