Mexico City– Mexico’s Federal Competition Commission (CFC) has opened a formal probe into alleged monopolistic practices that will likely involve the top two broadcasters, Televisa and TV Azteca, as well as Carlos Slim’s telco empire, as the billionaire fights to enter the TV market.
Making the announcement Friday, the CFC said it would look at phone interconnection rates and media outlets’ anti-competitive practice of blocking access to advertisers.
The news comes a day after the Mexican Senate passed a massive anti-monopolistic reform package that seems likely to become law.
The CFC overhaul gives the agency sharp teeth in fighting the most entrenched monopolies, allowing it to fine offenders up to 10% of their annual revenue, file criminal charges against complicit execs and make surprise inspections to recover records as potential evidence.
While Mexican law prevents the CFC from naming the companies that are under investigation, the probe is an obvious reaction to the 100-plus lawsuits launched mostly in March between Emilio Azcarraga Jean’s Televisa and Ricardo Salinas-Pliego’s TV Azteca on one side and Slim’s fixed-line and mobile telcos Telmex and Telcel on the other.
Tied to the vast array of lawsuits, a slew of other feevees and subsidies controlled by the TV moguls have now become embroiled with the conflict under the banner of Todos Unidos Contra de Telcel (Tucontel) — literally, Everyone United Against Telcel.
The heart of the conflict revolves around both sides’ efforts to expand services to encompass pay TV, Internet, fixed-line phone and mobile services.
Telmex, now years into efforts to gain a federal broadcasting license, teamed up last year with low-cost satcaster Dish Network, bundling the feevee into discount, same-bill packages. As a result, Dish has also been brought into the legal war on accusations that its arrangement with Telmex is illegal.
Furthermore, Salinas-Pliego and Azcarraga Jean, newly minted partners in mobile-service provider Iusacell, are eager to force Telcel and Telmex to lower interconnection rates for access to the telcos’ networks. The CFC will undoubtedly look at these rates.
On Feb. 18, Slim’s umbrella corporation Grupo Carso refused to pay Televisa 20% higher advertising rates — costing the broadcaster approximately $70 million in revenue a year. It pulled the ads.
The following week, TV Azteca barred Slim’s companies from advertising, in protest over the high interconnection rates, aligning the broadcasters’ interests as a bloc against Slim.
Together the two control nearly all the national TV market share. Consequently, these tactics, effectively barring Grupo Carso from TV advertising, are likely ones the CFC will be probing on their side of the question.