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Latino Daily News

Monday April 25, 2011

Mexico’s CFC Explains $1Billion Fine Against Carlos Slim’s Telcel for Monopolizing Mobile Market

Mexico’s CFC Explains $1Billion Fine Against Carlos Slim’s Telcel for Monopolizing Mobile Market

Photo: Telel fined $1 billion for monopoly

Click Here to Enlarge Photo

Sunday, Mexico’s Federal Competition Commission (CFC) confirmed in a press release that a $1 billion fine has been given to America Movil SAB (AMX, AMX.MX) unit Telcel accusing the mobile phone operator of using its market weight and interconnection fees to push out its competition.

The 11.99 billion peso (roughly $1 billion) fine is equivalent to 10 percent of Telcel’s assets, which is the maximum fine allowed in this case.

Carlos Slim is the billionaire behind America Movil, Mexico’s largest mobile phone operator, and after a 3-2 vote, were slapped with the fine from the CFC. The company has 30 days to seek reconsideration, and they can take it up in court as well, where proceedings could drag on for months or even years.

Following an investigation of the company after several smaller phone operators filed charges in 2006, the CFC determined that Telcel increased the costs of its competitors by charging interconnection fees to end calls on the Telcel network that are above the initially indicated fees for calls made within its own network.

The CFC said the company is a near-monopoly, as is holds 70 percent of the country’s 91 million mobile customers, with what the CFC called “substantial market power.”

Telcel now has 30 days to present a proposal on how they intend to desist from the anticompetitive practice.