Mexican Economics: Taking on Mexico’s Monopolies

Shannon O'Neil is Douglas Dillon Fellow for Latin America Studies at the Council on Foreign Relations
Shannon K. O'Neil: Latin America's Moment » Taking on Mexico’s Monopolies: "Last Friday, Mexico’s regulatory agency, the Federal Competition Commission, fined Telcel US$1billion for monopoly practices associated with high interconnection fees on its network. Controlling over 70% of the market, Telcel’s interconnection fees put competitors at a severe disadvantage due to the high costs charged to other fixed and mobile line operators when their subscribers call those on Telcel’s network.

This is the largest fine in Mexico’s history. Though the previous 2007 case against Telcel remains sealed, the maximum first time violation is roughly $8 million – peanuts compared to this ruling. As important as the money, this would be the second strike against Telcel. In contrast to U.S. laws, in Mexico the regulators have to build up a fine-based case for monopolistic behavior. With one more ruling against it, the Mexican government could in theory break up Telcel."