Mexico Judicial Criteria Issued for Telecommunications Antitrust and Preponderance
One of the purposes of the 2013 Amendment to the Mexican Constitution was to promote competition in telecommunications and broadcasting services. As part of the reform, the Federal Telecommunications Institute, or Instituto Federal de Telecomunicaciones (IFT), was created as a constitutional autonomous organization at the same level of the executive branch and to independently rule both the telecommunications and broadcasting sectors with technical and antitrust authority. A new Telecommunications and Broadcasting Law also was enacted, along with secondary regulations.
Under Transitory Articles Four and Eight of the constitutional reform, IFT declared "preponderant agents" in telecommunications and broadcasting sectors as being those that, directly or indirectly, had market share of greater than 50 percent of users, subscribers, audience, net traffic or used capacity.
As a consequence of the declaration, and to ensure a competitive market, IFT has the ability to impose asymmetric regulation on preponderant agents related to information, quality of services, exclusive agreements, terminal equipment, tariffs and unbundling of local loop, as well as accounting, functional or structural separation.
Federal Court Resolutions on Preponderance
In February 2017, Mexico's Federal Courts that specialize in Antitrust, Broadcasting and Telecom issued several resolutions on preponderance for the telecommunications sector. In general, the courts resolved a number of issues.
- Preponderance declaration and asymmetric regulation are not penalties but regulatory decisions.
- Asymmetric regulation must allow preponderant agents to continue in the market and obtain a reasonable return of investment.
- Asymmetric regulation by the antitrust agency (IFT) is not subject to constitutional control but to public policy evaluation. However, it is also subject to the same law provisions as any other act of authority.
- Transitory articles of the Mexican Constitution are not subject to amparo injunctions, as they are also part of the Constitution.
- Concessions cannot be revised to impose obligations that affect in a disproportionately or unjustified manner the rights and assets of holders.
- Preponderance proceedings are subject to administrative proceeding law and not to competition law, as it is an extraordinary proceeding ordered by the Mexican Constitution.
- Revisions imposed to concessions by preponderance (asymmetric regulation) does not breach the legal principle of applying the law backwards, as such proceeding comes from the Constitution.
- The opinion of the Ministry of Communications is not necessary for declaring preponderant agents.
These resolutions not only provide guidance regarding the Federal Courts' position on preponderance in the telecommunications sector but also provide valuable precedents for other legal areas related to broadcasting, subscription-based television and services, revisions or renegotiations of concessions, antitrust issues and constitutional construction.
Holland & Knight attorneys have extensive sector-wide experience regarding legal issues for a wide variety of projects and services in the telecommunications industry. For more information, contact Holland & Knight's Mexico City office.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.