Mexican Antitrust Authority Fines Telmex, Calls It Repeat Offender

Mexico's antitrust commission said Wednesday it has fined fixed-line phone operator Telefonos de Mexico (TMX), or Telmex, marking yet another regulatory jab at billionaire Carlos Slim's communications empire.

The Federal Competition Commission, or CFC, said it has fined Telmex 91.5 million pesos ($7.9 million) after determining that the carrier denied interconnection services to an affiliate of Spain's Telefonica (TEF).

Telmex is a former government monopoly that controls around 80% of Mexico's fixed phone lines.

The fine comes on the heels of the Mexican Communications and Transport Ministry's denial last week of authorization for Telmex to offer television alongside its phone and Internet service.

Additionally, the CFC recently fined Telmex's parent company, mobile operator America Movil (AMX), $1 billion for anticompetitive practices involving mobile termination rates. And Mexico's Supreme Court ruled that America Movil must accept lower interconnection rates set by the country's telecommunications regulator.

America Movil's Telcel unit services about 70% of the country's mobile subscribers.

The incident prompting Wednesday's MXN91.5 million fine occurred over seven months in 2007 and 2008, during which the antitrust authority said that Telmex denied Grupo de Telecomunicaciones Mexicanas interconnection to its network in certain localities.

The CFC said it isn't the first time that Telmex has committed this "monopolistic" offense, and that the operator's substantial market power enables it to block access to competitors.

"Interconnection service is a necessary component for building a competitive offering in the phone market," the antitrust authority said, explaining that companies need to be able to connect their clients' calls to networks other than their own.

The CFC said that it could have imposed a fine on Telmex that represented 10% of the company's annual sales, but that it decided on a reduced fine given the short period of time and limited area impacted by the offense. Telmex reported sales of MXN113.6 billion in 2010.

Telmex has 30 working days to ask the CFC to reconsider the fine.

Telmex L shares were down 1.8% at MXN10.19 in midday trade Wednesday.

-By Amy Guthrie, Dow Jones Newswires; (5255) 5980-5177; amy.guthrie@dowjones.com

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