America Movil Antitrust Reversal Isn’t Done Deal, Officials Say

July 01, 2011, 10:27 AM EDT By Crayton Harrison

July 1 (Bloomberg) -- America Movil SAB, the wireless carrier controlled by Carlos Slim, doesn’t have a guaranteed victory in its bid to overturn a $1 billion fine for anticompetitive practices after a legal development in its favor this week, two antitrust commissioners said.

Luis Alberto Ibarra Pardo and Miguel Flores Bernes, who both voted against the fine in April, said they won’t necessarily vote the same way when considering America Movil’s appeal. Banco Santander SA said this week the two commissioners are making a reversal of the record fine more likely.

“Each case is reviewed on its own merits,” Ibarra Pardo said yesterday in an interview in the antitrust agency’s office in Mexico City. “There are arguments, from the economic point of view and the legal point of view, that could be contradictory.”

Ibarra Pardo and Flores Bernes both voted this week to bar Eduardo Perez Motta, Mexico’s antitrust chief, from the vote on America Movil’s appeal, saying he had shown bias on the matter in radio and TV interviews in May. That recusal made a vote to overturn the fine more likely, Gregorio Tomassi, a Santander analyst, said in a research note dated yesterday.

America Movil, based in Mexico City, fell 10 centavos to 15.70 pesos at 9:55 a.m. New York time in Mexico City trading. The shares had dropped 11 percent this year before today. Tomassi, based in Mexico City, recommends buying the shares.

Perez Motta and another commissioner, Rodrigo Morales Elcoro, voted in favor of the fine in April. The result was a 2- 2 tie because the fifth commissioner, Agustin Navarro Gergely, had recused himself because of a conflict of interest. As president, Perez Motta’s vote broke the tie.

Anticompetition Practices?

America Movil, which controls 70 percent of Mexico’s wireless market, committed anticompetitive practices in the market for fees charged to connect calls from rivals’ networks, the commission concluded with that vote.

With Navarro Gergely recused and Perez Motta unable to participate, the remaining three commissioners would overturn the fine if their votes remain the same as before. Morales Elcoro and Perez Motta declined to comment yesterday.

“It’s very unfortunate. I don’t like being in this situation, and I wish all of my colleagues could participate in the vote,” Flores Bernes said yesterday in a phone interview. “But the law is the law.”

In a dissenting opinion to the decision exempting Perez Motta from the appeal vote, Morales Elcoro said the recusal didn’t have a solid legal foundation.

“They’re taking this incident as a way to control the public communication of the commission,” he wrote. “They’re converting the incident as a way to censor a technical opinion.”

Public Comments

The opinion issued by Ibarra Pardo and Flores Bernes cited examples of TV and radio interviews in which Perez Motta argued against America Movil’s claims that the amount of the fine couldn’t be based on previous antitrust violations by the company, a concept known as “reincidence,” because the alleged violations were different in nature.

“You don’t have to re-commit the same infraction for it to be considered reincidence,” Perez Motta said in a May 10 interview on TV Azteca SAB’s network, according to the opinion. “That’s an abuse of dominance.”

Perez Motta’s removal from the appeal process won’t have a chilling effect on antitrust officials’ ability to express their opinions, Ibarra Pardo said. While commissioners should be transparent about their opinions after a vote, they can’t express their views on pending matters, he said.

Slim’s Wealth

Part of Perez Motta’s duties include representing the antitrust agency in public, and his comments to news media in the past generally won’t affect his ability to participate in future votes, Flores Bernes said.

“This decision was made based on specific declarations about a specific company when we were in the process of resolving an appeal,” he said.

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: Peter Elstrom, James Callan

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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