Bloomberg News

America Movil Gets Victory in Quest to Overturn Record Fine

June 29, 2011

(Updates with closing share price in fifth paragraph.)

June 29 (Bloomberg) -- America Movil SAB, the wireless carrier controlled by Carlos Slim, said it scored a legal victory in its bid to overturn a record $1 billion fine as Mexico’s antitrust chief was recused from voting on an appeal of the penalty.

Eduardo Perez Motta, president of the Federal Competition Commission, must refrain from voting because of comments he made to news media before the fine was assessed, Alfonso Lopez Melih, a lawyer for America Movil, said yesterday in an e-mail. Perez Motta cast the deciding vote to approve the fine in April, so his exclusion could change the outcome of the agency’s vote on America Movil’s appeal.

America Movil, which controls 70 percent of Mexico’s wireless market, is battling a flurry of legal and regulatory rulings this year designed to reduce its dominance. The company is challenging a decision by Mexico’s telecommunications regulator to slash by more than half the fees the phone carrier can charge competitors, and it’s appealing a separate antitrust fine of $7.9 million against its fixed-line phone unit.

An official with the Federal Competition Commission who can’t be named under the agency’s policy declined to comment. Lopez Melih has represented America Movil in cases before the antitrust agency and in federal court. Reforma newspaper reported the recusal decision yesterday, citing Lopez Melih and a document from the competition commission.

America Movil rose 30 centavos, or 1.9 percent, to 15.78 pesos at 4 p.m. New York time today in Mexico City trading, the biggest gain in more than a month. The shares have dropped 7.2 percent since the fine was announced on April 15.

Stiffer Penalties

The recusal is a setback for Perez Motta, named in 2004 to a 10-year term by former President Vicente Fox. The antitrust chief had gained a political victory in May when President Felipe Calderon signed a bill increasing fines for anti- competitive practices and allowing for jail terms of as long as 10 years for officials whose companies act as monopolies, powers Perez Motta, 55, had sought.

The agency said in April it assessed the fine because America Movil increased competitors’ costs by charging them more than it charges its own users to complete calls to its network. Such charges are called interconnection fees.

America Movil’s appeal of the decision said Perez Motta must recuse himself because of comments he made to Bloomberg Television in 2008 and to Mexican newspapers in March of this year, according to Reforma.

‘Reflect Costs’

“Interconnection fees must better reflect costs,” Perez Motta told Bloomberg Television in the 2008 interview. “That would stop discrimination against a particular network, fixed or mobile.”

The five-member antitrust panel voted 2-2 to assess the fine in April, with Commissioner Agustin Navarro Gergely recusing himself, citing rules governing conflicts of interest. As president of the commission, Perez Motta had the power to break the tie with his vote.

Commissioner Rodrigo Morales Elcoro voted alongside Perez Motta, while Miguel Flores Bernes and Luis Alberto Ibarra Pardo voted against the fine.

Slim, 71, was declared the world’s richest man in March for a second year by Forbes magazine. America Movil represents about 62 percent of his $72.6 billion in publicly disclosed holdings, according to data compiled by Bloomberg.

--Editors: Jonathan Roeder, Niamh Ring

To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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