Mexico's Antitrust Panel Probes Phone Interconnection Practices

Mexico's antitrust commission said Friday it has launched an investigation into possible monopolistic practices in the telephone interconnection market in Mexico, less than a month after it fined the country's leading mobile operator Telcel $1 billion for anticompetitive practices involving mobile termination rates.

The Federal Competition Commission, or CFC, published a notification of the probe in the official gazette, saying it is in response to a complaint.

The investigation, it said, consists of possible monopolistic practices involving interconnection rates, which could include the refusal to grant connections, discriminatory pricing or obstructing competitors by raising their costs or reducing their demand.

The commission didn't identify the plaintiff, and said the probe has just begun and not yet identified specific acts or violators of competition laws. It didn't say whether it referred to mobile interconnection, fixed-line, or both.

In mid-April, the CFC fined Telcel, a unit of America Movil SAB (AMX, AMX.MX), because it used its market weight--around 70% of the country's mobile subscribers--and high interconnection fees to displace competitors by charging more to complete incoming calls than what it charges Telcel clients for calls within its own network.

Telcel plans to appeal the fine, which stems from an investigation begun in 2006. The company has defended the practice of using cheaper "on net" calls, saying it promotes greater phone use, and disputes the conclusion that it keeps competitors from lowering their own charges to customers.

The increase in regulatory pressure on Telcel has contributed to recent declines in America Movil shares, which are down 16% so far this year, trading recently on the Mexican stock exchange at MXN29.75, little changed from Thursday's close.

The latest probe coincides with a number of disputes in the Mexican telecommunications market, where smaller fixed and mobile operators reject the interconnection rates that Telcel charges for completing calls on its network.

Telcel, America Movil fixed-line unit Telefonos de Mexico SAB (TMX, TELMEX.MX), and Spain's Telefonica SA (TEF) agreed on a mobile termination rate of 95 Mexican cents per minute for 2011, as well as the elimination of rounding each call to the next minute.

The telecommunications regulator Cofetel, which sets the rate when there is disagreement among operators, recently resolved several cases setting a rate of 39 Mexican cents per minute, also without rounding. The Supreme Court made a ruling last week that enforces the rates set by Cofetel while they are being challenged in court.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5980-5176, anthony.harrup@dowjones.com

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