Antitrust Expert: OECD Recommendations Would "Cartelize" Mexican Telecom Market

WASHINGTON, May 21, 2012 /PRNewswire/ -- A noted economist and antitrust expert has authored a report calling OECD's proposed regulations to Mexico's telecommunication market unnecessary and unsubstantiated.  Worse, they would harm Mexican consumers.

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On Monday, Criterion Economics lead expert Gregory Sidak presented his study commissioned by America Movil—the parent company of Telmex and Telcel—to the OECD, a global development and policymaking forum with members from thirty-four countries.

Sidak's report explained how policies recommended by the OECD would stifle competition and reward inefficient competitors. The report accompanies independent econometric findings from economists Jerry Hausman and Agustin Ros.

"The asymmetric regulation advocated by the OECD would invite a government-sanctioned price-fixing cartel," says Sidak. "They would be rewarding inefficiency while penalizing efficient carriers at the consumer's expense."

"The OECD criticizes Mexico's amparo process and the filing of such appeals by [carriers like] Telmex and Telcel with regard to various [commission] rulings, despite that fact that, as the OECD report itself admits, the courts more often than not found that Telmex and Telcel were correct, and that [the commission] had in fact acted unlawfully," the Sidak report states. "Despite this fact, the OECD urges that [the commission], the organization that requested the OECD report, be given absolute and unquestionable authority over the telecommunications sectors, subrogating the role of [other agencies] and the Mexican courts."

The solution to promoting innovation and deployment of next-generation telecommunications networks, says Sidak, is to remove government barriers to entry in the wireless and television markets, not impose outdated and counterproductive regulations.

"This is not just an America Movil issue," Sidak says, stressing that countries and governments count on the accuracy of data produced in reports like the OECD's to guide policymaking. "Had Mexico relied on this report to implement new policies, they would not only have harmed innocent, innovative companies, they would have harmed the Mexican consumer, too."